Principles of Management

Module I

Introduction to Management
Evolution & Development of Management Thought

Management has existed in every nook and corner of the world since the dawn of civilization. It has emerged
when man started living in groups. Strong men organized the masses in to groups, according to their intelligence,
physical and mental capabilities and became their leaders. Use of Principles of management was found in the
organizations of public life in ancient Greece, the organizations of Roman Catholic Church and the organization of
military force.

It was not in the business world for a long time, because earlier business organizations were too simple in
structure.

Later in 1750 there was a radical change, following Industrial revolution and it made the structure of Industry
extremely complex. At this juncture the development of formal theory of management for work and workers became
absolutely necessary.

1. Egypt : Pyramids (Egyptian skill in planning and organizing the public edifices is evident here)
2. China : Diverse & Complex civilization
3.
4.
5.
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India : Organization & Management of Trade
Greece : Documentation of Management Principles
Rome : Craft & Trading groups

1. Robert Owen (1778-1858)

Performance & Working conditions

2. Charles Babbage (1792-1871)

Used Science & Mathematics, Technology and accurate data

3. James Watt Jr. (1796-1848) & Robinson Boulton (1770-1842)

Forecasting, Planned Layout, Production Planning, Standardization of Parts, Elaborate Statistical records,
Welfare of workers.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

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 MANAGEMENT

“Management as a discipline has attracted the attention of academicians and practitioners to a very great extent.”

“Management as a discipline has drawn concepts and principles from Economics, Sociology, Psychology,
Anthropology, History, Statistics and so on.”

It is the process of designing and maintaining an environment in which individuals working together in groups
efficiently accomplish selected aims. The aim of any manager is the same, to create surplus. It is concerned with
productivity which implies effectiveness and efficiency.

Definitions

According to Harold Koontz Management is the art of getting things done through and with the people in
formally organized groups.

According to Dalton E McFarland Management is defined for conceptual, theoretical, and analytical purposes as
that process by which managers create, direct, maintain, and operate purposive organization through systematic,
coordinated, co-operative human effort.

Need For Management

Society has large and complex institutions with many people working together. The relationship between
managers and managed has changed as compared to the older master-servant relationship making it more
complex. People have greater expectations from their jobs.
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“In order to make all these things function properly, people have been trying to evolve some methods and
techniques. Such attempts have given the birth of management as a separate discipline”

Managerial Roles:

Managerial roles refer to managerial activities. This can be grouped in to three.

A. Interpersonal Role
1. The figure head role : perform ceremonial and social duties
2. The Leader Role
3. The Liaison Role : with outsiders
B. Informational Role
4. The recipient Role : receiving information about the operation of an enterprise
5. The disseminator Role : passing information to subordinates
6. The spokesperson Role: transmitting information to outside

C. Decision Role
7. The entrepreneurial Role
8. The disturbance – handler Role
9. The resource allocator Role
10. The negotiator Role

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

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 Management Functions:

“Management process suggests that all the managers in the organization should perform certain functions to
get things done by others”

1. Forecasting
2. Planning
3. Organizing
4. Staffing
5. Directing
6. Coordinating
7. Controlling
8. Decision making

Forecasting: It is necessary preliminary to planning. Forecasting estimates what should be done in future.
Forecasting begins with sales forecast, and is followed by production forecast and forecasts for costs finance,
purchase, profit/loss etc.

Planning: It is the conscious determination of the future course of action to achieve the desired results. What to
achieve ?, When to achieve ?, How to achieve ?. It includes determination of objectives, setting rules and
procedures, determining projects, setting policies and strategies, budgeting etc.

Organizing: It is the process of dividing work in to convenient tasks or duties, grouping of such duties in the

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form of positions, and grouping of various positions in to departments and sections and delegating authority to
each position so that the work is carried out as planned.

Staffing: Here the Managers/ HR department select train place promote and (retire) qualified people. It is a
continuous process.

Directing: When people are available in the organization, they must know what they are expected to do in the
organization. Superior managers fulfill this requirement by communicating to subordinates about their expected
behavior. Through directing the actual performance of a subordinate is guided towards company objectives.

Directing includes,

1. Giving instructions to subordinates

2.Guiding the subordinates to do the work

3.Supervising the subordinates to make certain that the work done by them is as per the plans
established.

Directing involves the following functions,

a) Leadership

b) Communication

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

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 c) Motivation

d) Supervision

Leadership:It is the quality of the behavior of a person by which he can inspire confidence and trust in his
subordinates, get maximum cooperation from them and guide their activities in organized effort.

Communication: Communication is the process by which ideas are transmitted, received and understood by
others for the purpose of achieving desired results. Communication may be verbal or written.

Motivation: Inspiring the subordinates to do a work or to achieve company objectives effectively or efficiently.

Supervision: Supervision is necessary in order to ensure,

1. That the work is going on as per the plan established

2. That the workers are doing as they were directed

Coordinating: Means achieving harmony of individual effort towards the accomplishment of company objectives.
Make plans to regulate the activities and communication of subordinates on the job. Informal relationships within
the organization always tend to facilitate coordination

Controlling : Controlling involves identification of actual results, comparison of actual results with expected
results as set by planning process , identification of deviation between the two, if any and taking of corrective
action so that actual results match with expected results.

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1. Set standards STUDENTS
2. Measure Job performance

3. Take corrective action

Decision Making:It is the process by which a course of action is consciously chosen from available alternatives
for the purpose of achieving desired results.

An outstanding quality of a successful manager is his ability to make sound and logical decisions.

Managing: Science or Art?

Managing when we practice systematically, it is an art and organized knowledge underlying the practice is a
science. The science underlying managing is crude and inexact because many variables that managers deal with
are extremely complex. Managers use organized knowledge to do their activities efficiently and effectively. While
practicingif, they adopt trial and error method that will contribute more towards organized knowledge.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

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 Organization and External Environment

Operating in Pluralistic Societies: Pluralistic society consists of many organized groups survive together and
representing various interests. There are many stake holders or claimants on the organization. They have
divergent goals, and it is the task of the manager to integrate their aims.
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Working within a Pluralistic Society: Implications for Business

1. Various groups keep business power in balance

2. Business interests can be expressed by joining groups (Eg. Chamber of commerce)
3. Business can participate in projects with other responsible groups for the betterment of society.
4. There can be conflict as well as agreement among groups
5. One group will be aware of other group’s activities
External Environment

 Technological and Innovative Environment

It is the sum total of the knowledge we have, the ways of doing things. It includes inventions,
techniques and the vast store of organized knowledge. It influences designing, production,
distribution and selling of goods/services.
Invention: It can be finding new products, services, processes, ideas or combining these.
Commercialization of invention results in innovation. To be successful it should not be a one- time
event, it should be continuous.
E.g.: Apple started with computers and continued with iPod, iPhone, iPad…etc
Amazon, started with books, Amazon reader, Amazon fire (Tab)…etc
Product innovation: Apple phone
Service innovation: Apple’s Tunes

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

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 Process innovation: High Quality cars produced by Toyota
Incremental innovation:Here we use existing knowledge or method and through continuous
changesimprove products/services.
E.g. Google
Six sigma: failure rate of 3.4 parts per million.
Disruptive/ Breakthrough innovation: They may use new methods, materials, products or
services.
E.g.:Digital imaging and film based imaging.
 Ecological Environment
Ecology means the relationship of people and other living things with their environment such as soil,
water and air. These may get polluted by means of industrial waste. A variety of legislation has been
passed dealing with solid waste, water and air pollution. Managers must keenly aware of these
regulations and must incorporate ecological concerns in to their decision making.
For example, in 1984 lethal vapors from Union carbide’s pesticide plant in India killed over 2000
people and injured nearly 40,000. In order to protect environment European countries developed the
ISO 14001 standard to assure that company policies address a variety of public concerns including
pollution prevention and compliance with relevant laws and regulations.
 Social Environment:There are many stakeholders and claimants to the organization. The social
responsibility is associated with not only business, but with governments, universities, nonprofit
foundations charitable organizations, …etc
Corporate Social Responsibility is seriously considering the impact of the company’s actions on
society. Similar to this there is new concept that is social responsiveness; it means the ability of a
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corporation to relate its operations and policies to social environment in such a way that both are
mutually benefitted.

Eg.SudhaMoorthy, w
/o Narayana Moorthy, CEO Infosys. She is leading philanthropic work through Infosys foundation;
she has arranged to give Library facility and Computers for Govt. Schools in Karnataka

 Ethical Environment: Business ethics is concerned with systematic study of morals. It strives to
provide methods to distinguish between actions and attitudes that are detrimental for business and
those that are sound ethically and inspire businesses.Managerial ethics is the rules and principles,
decided by upper management, that spell out what is right and wrong in an organization. Managerial
ethics is intended to make it easier for managers to make the right decisions on the job when a conflict
of values is presented.According to moral management ethics, managers aim to maximize profit
within the confines of ethical values and principles. They conform to professional and legal standards
of conduct.
Whistle bowling: “An employee refuses to engage in and or reports illegal or wrongful activities of his
employer or fellow employees”

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

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  Economic Environment:

The economic environment consists of external factors in a business market and the broader
economy that can influence a business. You can divide the economic environment into the
microeconomic environment, which affects business decision making - such as individual actions of
firms and consumers - and the macroeconomic environment, which affects an entire economy and all
of its participants. Many economic factors act as external constraints on your business, which means
that you have little, if any, control over them. Let's take a look at both of these broad factors in more
detail.
Macroeconomic influences are broad economic factors that either directly or indirectly affect the entire
economy and all of its participants, including your business. These factors include such things as:

 Interest rates
 Taxes
 Inflation
 Currency exchange rates
 Consumer discretionary income
 Savings rates
 Consumer confidence levels
 Unemployment rate
 Recession
 Depression

Microeconomic factors influence how your business will make decisions. Unlike macroeconomic factors,

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these factors are far less broad in scope and do not necessarily affect the entire economy as a whole.
Microeconomic factors influencing a business include:

 Market size
 Demand
 Supply
 Competitors
 Suppliers
 Distribution chain, such as retail stores

 Political & Legal Environment: Authoritarian government rests on rule by political elite that has
power for the time being. Such a regime usually holds on to the power by suppressing dissent, often
by force. Democratic governments tend to be accountable to the people, instead, by relying on free and
fair elections. The will of the leadership thus dominates in an authoritarian regime, whereas
democracy relies on representative institutions like the elected legislatures.  Political risks comprise
the uncertainties associated with location and exercise of power within a country as also from the
forces outside its borders. There are two kinds of political risks, therefore: –

Internal political risks include corruption, weak rule of law, social fragmentation etc. that are
common in developing economies. Since most economic opportunities too arise in these countries,

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

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 many international businesses balance the extra costs associated with these risks against the potential
benefits.

– External political risks concern inter-governmental relations and include benefits like trade
agreements and investments as also the risks such as disputes that affect trans-border trade and
business. Terrorist threats too would be included here. By informing themselves of a country’s
historic relations with others, international managers can manage the range of possible external risks.

The national legal system provides the substantive law and court structure which most directly affect
businesses. − MNEs operating in different countries are subject to the national law in each. Legal
systems in democratic societies where the rule of law prevails tend to be more transparent than those
in authoritarian countries. − Regional frameworks and international law overlap with national law in
several spheres, such as environmental protection  Legal risk internationally − Legal risk arises
when a company needs to launch legal action (such as to enforce a contract) or when it must defend
itself against legal action. − In FDI and outsourcing strategies, the MNE is involved in webs of legal
relations in foreign environments,
e.g.,  Contracts with suppliers, customers, subcontractors
 Liability under environmental protection law
 Liability for dangerous products
 Liability for industrial accidents
 Liability under employment law and health and safety law

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MANAGING FOR COMPETITIVE ADVANTAGE

Competitive advantage is the favorable position an organization seeks in order to be more profitable than its
competitors.
Competitive advantage involves communicating a greater perceived value to a target market than its
competitors can provide. This can be achieved through many avenues including offering a better-quality product or
service, lowering prices and increasing marketing efforts. Sustainable competitive advantage refers to maintaining a
favorable position over the long term, which can help boost a company's image in the marketplace, its valuation and
its future earning potential.
Advancement in technologies like Internet people can easily share their information by adapting modern way
of communication. The world becomes global village due to which the organizations have to make certain vital
decision to gain the competitive advantage.
To survive and win in this age of globalization organization must adapt the fundamental success drivers to
gain the competitive advantage over their rivals.The competitive advantage is consider as asset for the organization to
survive and compete in the industry.

Following are the four fundamental success drivers.

1. Cost Competitiveness
2. Quality
3. Speed

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

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4. Innovation

COST COMPETITIVENESS
Cost competitiveness is all about by keeping the price low by realizing the profits. If we find out most of the people
have limited earnings. Keeping the cost low increases attractiveness of your product and people not feel hesitant to
buy your products.
But keeping the cost low is not easy to manage for most of the companies. It is possible by managing resources, labor,
manufacturing, and marketing.
Examples,

 Dell computers are one of the best companies of the world dealing in computers they provide computers in
affordable prices and deal online in the Internet.
 Chinese products dominating the Asian market by keeping the price low of products.
 Major company like Intel establish manufacturing plats to cheap labor countries like china, Pakistan , India
and Bangladesh by managing labor, manufacturing and minimize taxes result in low cost of the product.
 Southwest airlines gain success by keeping the cost low.

QUALITY
Quality is the excellence of a product, including such thing as attractiveness, lack if defects, reliability, and long term
dependability.”
Quality is the success driver that most companies want to achieve. The quality of is always examine by customers if

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they satisfied with your products then you achieve the milestone of quality.
Quality is most important factor of success for the new entrants. Most of the companies in the starting focus on
quality because it will help them to attract the customers and polishing their brand. Most companies improving their
quality by TQM, Continuous Quality management and benchmarking.
Examples,

 Dell computer maintain quality as well as they are cheaper than others.
 Intel Corporation deals in many computer products like processors and motherboard and satisfies people by
the performance, reliability of their products that’s why they capture computer hardware market.
 AMD Corporation is not stable yet because in early stages they lack of quality in their products results in big
loss.

SPEED
“Fast and timely execution of the response.”
How fast you can develop and get a new product into the market? “How quickly you response to customer request “
It not about that to make the products faster only by manufacturing maximum number of units cant lead you to
success. Speed means to know about the market condition to get the requirements and then deliver the product as soon
as possible in the market. The companies have to exploit the opportunities and always look for new one. The timely
response to the customer adds value to the company.
Examples,

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

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  Dell computer get specification of the computer form the user and deliver the it within 36 hours it because of
they have good coordination with their supplier get the parts in 10 hours.
 Pizza hut deliver each order in 15 minutes people don’t have to much, that why they are dominating..

INNOVATION
“Creation of new devices, objects, ideas, or procedures useful in accomplishing human objectives.”
The companies must capitalize the human assets by unlocking their expertise to get new ideas from supplier,
employees, customers and other companies. The results of this process lead your company to dominate by producing
new products and services to the customers. Company can’t depend on one product all the time if this is the case then
competitors introduce so many new products and hold the major share of customers.
Examples,

 P & G producing thousands of products each year because they are innovative they share they share the view
of customers and introduce products what they want.
 Nokia leading cell phone company dominating because they implement new ideas in their products and
deliver continuously new products in the market for every class of customer

Span of Control
Span refers to the number of subordinates a manager or supervisor can supervise, manage or control effectively
and efficiently. This number depends on various factors such as Ability, knowledge, skill and experience of
superior as well as subordinates, Use of modern sophisticated systems such as CCTV, Camera, Internet, Intranet
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services…etc. STUDENTS
If the superior is more able by quality and ability he can control more people and at the same time the quality and
ability of the subordinate is also crucial. If the subordinates are well trained and equipped less supervision is only
needed to get best performances. Modern technologies like various internet and mobile phone services will help to
get periodic reports and correct track of work to control more people effectively and efficiently.

Challenges of Manager

1. Achieving a Stretch Goal

The organization you’re managing is responsible for something — whether it’s performing a business process,
supporting some other organization, developing a new product, or getting new customers. There are goals
associated with your objectives, and if your organization is aggressive then those goals require more than the
typical amount of effort. It’s going to take some careful planning for you to figure out how to apply your
organization’s people and resources to achieve an aggressive goal. You’re going to have to motivate people, remove
roadblocks from their path, and focus them on the things that are most important. It’s a stretch goal, but you can
achieve it — maybe even surpass it.

2. Bringing Out the Best in Your Employees

All employees have good days and bad days. Some of the causes are out of your control. But it’s important
that you take steps to make as many days as possible “good days.” Here are some of the things that you can do:

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

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 Treat every employee with respect. If you have praise for the employee, give the praise in front of coworkers. If you
have criticism for the employee, give it in private. For all but the worst underperforming employees, make sure
that the praise happens much more often than the criticism.
Help employees align their personal goals with their work goals. Talk with each employee about his or her
personal goals: what they want to get out of life, where they want their career to go. To the extent possible, use
this information to help you allocate work assignments.
Provide a work environment that is appropriate for the work and conducive to employee well-being. A
comfortable work environment makes your employees more productive.
Encourage employee communication and cooperation. For example, in one of my management jobs, I held a
monthly lunch for my employees. During the lunch I updated them on any company news I’d heard, and I had
some of the employees describe their recent work and some of their challenges. We also had a series of awards.
But these were not your typical awards. Each award was given by the previous award recipient to someone who
exemplified the spirit of the particular award. There was a “Gumby” award (a Gumby character) given to the
most flexible employee, and other awards for things like putting the team ahead of yourself, most creative outside-
the-box idea, and unluckiest employee. Employees sometimes even created their own one-time awards when
something special or unusual happened. Over time the number of awards grew, and the interchange of
enthusiasm and ideas made the organization a happy and fun place to work.
3. Dealing with Underperforming Employees
Not all of your employees will do their best. Some will have personal issues that interfere with their work.
Technically it’s not your problem, but in reality any issue that contributes to an underperforming employee is
your problem. You’ll help employees cope with personal issues, you’ll provide motivation and counsel, maybe
steer them to appropriate resources inside or outside your company. You’ll “carry” your underperforming

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employees to a point, and then beyond that point you’ll have to ease them out of your organization. You’ll be
humane, but you have to balance the needs of the organization with the needs of the employees.

4. Dealing with Outstanding Employees

Some of your employees obviously outperform the others. That’s good news for your organization, but it
presents its own set of challenges. Outstanding employees need special treatment. You want them to keep doing
an exceptional job but that usually means that you’ll have to pay them special attention. They need recognition
for their talents and efforts. They need encouragement, training and guidance. And above all they need to know
that they have a career path in your company, even if that career path takes them out of your organization.
You’ll be tempted to hold on to your outstanding employees and keep them from being promoted out of your
organization. You shouldn’t do that. When an employee star outgrows your organization, the best thing for your
company is to make sure that the employee finds a home in another part of your company where he or she can
continue to contribute. And ultimately, you’ll be rewarded for your good deed of helping the employee achieve his
or her potential. Your reputation as a “team player” and good manager will grow, and your own career will be
enhanced.
5. Hiring the Right People
No matter how happy your employees are, you’ll get occasional turnover. And if your organization is
successful then you’ll often find that your budget and headcount will grow as you are assigned more and more
responsibility. Either way, you’ll need to hire. Hiring is easy, but hiring the right person is extremely difficult.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

For more study materials>www.ktustudents.in

 The trick in hiring is to get an understanding of how an employee will actually perform the work — not just
how the employee does in interviews. Interviews are seldom a good predictor of work and work habits, so going
beyond the interview is crucial.
I’ve sometimes used unconventional interviewing techniques. I’ve done the traditional interview, but then
I’ve tried some things that gave me a better feel for how the interviewee will perform in an actual work situation.
For example, for some programmer positions, I had the prospective employee spend some time with his/her future
coworkers, going through a task that the current employee was doing. Getting feedback from the current employee
(who had a vested interest in finding someone who would carry a part of the workload) made a big difference in
our choice for some potential new hires. And the process also increased our acceptance rate for job offers, since the
job applicants had a better feel for the environment into which they were being hired.
6. Responding to a Crisis
No matter how much planning you do, things will go wrong. An employee will get sick at a critical time. A
weather disaster will hit your facility and disrupt your plans. A crime will be committed — maybe a theft or even
something that harms an employee.
Planning is a part of managing, but perhaps more important is a manager’s ability to change plans on the fly
in response to changing conditions. When a crisis hits, you have to be able to deal with it — calmly, quietly and
without being overwhelmed by stress.
7. Continuous Improvement
No matter how good your organization gets, it can do better. There’s always some type of improvement that
can be made: a change in a process, a better working environment, better employee motivation, more focus on the
essentials. If you ever get to the point where you honestly have no idea how to improve things further, then you
should either (a) seek outside advice, or (b) look for another job. There’s always a better way, and you have to keep

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looking for it.
Conclusion
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Management is complicated. It requires skill and motivation. But most of all it requires commitment — the
commitment needed to rise to these seven challenges.

Prof. Baiju B.S., H.O.D., Dept. of Applied Sciences, MEA Engineering College, Perinthalmanna, Malappuram

For more study materials>www.ktustudents.in