Nature and Significance of ManagementClass 12 Business Studies Part 1 NCERT Solutions
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Q1Exercises
Management is considered to be both an art and science. Explain.
Solution
Management is a complex discipline that has features of both art and science. They are not mutually exclusive but complement each other.
Management as an Art
Art is the skillful and personal application of existing knowledge to achieve desired results. Management can be considered an art because it satisfies the following criteria:
- Existence of theoretical knowledge: Like any art form, management has a well-defined body of knowledge. There is a lot of literature available in various areas of management like marketing, finance, and human resources, which a manager uses to manage an organisation.
- Personalised application: The use of this basic knowledge varies from one manager to another. A good manager applies the scientific principles and knowledge to a given situation in his or her own unique manner, based on practice, creativity, and innovation.
- Based on practice and creativity: Management is practical. A manager's skill improves with practice. A successful manager creatively applies the acquired knowledge to solve complex problems and achieve organisational goals, similar to how a musician uses basic notes to create a unique composition.
Management as a Science
Science is a systematised body of knowledge that explains general truths. Management can be considered a science as it has the following characteristics:
- Systematised body of knowledge: Management has its own theories and principles that have developed over time. It has its own vocabulary and concepts, similar to other sciences.
- Principles based on experimentation: The principles of management have evolved over a period of time based on repeated experimentation and observation in different types of organisations. However, since management deals with human behaviour, the outcomes are not always accurately predictable. Hence, it is considered an inexact or social science.
- Universal validity: The principles of management are not as exact as the principles of pure science and their application is not universal. They have to be modified according to a given situation. However, they provide managers with certain standardised techniques that can be used in different situations.
In conclusion, the practice of management is an art, but managers can work better if their practice is based on the principles of management, which constitute the science. Therefore, management is both a science and an art.
Q1Exercises
Ritu is the manager of the northern division of a large corporate house. At what level does she work in the organisation? What are her basic functions?
Solution
Ritu is working at the Middle Level of Management in the organisation. As a division manager, she acts as a link between the top management and the lower-level managers.
Her basic functions as a middle-level manager include:
- Interpreting Policies: She is responsible for interpreting the policies framed by the top management and communicating them to the lower levels.
- Organising Activities: She needs to ensure that her department has the necessary personnel and resources to carry out the plans.
- Assigning Duties: She assigns necessary duties and responsibilities to the personnel in her division.
- Motivating Employees: She is responsible for motivating employees in her division to achieve the desired objectives.
- Cooperating with other departments: She must cooperate with other divisional heads for the smooth functioning of the entire organisation.
Q1Exercises
What is meant by management?
Solution
Management is the process of getting things done with the aim of achieving organisational goals effectively and efficiently. It involves designing and maintaining an environment in which individuals, working together in groups, can accomplish selected aims. It consists of a series of interrelated functions like planning, organising, staffing, directing, and controlling.
Q2Exercises
Do you think management has the characteristics of a full-fledged profession?
Solution
Management does not have all the characteristics of a full-fledged profession like medicine or law, but it is on the path to becoming one. We can evaluate this by comparing management against the key features of a profession:
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Well-defined body of knowledge: Management satisfies this criterion. It is a systematic body of knowledge with well-defined principles and is taught as a discipline in various institutes and universities worldwide.
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Restricted entry: This criterion is not strictly met. Unlike a doctor or a lawyer, there is no mandatory educational degree or license required to become a manager. Anyone can be appointed as a manager regardless of their educational qualifications.
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Professional association: This criterion is partially met. There are several management associations, like the All India Management Association (AIMA), that have laid down a code of conduct for their members. However, it is not compulsory for managers to be members of such an association, and these associations do not have statutory backing.
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Ethical code of conduct: This is not fully met. While professional associations have prescribed codes of conduct, they are not legally binding on all managers. There is no universally accepted ethical code for managers.
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Service motive: The primary objective of management in a business organisation is often profit maximisation. However, this is gradually changing, with an increasing emphasis on social responsibility and serving the interests of various stakeholders. So, this feature is not fully present but is gaining importance.
In conclusion, since management does not satisfy all the criteria, it cannot be considered a full-fledged profession. However, it is rapidly professionalising due to the growing emphasis on formal education, training, and ethical conduct.
Q2Exercises
Name any two important characteristics of management.
Solution
Two important characteristics of management are:
- Management is a goal-oriented process: Management unites the efforts of different individuals in an organisation towards achieving common goals. The existence of an organisation is based on a set of basic goals, and management's purpose is to achieve them.
- Management is all pervasive: The activities involved in managing an enterprise are common to all organisations, whether they are economic, social, or political. Management is necessary for a school, a hospital, a business, or any other organisation.
Q2Exercises
State the basic features of management as a profession.
Solution
A profession has certain distinct characteristics. The basic features of a profession are as follows:
- Well-defined body of knowledge: All professions are based on a well-defined body of knowledge that can be acquired through instruction and education.
- Restricted entry: The entry into a profession is restricted through a prescribed qualification, such as an examination or an educational degree.
- Professional association: All professions are affiliated to a professional association which regulates entry, grants certificates of practice, and formulates a code of conduct.
- Ethical code of conduct: All professions are bound by a code of conduct formulated by the professional association, which guides the behaviour of its members.
- Service motive: The basic motive of a profession is to serve their clients' interests by rendering dedicated and committed service.
Q3Exercises
Identify and state the force that binds all the other functions of management.
Solution
The force that binds all the other functions of management is Coordination.
Coordination is considered the essence of management. It is the process by which a manager synchronises the activities of different departments and individuals to ensure unity of action for the achievement of common goals. It is the common thread that runs through all management functions like planning, organising, staffing, directing, and controlling.
Q3Exercises
Why is management considered to be a multi-dimensional concept?
Solution
Management is considered a multi-dimensional concept because it is a complex activity that involves three main dimensions:
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Management of Work: Every organisation exists to perform some work, such as manufacturing a product or providing a service. Management translates this work into goals to be achieved and establishes the means to achieve them. This involves planning, organising, and controlling.
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Management of People: Human resources are an organisation's most valuable asset. The task of management is to get work done through people. This has two dimensions: dealing with employees as individuals with diverse needs and dealing with them as a group. It involves making their strengths effective and their weaknesses irrelevant to achieve organisational goals.
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Management of Operations: All organisations have an operational aspect where inputs are transformed into desired outputs. This involves a production process that links the management of work and the management of people. It requires managing the flow of input material and the technology for transforming it into the final product or service.
Q3Exercises
"A successful enterprise has to achieve its goals effectively and efficiently." Explain.
Solution
This statement is correct. For a successful enterprise, it is crucial for management to be both effective and efficient. These two terms are interrelated yet distinct aspects of management.
Effectiveness
Effectiveness in management means doing the right task, completing activities, and achieving the set goals. It is concerned with the end result. If a company achieves its target production within the given timeframe, it is considered effective. For example, if the target is to produce 5,000 units in a year and the company produces 5,000 units, it is effective.
Efficiency
Efficiency means doing the task correctly and with minimum cost. It involves a cost-benefit analysis and focuses on the relationship between inputs (resources like money, materials, labour) and outputs (goods or services). If a company can produce more output with the same inputs or the same output with fewer inputs, it is considered efficient. Efficiency leads to cost reduction and higher profits.
Interrelation and Importance of Both
Effectiveness and efficiency are two sides of the same coin; both are equally important for the success of an organisation.
- Being effective but inefficient: A company might achieve its target production (being effective) but at a very high cost, for example, by using overtime labour and extra electricity. This will reduce its profits and is not sustainable in the long run.
- Being efficient but ineffective: A company might focus too much on cutting costs (being efficient) but fail to achieve its production target. Consequently, its goods may not reach the market on time, leading to a decline in demand and loss of market share to competitors.
Therefore, a successful enterprise must balance both. It needs to complete its tasks (effectiveness) while using the minimum possible resources (efficiency). High efficiency associated with high effectiveness is the ultimate aim of all managers and the key to long-term success and profitability.
Q4Exercises
List any two indicators of growth of an organisation.
Solution
Two indicators of growth of an organisation are:
- Increase in sales volume.
- Increase in the number of employees.
Q4Exercises
Management is a series of continuous interrelated functions. Comment.
Solution
The statement that management is a series of continuous and interrelated functions is correct. Management is a process, and this process consists of several functions that managers perform to achieve organisational goals. These functions are planning, organising, staffing, directing, and controlling.
Continuous Nature of Management Functions:
Management is an ongoing process. The functions of management are performed continuously by all managers. A manager's job does not end after performing one function. For example, a manager is engaged in planning, but at the same time, they might also be directing employees and controlling ongoing activities. The task of a manager is a never-ending series of functions. The cycle of management begins with planning and ends with controlling, but the feedback from controlling becomes the basis for future planning, thus making it a continuous cycle.
Interrelated Nature of Management Functions:
All the functions of management are interrelated and interdependent. They cannot be viewed in isolation. They are performed in a sequence and affect each other.
- Planning is the primary function that sets the objectives and the course of action. All other functions are performed within the framework of the plans laid down.
- Organising is the function of creating an organisational structure and allocating resources as per the plans.
- Staffing involves filling the roles created by the organising function with the right people.
- Directing is required to lead, motivate, and guide the staff to perform their tasks effectively to achieve the plans.
- Controlling involves monitoring the performance against the standards set in the planning stage and taking corrective actions. The results of controlling provide valuable feedback for future planning.
In reality, managers rarely perform these functions in a rigid, step-by-step sequence. The activities are intertwined, and it is often difficult to pinpoint where one ends and the other begins. Therefore, management is rightly described as a series of continuous and interrelated functions.
Q4Exercises
Company X is facing a lot of problems these days. It manufactures white goods like washing machines, microwave ovens, refrigerators and air conditioners. The company's margins are under pressure and the profits and market share are declining. The production department blames marketing for not meeting sales targets and marketing blames production department for producing goods, which are not of good quality meeting customers' expectations. The finance department blames both production and marketing for declining return on investment and bad marketing. State the quality of management that the company is lacking? What quality of management do you think the company is lacking? Explain briefly. What steps should the company management take to bring the company back on track?
Solution
The quality of management that Company X is lacking is Coordination.
Explanation:
Coordination is the process of synchronising the activities of different departments and individuals to achieve common organisational goals. The situation in Company X, where the production, marketing, and finance departments are blaming each other, indicates that they are working in isolation. There is a clear lack of integration of efforts and unity of action. This leads to conflict and chaos instead of harmony, which is why profits and market share are declining.
Steps the company management should take:
To bring the company back on track, the management must focus on establishing coordination among all departments. The following steps should be taken:
- Integrate Efforts: The top management should make a conscious effort to integrate the efforts of the production, marketing, and finance departments. They must be reminded that they are all working towards the common goal of organisational success, not just departmental targets.
- Ensure Unity of Action: Management must act as a binding force between departments. For example, the production department should produce goods based on the feedback and requirements provided by the marketing department. The finance department should approve promotional budgets that align with the sales targets.
- Improve Communication: Regular meetings and clear communication channels should be established between the heads of all departments to resolve conflicts and ensure that everyone is aligned with the company's objectives.
- Deliberate Coordination: The top manager must deliberately coordinate the activities. This involves balancing the functions of all departments to ensure that organisational objectives are achieved effectively and efficiently.
Q5Exercises
Coordination is the essence of management. Do you agree? Give reasons.
Solution
Yes, I agree that coordination is the essence of management.
Coordination is not a separate function but the very core of management that binds all other functions together. The following reasons support this statement:
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Coordination is needed in all functions:
- In Planning, coordination is required between the master plan and the supporting plans of different departments.
- In Organising, coordination is needed between different resources of an organisation and also between authority and responsibility.
- In Staffing, coordination is needed between the skills of a person and the job assigned to them.
- In Directing, coordination is required between orders, instructions, and suggestions.
- In Controlling, coordination is required between the planned standards and the actual performance.
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Coordination is needed at all levels:
- Top level management needs coordination to integrate all the activities of the organisation.
- Middle level management needs coordination to balance the activities of different departments.
- Lower level management needs coordination to integrate the activities of the workers.
Because coordination is required in every function and at every level of management, it is rightly considered the 'essence of management'.
Q5Exercises
A company wants to modify its existing product in the market due to decreasing sales. You can imagine any product about which you are familiar. What decisions/steps should each level of management take to give effect to this decision?
Solution
Let us assume the product is a smartphone model whose sales are decreasing due to outdated features.
The decisions and steps to be taken by each level of management would be as follows:
1. Top Level Management (e.g., CEO, Board of Directors)
The top management is responsible for the overall welfare and strategic direction of the company. Their steps would include:
- Analysis: They will analyse the business environment, including competitor strategies, technological trends, and customer feedback, to understand the reasons for decreasing sales.
- Goal Formulation: They will set the overall strategic goal, such as, "To relaunch the smartphone with an upgraded camera, longer battery life, and 5G capability within the next six months to regain a 15% market share."
- Policy Making: They will frame the broad policies regarding the product modification, including the budget for research, development, and marketing.
- Resource Mobilisation: They will approve the necessary financial and other resources required for the project.
- Coordination: They will coordinate the activities of different functional departments like R&D, production, and marketing to ensure they work in harmony towards the new goal.
2. Middle Level Management (e.g., Production Manager, Marketing Manager, Finance Manager)
The middle management acts as a link between the top and lower levels and is responsible for implementing the plans. Their steps would include:
- Interpreting Plans: They will interpret the policies and strategies formulated by the top management for their respective departments.
- Departmental Planning: The Marketing Manager will plan the new advertising campaign, pricing strategy, and distribution channels. The Production Manager will plan the changes in the assembly line and ensure the procurement of new components. The R&D manager will oversee the technical development of the new features.
- Assigning Duties: They will assign specific duties and responsibilities to the supervisory staff and other employees within their departments.
- Resource Allocation: They will allocate the resources, including personnel and finances, within their departments to achieve the departmental objectives.
3. Supervisory or Operational Management (e.g., Foremen, Supervisors)
This level of management directly oversees the workforce and is responsible for the actual execution of work. Their steps would include:
- Execution of Plans: They will ensure that the production work is carried out according to the plans and specifications provided by the middle management.
- Supervision and Motivation: They will directly supervise the workers on the assembly line, motivate them for quality work, and maintain discipline.
- Quality Control: They will be responsible for maintaining the quality of the modified product and minimising the wastage of materials.
- Communication: They will pass on the instructions from middle management to the workers and communicate the workers' grievances or suggestions back to the middle management.
Q5Exercises
Indian Railways has launched a new broad gauge solar power train which is going to be a path breaking leap towards making trains greener and more environment friendly. The solar power DEMU (Diesel Electric Multiple Unit) has 6 trailer coaches and is expected to save about 21,000 liters of diesel and ensure a cost saving of Rs 12,00,000 per year. Name the objectives of management achieved by Indian Railways in the above case.
Solution
Indian Railways has achieved the following objectives of management in the given case:
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Organisational Objectives: By ensuring a cost saving of Rs 12,00,000 per year, Indian Railways is fulfilling its economic objective of utilising resources to the maximum possible advantage. This contributes to its survival and growth by reducing costs.
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Social Objectives: By launching a solar-powered train that is 'greener and more environment friendly', Indian Railways is fulfilling its social obligation. This involves using environmentally friendly methods of production (or operation) and contributing to the greater good of society by reducing pollution.
Q6Exercises
A firm plans in advance and has a sound organisation structure with efficient supervisory staff and control system but on several occasion it finds that plans are not being adhered to. It leads to confusion and duplication of work. Advise remedy.
Solution
The problem described indicates that while the firm has strong Planning, Organising, Staffing, and Controlling systems in place, it is failing in execution. The symptoms of 'confusion and duplication of work' and plans 'not being adhered to' point towards a significant weakness in two key areas: Directing and Coordination.
Here is the advice and remedy for the firm:
1. Strengthen the Directing Function:
A sound plan and structure are useless if employees are not properly guided and motivated to implement them. The management needs to focus on the following aspects of directing:
- Effective Leadership: Managers must provide effective leadership to their subordinates. They need to influence and guide their teams to understand and commit to the plans.
- Clear Communication: There might be a communication gap. Management must ensure that plans, policies, and individual responsibilities are communicated clearly to all employees to avoid confusion.
- Motivation: The firm needs to assess its motivation strategies. Employees may not be adhering to plans because they are not sufficiently motivated. Management should use financial and non-financial incentives to encourage employees to perform according to the plan.
- Supervision: While the supervisory staff is stated to be 'efficient', their role in directing needs to be re-evaluated. They must actively oversee, guide, and instruct the workforce to ensure work proceeds as planned.
2. Emphasise Coordination as the Essence of Management:
The core problem seems to be a lack of coordination, which leads to confusion and duplication of work. Coordination ensures that the efforts of all individuals and departments are synchronised to achieve organisational goals.
- Integrate Departmental Efforts: The top management must make a deliberate effort to synchronise the activities of different departments. Regular inter-departmental meetings should be held to ensure that all units are working in harmony and not in isolation.
- Ensure Unity of Action: The management's task is to ensure that all actions are aimed at achieving the common goals set out in the plans. This will prevent different departments from pulling in different directions.
- Make Coordination a Responsibility of All Managers: Every manager, from top to bottom, must understand that coordination is their responsibility. They must consciously coordinate the efforts of their subordinates to avoid conflict and wastage of effort.
In conclusion, the remedy is to shift focus from just creating plans and structures to effectively implementing them through strong Directing and making Coordination the central thread that binds all activities together.
Q6Exercises
Ashita and Lakshita are employees working in Dazzling enterprises dealing in costume jewellery. The firm secured an urgent order for 1,000 bracelets that were to be delivered within 4 days. They were assigned the responsibility of producing 500 bracelets each at a cost of Rs 100 per bracelet. Ashita was able to produce the required number within the stipulated time at the cost of Rs 55,000 whereas, Lakshita was able to produce only 450 units at a cost of Rs 90 per unit. State whether Ashita and Lakshita are efficient and effective. Give reasons to justify your answer.
Solution
To determine whether Ashita and Lakshita are efficient and effective, we need to analyze their performance based on the definitions of effectiveness (completing the task on time) and efficiency (completing the task at minimum cost).
Ashita's Performance:
- Effectiveness: Ashita was assigned to produce 500 bracelets and she successfully produced the required number within the stipulated time of 4 days. Therefore, Ashita is effective.
- Efficiency: The standard cost was Rs 100 per bracelet, meaning the total standard cost for 500 bracelets should have been 500 x 100 = Rs 50,000. Ashita completed the task at a cost of Rs 55,000. Her cost per bracelet was Rs 55,000 / 500 = Rs 110. Since her actual cost is higher than the standard cost, Ashita is not efficient.
Lakshita's Performance:
- Effectiveness: Lakshita was assigned to produce 500 bracelets but was able to produce only 450 units. She failed to complete the task. Therefore, Lakshita is not effective.
- Efficiency: Lakshita produced each unit at a cost of Rs 90, which is less than the standard cost of Rs 100 per unit. She managed to produce at a lower cost. Therefore, Lakshita is efficient.
In conclusion, Ashita is effective but inefficient, while Lakshita is efficient but ineffective. For an organisation, it is important for employees to be both effective and efficient.