Nature and Significance of Management

Written and reviewed by Rohit Singh, Computer Science & Commerce faculty at UniDrill (MCA, Osmania University · 6 years teaching). Based on NCERT Business Studies Class XII, Chapter 1.

Who made sure the bus came on time?

Your school bus has a route, a driver, a conductor, a fuel budget and a timetable. Someone decided the route, someone hired the driver, someone checks if the bus is late and someone sorts out the problem when it is. None of them is driving the bus, yet without them the bus would not run. That quiet work is management, and it is the reason a group of people can achieve what none of them could do alone.

What management is

Management is the process of getting things done, effectively and efficiently, with and through other people, to achieve the goals of the organisation. It is needed in every kind of organisation: a factory or a school, a big firm or a small shop, one that earns a profit or one that serves a cause.

Effectiveness and efficiency. These two words are the first thing CUET tests, and the difference is simple.

Why a manager needs both. Neerja Bakery has a target of 1,000 loaves a day. If the bakers hit 1,000 by running costly extra shifts, the bakery is effective but not efficient. If it cuts costs by buying poor flour and customers stop buying, it is efficient on paper but not effective. A good manager aims for the target at the lowest cost, since high efficiency usually goes hand in hand with high effectiveness.

Pause and predict: a stationery shop cuts its electricity and staff cost to half, but because it now opens only three hours a day, sales fall far below its target. Efficient, effective, both or neither?

Check your answer: it saves cost (efficiency) but misses its sales target (so it is not effective). Cutting cost without reaching the goal is not good management.

Beyond the textbook. For the exam: effectiveness is the end result, efficiency is cost against output. In reality: management writers often put it as "efficiency is doing things right, effectiveness is doing the right things", and warn that a perfectly efficient method for the wrong goal is a waste. The one-line version helps you answer a case question in seconds.

Seven features of management

Every characteristic comes with a clue that shows up in case questions. Learn the clue, and you can spot the feature without reading the options.

Mini-case. Millet Munch Foods in Bengaluru noticed that customers were moving from fried snacks to healthier ones, so its managers launched a baked millet range. The clue is that the firm changed with its surroundings, which shows management as a dynamic function. When the same managers settle a quarrel between two packers, they are managing people. When they fix the order of tasks on the packing line, they are managing operations.

Objectives: what management is trying to achieve

Management serves three kinds of objectives, and NTA likes to slip one kind into the list of another.

Why they pull in different directions. A firm that wants profit may be tempted to cut pollution control, and an employee who wants a high salary may clash with the profit goal. Management has to balance them.

Mini-case. Clean Loop Recyclers runs a plastic recycling plant and trains local youth from low income families for jobs in it. Providing employment to such groups is a social objective. Covering its running cost from sales is survival. Opening a second plant is growth.

Why management is important

Management matters for five reasons, one for each of the following.

Art, science or profession?

This is a favourite assertion-reason topic. The answer is not one word, because management has features of all three, but it is both an art and an (inexact) science, and only an emerging profession.

Beyond the textbook. For the exam: management does not fully meet the conditions of a profession, because entry is not restricted, the association has no statutory backing and there is no binding ethical code. In reality: more and more firms prefer managers with an MBA or similar qualification, which is moving management towards a profession. Yet no law demands this, unlike for a doctor, lawyer or chartered accountant. Write the exam version in an assertion-reason answer.

Levels of management

Authority and responsibility form a ladder. Every organisation has three rungs, and CUET often hands you a job title and asks which level it belongs to.

Mini-case. At Sagar Garments, the managing director decides to open a new export division (top). The production manager converts that into targets and staffing plans for the stitching department (middle). The floor supervisor makes sure that each worker finishes a batch without defects and wastes no cloth (supervisory).

Functions of management: P-O-S-D-C

The same five functions run in every organisation, from planning at the start to controlling at the end, and they feed back into planning again.

The functions in one line: Planning → Organising → Staffing → Directing → Controlling → (back to planning)

Each of these functions has its own chapter, so here you only need to recognise them. For example, Planning comes next in this book.

Mini-case. Priya, the manager of a delivery firm, sets a target of 500 parcels a day (planning). She groups her riders into four zones (organising), hires six more riders and trains them (staffing), motivates the team with a bonus (directing), and at the end of the day compares parcels delivered with the target (controlling).

Coordination: the essence of management

Coordination is the process by which a manager synchronises the activities of different departments, such as purchase, production, sales and finance, so that they pull in the same direction. It is not a sixth function. It is the thread that runs through all five, beginning at planning and continuing till controlling, and that is why it is called the essence of management.

Characteristics of coordination. It integrates group efforts, ensures unity of action, is a continuous process, is all-pervasive (across departments and levels), is the responsibility of all managers, and is a deliberate function (it has to be done on purpose).

Why it is needed. Three reasons make it necessary: growth in the size of the organisation (more people with different goals), functional differentiation (each department builds its own objectives and policies, which may clash) and specialisation (specialists prefer to follow their own view).

Coordination versus cooperation. Cooperation is voluntary goodwill. Coordination is a deliberate effort by the manager to give that goodwill a direction.

Mini-case. At Anand Appliances, the sales team promises customers delivery in 5 days, the production team needs 12, and the purchase team has not ordered the parts. Everyone is working hard and is willing to help, which is cooperation, but the results are chaos. Only a manager who aligns the timelines of all three departments can fix it. That is coordination.

Pause and predict: can a company have excellent cooperation among employees and still suffer from poor coordination?

Check your answer: yes. Cooperation is only willingness. Without a manager aligning the tasks, timing and quality, willing people can still duplicate work or leave gaps.

Exam traps

60-second revision

Where this chapter connects

• Next: Principles of Management turns the general idea of management into the guidelines that Fayol and Taylor gave to managers.
• Functions in detail: Planning, Organising, Staffing, Directing and Controlling each expand one of the five functions.
• Environment link: Business Environment explains the outside forces behind the "dynamic function" feature.