MPOB – NOTE

MODULE-I
FOUNDATIONS OF MANAGEMENT

BY
SUJATA DAS
Asst. Prof HR
DEFINITION OF MANAGEMENT

Management is the process of planning, organizing, leading, and controlling the

activities of an organization to achieve its 1 goals effectively and efficiently. It
involves utilizing human, financial, and material resources to accomplish desired
outcomes.

Key Elements of Management

 Planning: Setting goals, objectives, and strategies for the organization.

 Organizing: Structuring the organization, allocating resources, and
assigning responsibilities.
 Leading: Motivating, inspiring, and guiding employees towards achieving
organizational goals.
 Controlling: Monitoring progress, evaluating performance, and taking
corrective actions.

NATURE OF MANAGEMENT

The nature of management encompasses several key aspects:

 Goal-Oriented: Management is fundamentally focused on achieving

specific objectives. These objectives can vary widely, from maximizing
profits in a business to providing quality healthcare in a hospital.
 Involves People: Management is inherently a social process. It deals with
people, their motivations, behaviors, and interactions within an
organization.
 Multi-disciplinary: Management draws upon knowledge and principles
from various fields, including psychology, sociology, economics, and
ethics.
 Dynamic and Evolving: The nature of management is constantly
changing due to factors like technological advancements, globalization,
and shifting societal values.
 Involves Decision-Making: Managers are constantly faced with
decisions, big and small, that impact the organization's direction and
performance.
 A Continuous Process: Management is not a one-time event, but rather an
ongoing cycle of planning, organizing, leading, and controlling.

SIGNIFICANCE OF MANAGEMENT

Management plays a crucial role in the success of any organization, regardless of

its size or industry. Here are some key reasons why management is significant:
 1. Achieving Organizational Goals: Effective management ensures that the
organization's goals are clearly defined and that resources are utilized
efficiently to achieve them.
2. Improving Efficiency and Productivity: By optimizing processes and
resource allocation, management can enhance the organization's efficiency
and productivity.
3. Developing and Motivating Employees: Good management practices
create a positive and motivating work environment, leading to increased
employee engagement and productivity.
4. Adapting to Change: In today's dynamic business environment, effective
management is essential for organizations to adapt to changing market
conditions and customer demands.
5. Building a Strong Corporate Culture: Management plays a vital role in
shaping the organization's culture, values, and ethical standards.
6. Social Responsibility: Effective management practices can help
organizations to be socially responsible and contribute positively to
society.

PRINCIPLES OF MANAGEMENT

The Principles of Management are fundamental guidelines that managers can follow to
effectively organize and run their businesses. These principles were first outlined by
Henri Fayol, a renowned French industrialist, in the early 20th century. While
some of these principles may seem outdated in today's rapidly changing business
environment, they still provide a valuable framework for effective management
practices.

Here are the 14 Principles of Management as outlined by Henri Fayol:

1. Division of Work: Specializing in a specific task or area of expertise can

lead to increased efficiency and productivity.
2. Authority and Responsibility: Managers should have the authority to
give orders and the responsibility to ensure that tasks are completed
effectively.
3. Discipline: Employees must adhere to the established rules and regulations
within the organization. Discipline is essential for a smooth-running
operation.
4. Unity of Command: Each employee should receive orders from only one direct
supervisor to avoid confusion and conflicting instructions.
5. Unity of Direction: All members of an organization should work towards
the same common goals and objectives.
6. Subordination of Individual Interests to General Interest: Individual
goals and ambitions should not overshadow the overall goals of the
organization.
 7. Remuneration: Employees should be fairly compensated for their work to
maintain their motivation and satisfaction.
8. Centralization: The degree to which decision-making power is
concentrated at the top of the organization should be determined based on
the specific needs and circumstances of the business.
9. Scalar Chain: A clear hierarchy or chain of command should be
established within the organization to ensure effective communication and
coordination.
10. Order: A proper place for everything and everything in its place. This
principle emphasizes the importance of organization and a well-structured
work environment.
11. Equity: Fair and impartial treatment of all employees is crucial for
maintaining a positive and productive work environment.
12. Stability of Tenure of Personnel: High employee turnover can disrupt
operations and negatively impact productivity. Efforts should be made to
retain qualified employees.
13. Initiative: Employees should be encouraged to take initiative and
contribute their ideas for improvement.

MINTZBERG'S 10 MANAGERIAL ROLES:

Interpersonal Roles

1. Figurehead: Representing the organization in a symbolic or ceremonial way.

o Example: Attending industry events, hosting client dinners.

2. Leader: Motivating and directing employees, building teams.

o Example: Conducting team meetings, providing feedback, setting
goals.

3. Liaison: Building and maintaining relationships with external

stakeholders.
o Example: Networking with other managers, attending industry
conferences.

Informational Roles
 4. Monitor: Collecting and analyzing information from both internal and
external sources.
o Example: Reading industry reports, attending conferences,
conducting market research.

5. Disseminator: Sharing information with employees within the organization.

o Example: Communicating company news, conducting team
meetings, sending emails.

6. Spokesperson: Communicating information about the organization to

external stakeholders.
o Example: Giving presentations to investors, conducting media
interviews, publishing reports.

Decisional Roles

7. Entrepreneur: Initiating and overseeing new projects and ventures.

o Example: Identifying new business opportunities, developing new
products or services, leading innovation initiatives.

8. Disturbance Handler: Responding to unexpected events and resolving

conflicts.
o Example: Handling crises, resolving disputes between employees,
dealing with unexpected challenges.

9. Resource Allocator: Allocating resources such as budget, personnel, and

equipment.
o Example: Approving budgets, allocating resources to projects,
making hiring decisions.

10. Negotiator: Representing the organization in negotiations with other

parties.
 o Example: Negotiating contracts with suppliers, negotiating salaries
with employees, representing the company in union negotiations.

These roles provide a comprehensive framework for understanding the diverse

responsibilities and activities that managers engage in to effectively lead and
manage their teams and organizations.

MANAGERIAL SKILLS

Managerial skills are the abilities and competencies that enable a manager to
effectively lead, guide, and support their team in achieving organizational goals.
These skills can be broadly categorized into three main areas:

1. Technical Skills:

 Specialized Knowledge: Expertise in a particular field or industry relevant

to the manager's role. For example, a marketing manager needs a strong
understanding of marketing principles, strategies, and tools.
 Functional Skills: Proficiency in specific job-related tasks, such as data
analysis, financial reporting, or software usage.
 Technical Proficiency: Ability to use and apply technology effectively in
their work, such as using project management software, conducting data
analysis, or utilizing communication tools.

2. Human Relations Skills:

 Communication: Effective verbal and written communication skills,

including active listening, clear and concise messaging, and the ability to
provide constructive feedback.
 Interpersonal Skills: Building strong relationships with team members,
colleagues, clients, and other stakeholders, fostering trust and
collaboration.
 Motivation: Inspiring and motivating team members to achieve their best,
recognizing and rewarding their efforts, and creating a positive and
engaging work environment.
 Conflict Resolution: Identifying and resolving conflicts effectively,
mediating disagreements, and fostering a harmonious and productive work
environment.
 Teamwork: Building and leading high-performing teams, delegating tasks
effectively, and fostering a collaborative and supportive team culture.
  Emotional Intelligence: Understanding and managing one's own
emotions and those of others, empathizing with team members, and
building strong emotional connections.

3. Conceptual Skills:

 Strategic Thinking: Thinking critically and strategically, analyzing

complex situations, and developing effective plans and strategies to
achieve organizational goals.
 Decision Making: Making sound and informed decisions, considering all
relevant factors, and assessing potential risks and rewards.
 Problem Solving: Identifying and analyzing problems, developing
creative solutions, and implementing effective solutions.
 Planning and Organizing: Setting clear goals and objectives, developing
action plans, and organizing resources effectively to achieve desired
outcomes.
 Vision and Innovation: Developing a clear vision for the team or
department, encouraging innovation and creativity, and adapting to
changing circumstances.

These managerial skills are essential for success at all levels of management, from
entry-level supervisors to senior executives. Continuous development and
improvement of these skills are crucial for personal and professional growth and
for building a successful and fulfilling career in management.

LEVELS OF MANAGEMENT

In most organizations, management is typically structured into three distinct

levels:

1. Top-Level Management
 TopLevel Management

 Responsibilities:
o Setting the overall strategic direction of the organization.
o Formulating major policies and plans.
o Representing the organization to the external world.
o Ensuring the organization's long-term survival and growth.
 Key Roles:
o Chief Executive Officer (CEO)
o Chief Operating Officer (COO)
o Chief Financial Officer (CFO)
o President
o Vice President
o Board of Directors

2. Middle-Level Management

MiddleLevel Management

 Responsibilities:
o Implementing the plans and policies set by top management.
o Coordinating and supervising the work of lower-level managers.
o Communicating information between top and lower levels of
management.
o Motivating and developing employees.
 Key Roles:
o Department Heads
o Regional Managers
o Plant Managers
o Division Managers
o Unit Heads

3. Lower-Level Management
 LowerLevel Management

 Responsibilities:
o Supervising and directing the work of frontline employees.
o Ensuring that daily operations run smoothly.
o Maintaining employee morale and productivity.
o Communicating with middle management about employee concerns
and performance.
 Key Roles:
o Supervisors
o Foremen
o Team Leaders
o Section Chiefs

Key Points:

 Each level of management plays a critical role in the success of the

organization.
 The specific roles and responsibilities of managers at each level may vary
depending on the size and structure of the organization.
 Effective communication and collaboration between different levels of
management are essential for achieving organizational goals.

EVOLUTION OF MANAGEMENT

1. Classical Approach

 Scientific Management (Frederick Winslow Taylor): Focuses on

increasing efficiency and productivity through scientific methods, work
standardization, and specialized labor.
o Key Concepts: Time and motion studies, differential piece-rate
system, scientific selection and training of workers.
  Administrative Management (Henri Fayol): Emphasizes the overall
organization and functions of management, identifying key managerial
principles and functions.
o Key Concepts: 14 principles of management (e.g., unity of
command, division of labor, scalar chain), functions of management
(planning, organizing, commanding, coordinating, controlling).
 Bureaucratic Management (Max Weber): Advocates for a hierarchical
structure with clear rules, regulations, and lines of authority to ensure
efficiency and fairness.
o Key Concepts: Hierarchy, division of labor, formal rules and
regulations, impersonality, merit-based selection.

2. Neo-Classical Approach (Behavioral Approach)

 Focus: Human relations, motivation, and individual behavior within

organizations.
 Key Figures:
o Elton Mayo: Hawthorne studies, highlighting the importance of
social factors and employee morale on productivity.
o Abraham Maslow: Hierarchy of needs, emphasizing the
importance of fulfilling human needs for motivation.
o Douglas McGregor: Theory X and Theory Y, contrasting
assumptions about employee motivation.

3. Modern Approaches

 Systems Approach: Views organizations as complex systems with

interconnected parts that interact with the environment.
o Key Concepts: Open and closed systems, subsystems, feedback
mechanisms, synergy.
 Contingency Approach: Recognizes that there is no one best way to
manage, and that the most effective approach depends on the specific
situation and context.
o Key Concepts: Situational variables, flexibility, adaptability.
 Quantitative Approach: Utilizes mathematical and statistical methods to
aid in decision-making and problem-solving.
o Key Concepts: Operations research, management science,
quantitative modeling.

4. Contemporary Approaches

 Globalization and Diversity: Managing multicultural teams and

navigating global markets.
  Technological Advancements: Leveraging technology for innovation,
communication, and decision-making.
 Sustainability and Corporate Social Responsibility: Balancing
economic growth with environmental and social concerns.
 Knowledge Management: Capitalizing on organizational knowledge and
intellectual capital.
 Agile and Lean Management: Adapting to change and improving
efficiency through flexible processes.

MANAGEMENT AS A SCIENCE

While management is often considered both a science and an art, there are several
aspects that support its classification as a science:

 Systematic Body of Knowledge: Management has a well-defined set of

principles, theories, and concepts that have been developed and refined
over time through research and observation. These principles, such as those
outlined by Henri Fayol, provide a framework for understanding and
managing organizations.
 Principles and Laws: Many management principles, such as the principle
of unity of command or the scalar chain, are considered universal and
applicable across various organizations and industries. These principles
can be studied, understood, and applied in a systematic manner.
 Cause-and-Effect Relationships: Management involves identifying
cause-and-effect relationships between different variables, such as
leadership styles and employee motivation, or resource allocation and
organizational performance. By understanding these relationships,
managers can make more informed decisions and predict potential
outcomes.
 Objectivity: While human behavior and organizational contexts can be
complex, management strives for objectivity in its approach. Data-driven
decision making, performance measurement, and the use of analytical tools
help to minimize subjectivity and bias.
 Continuous Research and Development: Management is a dynamic field
with ongoing research and development. New theories, models, and best
practices are constantly being developed and refined based on empirical
evidence and real-world experiences.

However, it's important to acknowledge that management also has characteristics

of an art:

 Human Element: Managing people involves understanding human

behavior, motivation, and interpersonal dynamics, which can be highly
subjective and influenced by individual personalities and cultural factors.
  Creativity and Innovation: Effective management often requires
creativity, innovation, and the ability to adapt to changing circumstances.
These skills are often considered artistic in nature.
 Intuition and Judgment: While data and analysis are important,
experienced managers often rely on their intuition and judgment to make
decisions, especially in complex or ambiguous situations.

FUNCTIONS OF MANAGEMENT

The functions of management are the essential activities that managers perform
to achieve organizational goals. While there are various frameworks, the most
widely accepted model includes five key functions:

1. Planning: This involves defining organizational goals, establishing

strategies to achieve them, and developing detailed plans of action. It
includes forecasting, setting objectives, and determining the resources
needed to accomplish goals.

Planning in Management

2. Organizing: This function focuses on creating a structure for the

organization, allocating resources, and assigning tasks and responsibilities
to individuals or teams. It involves designing the organizational chart,
establishing departments, and defining roles and reporting relationships.
 Organizing in Management

3. Staffing: This involves recruiting, selecting, training, and developing

employees to fill the roles required to achieve organizational goals. It
includes job analysis, recruitment, selection, orientation, training, and
performance appraisal.

Staffing in Management

4. Leading: This function involves motivating, inspiring, and guiding

employees towards achieving organizational goals. It includes
communication, motivation, leadership, and conflict resolution.
 5. Controlling: This function involves monitoring progress towards goals,
comparing actual performance with planned performance, and taking corrective action
1
as needed. It includes establishing performance standards, measuring
actual performance, comparing actual performance with standards, and 2
taking corrective action.

Controlling in Management

These functions are interconnected and interdependent, and effective

management requires a balance and integration of all five.

What is Management?
Management is how businesses organize and direct workflow, operations, and
employees to meet company goals. The primary goal of management is to create
an environment that empowers employees to work efficiently and productively.
A solid organizational structure guides employees and establishes the tone and
focus of their work.
Managers are involved in implementing and evaluating these structures. As a
manager, you may be responsible for doing any of the following tasks:
 Create goals and objectives
 Create schedules
 Develop strategies to increase performance, productivity, and efficiency
 Ensure compliance with company policies and industry regulations
 Mentor employees
  Monitor budgets, productivity levels, and performance
 Resolve customer problems
 Train staff
What is Administration?
Administration involves overseeing an organisation’s day-to-day operations,
ensuring they run smoothly by implementing policies and decisions set by
management. This entails tasks like managing schedules,
facilitating communication, optimizing resource allocation, and resolving issues
that arise. Administrators play a vital role in policy implementation, making
certain that guidelines are followed and organisational goals are pursued. Their
coordination efforts harmonize different teams and individuals, while their
adaptability enables them to respond effectively to changing circumstances.
While management focuses on strategic direction, administration handles the
practical and operational aspects, jointly contributing to an organisation’s
overall functionality and achievement. In smaller settings, these roles may
merge, whereas larger organisations might have separate departments or
individuals dedicated to each function.

Difference between Management and Administration

Basis Management Administration

Administration
Management encompasses the
involves overseeing
process of strategically planning,
an organisation’s day-
organizing resources,
to-day operations,
coordinating efforts, directing
ensuring they run
activities, and maintaining
smoothly by
control within an organization to
implementing policies
achieve its intended goals and
and decisions set by
objectives.
Meaning management.

Management is primarily Administration

concerned with planning, focuses on
organizing, directing, and establishing policies,
controlling resources to achieve guidelines, and
Focus organizational goals. procedures to ensure
Basis Management Administration

the smooth operation

of the organization.

Administration is a
Management is a broader term narrower term, often
that encompasses various associated with the
functions such as planning, implementation of
organizing, staffing, leading, and policies, rules, and
controlling. regulations set by the
Scope management.

Administrator is the
Manager is the key person in the
Key key person in the case
case of management.
Person of administration.

Administrators make
Managers make strategic decisions related to
decisions related to setting implementing
goals, formulating plans, and policies, procedures,
Decision- allocating resources. and guidelines set by
Making the management.

It is more concerned
with establishing a
It is more dynamic, action-
stable framework,
oriented, and focused on
ensuring adherence to
achieving objectives through
rules, and maintaining
efficient resource utilization.
order within the
Nature organisation.

Administrators tend to
Managers focus on both short- have a longer-term
term and long-term goals, with an perspective, aiming to
emphasis on adapting to establish enduring
Time changing circumstances. structures and
Horizon processes.
 Basis Management Administration

Administration
involves establishing
Management involves guiding, policies, rules, and
directing, and leading employees regulations that guide
toward achieving organizational the actions of
goals. employees and ensure
organisational
Function efficiency.

The role of
The role of management is
administration is
executive in nature.
Role decisive in nature.

Functions of a manager

 Managers have several functions within an organization. You'll usually see

these functions divided into four interconnected groups. Understanding
them can help you identify your strengths and areas of need so that you can
choose the proper training to improve your skills.
Planning
 The first function of a manager is to set goals. These goals may be for
individual employees, departments, or the entire organization, depending on
the manager's level of responsibility. In addition to setting goals, managers
often develop action items along with strategies and resources to complete
tasks and meet goals.
 Organizing
 Meeting organizational goals requires putting the right people in the right
places. Managers can play an important role in choosing workers for
positions and projects. Knowing how to group people and help them build
relationships often significantly affects how well the group works together.
Sometimes managers need to train employees for specific tasks to ensure
they have the knowledge and skills they need to succeed.

Staffing

Staffing is the process of finding, selecting, and developing employees for a

company. It's an important human resource (HR) function that helps organizations
acquire, deploy, and retain a workforce. The goal of staffing is to fill roles with
suitable candidates who understand the company's goals and match its culture.

Staffing includes:

 Recruiting employees

 Screening applicants

 Conducting interviews

 Making hiring decisions

 Managing employee records

 Onboarding new employees

 Providing training and development

 Managing employee terminations and layoffs

Directing
Directing in management is the process of guiding and supporting employees to
achieve organizational goals. It's one of the key management processes, along
with planning, organizing, staffing, and controlling.
Directing involves:
 Providing guidance: Managers provide instructions, counseling, and
support to employees.
 Motivating: Managers motivate employees to achieve goals.
 Overseeing: Managers oversee and monitor employees' performance.
 Communicating: Managers maintain communication with employees.

Controlling
Controlling is a systematic exercise which is called as a process of checking
actual performance against the standards or plans with a view to ensure adequate
progress and also recording such experience as is gained as a contribution to
possible future needs.
Characteristics of Controlling
 Controlling is an end function – It is a function, which comes once the
performances are made in conformity with plans.
 Controlling is a pervasive function – It is a pervasive function because it is
performed by managers at all levels and in all type of concerns.
 Controlling is backward as well as forward looking – Effective control is
not possible without past being controlled. Controlling always look to
future so that follow-up can be made, whenever required.
 Controlling is a dynamic process – Controlling requires taking revival
methods, changes have to be made wherever possible. Focus has to be on
controlling all the time, which makes it a dynamic function.
 Controlling is related with Planning – Planning and Controlling are two
inseparable functions of management. Without planning, controlling is a
meaningless exercise and without controlling, planning is useless. Planning
presupposes controlling and controlling succeeds planning.
3. Objectives
 To identify the actual progress of the work in the company.
 To facilitate R&D department to improve efficiency.
 To facilitate coordination in the organization.
 To measure the actual performance with the set standard.
 To calculate the actual quantity and quality of the product.
 To eliminate wastage of resources.
 To meet the deadline of the projects.
4. Advantages of Controlling
 It helps plans to be implemented effectively.
  Controlling facilitates coordination in organizational functioning, by
reducing diversity.
 It encourages high morale on the part of employees.
 It ensures order, discipline and obedience on the part of subordinates.
 Controlling helps the organization to preserve and promote its distinct
identity against environmental changes.
 It makes effective use of physical and human resources, for achieving
organizational goals.
 It enables organization to keep watch on external environmental for better
control over it.
 Control promotes integration between Short Term Goals and Long-term
Objectives Corporate Goals and Departmental Goals.
 It saves time and energy and helps in timely corrective action by the
manager.
 Control allows managers to concentrate on important tasks.
 It also allows better utilization of the managerial resource.
Steps in Controlling Function
Steps in Controlling Function include establishing standards, measuring
performance, comparing actual performance with standard performance and
finally taking remedial measures.

Figure : Steps in Controlling Function

1. Establishment of Standards – Standards are the targets required to be achieved.
Controlling becomes easy through establishment of these standards because
controlling is exercised on the basis of these standards. They are the criterions for
judging the performance. Standards generally are classified as

  Measurable or Tangible Standards- Those standards which can be
measured and expressed are called as measurable standards, such as
cost, output, expenditure, time, profit, etc.
 Non-Measurable or Intangible Standards –These cannot be
measured monetarily, such as performance of a manager, deviation
of workers, their attitudes towards a concern. These are called as
intangible standards.
2. Measurement of Performance – Deviations are found out by comparing
standard performance with the actual performance. Performance levels are
sometimes easy to measure and sometimes difficult. Measurement of tangible
standards is easy as it can be expressed in units, cost, money terms, etc.
Performance of a manager cannot be measured in quantities. It is also sometimes
done through various reports like weekly, monthly, quarterly, yearly reports. It
can be measured only by their-

Attitude Morale to Response towards Communication with

work physical environment the superiors.

3. Comparison of Actual with Standard Performance –By comparing the actual

with standard, deviations are identified. Manager has to find out whether the
deviation is positive or negative or whether the actual performance is in
conformity with the planned performance. The managers have to exercise control
by exception.
4. Taking Remedial Actions – Once the causes and extent of deviations are
known, the manager has to detect those errors and take remedial measures for it.
There are two alternatives as follows:

Taking corrective measures for In the end, if the actual performance is

deviations which have occurred not in conformity with plans, the
targets are revised.

7. Types of Control
Figure : Types of Control
1. Post-Action-Control/Feedback Control – This process involves collecting
information about a finished task, assessing that information and improvising the
same type of tasks in the future. The results of the completed activity are
compared with pre-determined standards and if there are any deviations,
corrective action can be taken for future activities. For example, a restaurant
manager may ask the customer about the quality and taste of food ordered by
him/her and take suggestions to improve the meals.
2. Concurrent Control – It is also called real-time control. It checks any problem
and examines it to take action, before any loss is incurred.
3. Steering Control – The key feature of this control is the capability to take
corrective action, when the deviation has already taken place, but the task has not
been completed. The big advantage of steering control is that corrective actions
can be taken early.
4. Yes/No Control – This control is designed to check at each check point,
whether the allow activity to proceed further or not. These controls are necessary
and useful where a product passes sequentially from one point to another, with
improvements added at each step along the way. These controls stop errors from
being compounded. Safety checks and legal approvals of contracts, prior to
approval are examples of yes/no controls.
5. Predictive/ Feed Forward Control – This type of control helps to foresee
problem ahead of occurrence. Therefore, action can be taken before such a
circumstance arises.
In an ever-changing and complex environment, controlling forms an integral part
of the organization.
Techniques of Controlling
Techniques of control are being used by managers since long and there are two
categories of controlling namely the traditional techniques and the modern
techniques.
Traditional Techniques
 Personal Observation
 Budgeting
  Break-Even Analysis
 Financial Statements
 Statistical Control
 Self Control
8.2 Modern Techniques
 Management Information System (MIS)
 Management Audit
 Responsibility Accounting
 Program Evaluation and Review Technique (PERT) and Critical Path
Method (CPM)
 Balanced Card
 Ratio Analysis
 Economic Value Added (EVA)

Levels of management
In many organizations, management falls into one of three levels: top, middle,
and low. Managers in smaller companies may fill roles at more than one level,
while larger organizations may have several managers within each level.
 Top: Top-level management typically has an administrative role, and their
decisions affect the entire organization even though they sometimes aren’t
involved in the day-to-day operations. They may have the title of chief
executive officer (CEO) or serve on the board of directors.
 Middle: You find people with executive roles at the middle management
level. They work with both top-level management and supervisors to help
workers meet objectives and boost the company's productivity. At this
level, they may be called regional managers or general managers.
 Low: The final level of management often has a supervisory role. These
managers have titles like shift supervisor, branch manager, or team leader.
They work with individuals and teams to meet goals determined by upper
management. They typically have less influence over company policy
 compared to the other management levels, but the most interaction
with direct reports.
What is Decision Making in Management?

Decision making in management is the process of making a choice between two

or more options. This involves evaluating the pros and cons of various choices
and choosing the best option to achieve a desired outcome. In management
decision making is about acting in a way that meets organizational goals and
objectives.

For example, a business manager may decide to invest in marketing to attract

new customers. This decision could involve analyzing the costs, benefits, and
risks involved with each possible course of action and choosing the best course
of action for the organization.

Management decision is an important part of managing any organization. It

allows managers to set goals and figure out what actions are needed to meet
those goals, and evaluate whether those actions are working as intended.
Management decision meaning refers to managers guiding their organizations
down the right path toward success.
Characteristics of Decision Making in Management

Business Jargons

1. Rational-thinking

Rational thinking is a process in managerial decision making that helps us to

make sound decisions. It involves systematically analyzing options and
choosing the best course of action based on logic and evidence. To think
rationally, we must first identify our goals and objectives.

2. Process

Many people view decision making as a cold, rational process. However, there
is much more to it than simply choosing the most logical option. In reality,
management decision making is influenced by a variety of factors, both
conscious and unconscious. For example, our emotions play a role in the
decisions we make, as do our personal values and beliefs.

3. Selective

A key characteristic of managerial decision making is that it is selective. That

is, deciding involves picking the best options. There are many factors that
influence what gets selected, including the clarity of the options, the relevance
of the criteria, and weighing the various factors.
4. Purposive

A purposive approach to decision making is one that is based on the specific

goals and objectives of the individual or organization. This type of decision
making takes into account the desired outcome of the decision, and considers
all of the available options in order to select the best possible course of action.

5. Positive

Decision making process in management is an essential skill in any area of life,

whether you're choosing what to eat for lunch or deciding which company to
work for. While there are many different approaches to management decision
making, there are some common characteristics that tend to lead to positive
outcomes.

6. Commitment

If you want to make successful decisions, it is crucial that you have

commitment. This means having the drive to see the decision through, even
when it gets tough. It also means being able to defend your decision to others,
even if they do not agree with you.

7. Evaluation

Evaluation is a key characteristic of good decision making. This involves

considering all of the options and weighing their pros and cons before making
a choice. It is important to be as objective as possible when evaluating the
different options, and to look at the situation from all angles.

What is Decision Making Process in Management?

Decision making in management is the process of choosing among alternatives.
It involves considering various factors, assessing the costs and benefits of each
option, and making a decision that takes these factors into account. The goal of
any decision-making process is to reach a conclusion that is as informed as
possible given the available information.
When a person is faced with a challenging or difficult situation, this can force
them to make a choice that may not be in their best interest. This can lead to poor
decision making and outcomes. For this reason, it is important to understand the
features of decision making and how the process can be improved.

Example of Decision Making Process

Let us check the decision-making process in management with examples.
1. Establishing Objectives
Establishing objectives is among the crucial decision-making steps in
management. Without clear objectives, it can be difficult to make effective
decisions that will help the organization meet its goals. Establishing objectives
involves setting specific goals that need to be achieved within a certain
timeframe.
For example, if you are the CEO of an e-commerce start-up with your business
expanding, you would want to hire the right employees for various roles. Firstly,
you would have to establish your objectives regarding which parts of your
business you would need to hire new people.
2. Identify the Decision
The next important step in the decision-making process in management is
identifying the problem that needs to be addressed. Once the problem has been
identified, the manager will gather information about possible solutions. This
may involve consulting with others, doing research, or running simulations. After
weighing the pros and cons of each option, the manager will choose the course of
action that they believe is most likely to succeed.
For example, after establishing the objectives regarding which parts of your
business need new recruits, you would have to identify the course of action with
others to recruit the ideal employees for the various job roles.
3. Gather Appropriate Information
This process of gathering information is known as information gathering. The
different sources of information that managers can use include surveys,
interviews, focus groups, observation, and secondary data sources such as articles
and reports. After gathering this information, managers must then analyze it to
determine which option is best.
For example, after identifying the course of action for the new recruits, you, along
with your team, have to gather proper information about the various hiring trends
and how to recruit the ideal talents.
4. Identify the Alternatives
One of the most important aspects of the decision-making process in management
is identifying the alternatives. Without knowing what your options are, it can be
difficult to make an informed decision. There are a number of different ways to
identify the alternatives, but some of the most common methods include
brainstorming, research, and consultation.
For example, after gathering the appropriate information on how to recruit the
ideal talents, identify what alternatives you can offer to attract talents. Like, can
you offer remote working or a hybrid working model?
5. Weigh the Evidence
When we define decision making in management One key step in this process is
known as 'weighing the evidence'. This simply means taking the time to consider
all of the available information before making a final decision. This can include
things like market research, financial data, and even gut instinct. By taking the
time to weigh the evidence, managers can make better-informed decisions that
are more likely to lead to success.
For example, after identifying what alternatives you can offer to attract new
recruits, consider all the options to understand which would be the most profitable
for your business. For this, you can take insights from market research, financial
data, and even gut instinct.
6. Choose Among the Alternatives
One of the most important decisions that a manager has to make is which
alternative to choose. There are multiple ways to approach this, such as by first
considering all available alternatives, then assessing each against an explicit set
of criteria. Finally, choosing one alternative over another could depend on other
factors such as political considerations and the influence of stakeholders.
For example, after considering all the alternatives and research regarding hiring
new recruits, choose the alternative which is the most profitable for your business.
7. Take Action
There are many approaches to decision making, but one of the most popular is
the "take action" approach. This approach involves taking decisive action in
response to a problem, without overthinking or second-guessing yourself. While
this approach can lead to quick results, it also carries the risk of making impulsive
decisions that may not be in the best interest of the company.
For example, after choosing the most profitable ways to hire new talents, take the
course of action of searching and interviewing the individuals.
8. Review the Decision
Finally, after a decision has been made, it is important to review the results and
make any necessary adjustments.
For example, after hiring the new recruits, review the whole process to see where
you can make some changes to make the process more efficient.
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Training Course Online
Decision Making Styles in Management
1. Psychological
Psychological decision-making styles tend to be more creative and flexible, as
they allow for gut instinct to play a role in the process. However, this style can
also lead to impulsive decisions that are not well thought out.
2. Cognitive
Among the many decision-making styles, one of the most popular is the cognitive
style. This involves making decisions based on logic and reasoning, rather than
intuition or emotion. When using cognitive style, it is important to consider all of
the available information before coming to a conclusion. This can sometimes
mean taking a long time to make a decision, but it also means that you are more
likely to make a sensible choice.
3. Normative
Normative decision making in project management is a style of decision making
that is based on sticking to established rules and procedures. This type of decision
making is often used in situations where there is little time for deliberation and
the stakes are low.
Techniques of Decision Making in Management
1. SWOT Analysis
One popular decision making a step in management is known as SWOT analysis.
This involves identifying the strengths, weaknesses, opportunities, and threats
associated with a particular decision. By taking all of these factors into account,
individuals can make informed and effective choices.
2. Marginal Analysis
A popular technique is known as marginal analysis. It involves weighing the costs
and benefits of each option to choose the one that will create the greatest value.
 Strengths: Marginal analysis forces you to think beyond the immediate
consequences of your actions. It can help you make better decisions
because you will consider how your actions affect other areas of your life.
 Weaknesses: It is time-consuming. If you're trying to make a decision
quickly, thinking about all the indirect costs and benefits can slow you
down. This analysis can sometimes lead to paralysis by analysis. It happens
when people get so caught up in thinking about all the possible costs and
benefits that they never actually make a decision.
 Opportunities: Marginal analysis is that it can help you to identify
opportunities that you might otherwise miss. It is because the process of
thinking about indirect costs and benefits helps you see the world
differently. For example, when considering whether to buy a new car, you
might not immediately think about the environmental impacts of driving.
But if you consider the indirect costs and benefits of car ownership, you
might decide that buying a hybrid or an electric car is better for you and
the planet.
 Threats: Marginal analysis only considers the incremental changes
associated with a particular decision, and it does not take into account the
other factors that may be affected by that decision. The analysis can be
misleading if not used correctly, and this is because it only considers
changes in absolute terms without taking into account the relative size of
those changes.
3. Pareto Analysis
Pareto analysis is a decision-making technique that can be used to identify the
most important factors in a given situation. Named after Italian economist
Vilfredo Pareto, the technique is based on the principle that 20% of the causes
will produce 80% of the results.
  Strengths: It is relatively simple to understand and use, meaning that it can
be applied in a variety of settings with minimal training. Pareto Analysis is
an objective method - it relies on data rather than subjective opinion -
which increases its credibility in the eyes of decision-makers. The analysis
is flexible and can be adapted to a wide range of problems and
organizations.
 Weaknesses: It only looks at cause-and-effect relationships and does not
consider other factors that may be important. Identifying all of the possible
causes of a problem can be difficult, and some causes may be more
important than others. Pareto analysis relies on statistical assumptions that
may not always be accurate.
 Opportunities: It can help you focus your efforts on the most promising
areas. Helps you prioritize opportunities so that you can allocate your
resources more effectively. Also, it can help you track your progress over
time and make necessary adjustments to your strategy.
 Threats: It is important to ensure that the data you are using is accurate and
representative of the overall population. Pareto analysis can sometimes be
biased towards more extreme outcomes. This analysis does not account for
all possible factors that could impact a decision.
4. Decision Matrix
Finally, the decision matrix is a tool that can be used to compare different options
side-by-side. By using these techniques, individuals can be sure that they are
making sound decisions that will lead to positive outcomes.
 Strengths: It forces you to carefully consider all of the options and to weigh
each one against the criteria. It can help ensure that you do not make a
decision based on emotion or instinct. Can help prevent you from
becoming overly attached to any option, as you are forced to consider each
option objectively. It can provide a clear and concise way to communicate
your decision-making process to others.
 Weaknesses: One issue is that the criteria used to evaluate the options can
be subjective, and it can lead to different people coming to different
conclusions based on the same data. Another potential problem is that all
options may not be known when the decision matrix is created, leading to
inaccurate or incomplete analysis.
  Decision matrices can be time-consuming to create and require a
significant amount of data, making them impractical for use in situations
where time is limited, or data is scarce.
 Opportunities: The ability to make better decisions by organizing and
ranking options.
 Ability to see the possible outcomes of each option.
 The ability to compare options side-by-side.
 Ability to quickly identify the best option.
 Threats: The process of creating a matrix can be time-consuming and may
require input from multiple stakeholders. The results of a decision matrix
are only as good as the data that goes into it, and the final results will be
misleading if the assumptions or inputs are inaccurate. Decision matrices
can create a false sense of precision, leading to overconfidence in the
results.

Types of Decision Making in Management

Let's explore some types of managerial decision making.
1. Routine and Basic Decision-making
Some decisions are more complex and require more thought. For instance, you
may need to decide what to wear to a job interview or how to handle a difficult
customer at work. In these situations, it is important to take the time to carefully
consider your options before making a decision. Basic decision-making skills
involve considering the potential consequences of each option and choosing the
one that is most likely to lead to the desired outcome.
2. Personal and Organizational Decision-making
Decision making is a key component of both personal and organizational success.
When making decisions, it is important to consider all of the potential options and
their consequences. In some cases, there may be a clear best choice, while in
others, the decision may be more difficult. However, the ability to make sound
decisions is essential for both individuals and organizations.
3. Individual and Group Decision-making
Individual decision-making process in project management typically occurs when
the stakes are low and the impact will be limited to a single person. Group
decision making is necessary when the stakes are high or the impact will be felt
by multiple people. In general, group decision making is more effective than
individual decision making because it allows for a greater diversity of
perspectives and more thorough deliberation.
4. Programmed and Non-Programmed Decision-making
Non-programmed decisions making in operation management are unique and not
repetitive. Typically, they are made in response to an unforeseen event or
opportunity. Programmed decisions, on the other hand, are routine and often
based on established rules or procedures. Because they are more predictable,
programmed decisions are typically less risky and easier to make. However, non-
programmed decisions often require more creativity and judgment, and can be
more difficult to reverse if they turn out to be wrong.
5. Policy and Operating Decision-making
Policy and operating decision making are two important aspects of any business.
Policy decisions are made at the strategic level and focus on long-term issues,
such as the overall direction of the company. Operating decisions, on the other
hand, are made at the operational level and focus on short-term issues, such as
which products to produce and how to staff the production process.
6. Tactical and Strategic Decision-making
This is an essential type of managerial decision making. Tactical decision making
is important because it helps organizations to respond quickly to changes in the
environment. However, too much emphasis on tactical decision making can lead
to a lack of focus on long-term goals. Strategic decision making is important
because it helps organizations to establish a clear direction and make informed
choices about resource allocation. Both tactical and strategic decision making are
necessary for an organization to be successful.
7. Planned and Unplanned Decision-making
There are two types of decision making in management: planned and unplanned.
Planned decisions are those that are made in advance, after considering all the
options and their possible outcomes. Unplanned decisions, on the other hand, are
those that are made on the spot, without any prior consideration. Both types of
decision making in management have their own advantages and disadvantages.
8. Organizational, Departmental, and Interdepartmental Decision-making
Organizational type of managerial decision making is the process of identifying
and choosing the best course of action to achieve organizational goals. It includes
both formal and informal methods of decision making, and it occurs at all levels
of an organization. This is one of the managerial decision-making examples that
managers have to be great at.
Interdepartmental decision making is the process of identifying and choosing the
best course of action to achieve interdepartmental goals. It occurs at all levels
where two or more departments interact.
Organizational, departmental, and interdepartmental types of managerial
decisions making are all important aspects of an organization's operations, and
each type of decision making has its own benefits and challenges.
Difficulties in Decision Making Process
Any decision-making model in management made by an individual or
organization has the potential to be difficult. There are many factors that can
contribute to difficulty in decision making in principles of management, such as
unclear objectives, lack of information, and emotional attachments. Here are five
of the most common difficulties that can arise during the decision-making
process:
1. Avoiding Discomfort: Without clear and specific objectives, it can be
difficult to decide which course of action to take. This is often a problem
when organizations are facing new challenges or opportunities.
2. Consultation Ambiguity: Not having enough information about a situation
can make it difficult to identify all of the possible options and their
potential consequences. This can lead to decisions that are based on gut
feeling or incomplete data.
 3. Blind Spot: When individuals or groups have strong emotional attachments
to an issue, they may find it difficult to be objective in their decision
making. This can lead to decisions that are driven by personal biases rather
than what is best for the organization as a whole.
4. Indecisive: When multiple people are involved in the decision-making
model in management, group dynamics can complicate matters.
disagreements over objectives, differing opinions on the best course of
action, and power struggles can all contribute to difficulty in reaching a
decision.
5. Group-thinking: Sometimes, decisions must be made quickly, without
adequate time for careful consideration. This can lead to rushed decisions
that may not be well thought out or optimal.
Frequently Asked Questions (FAQs)
1. Why is decision making important in management?
Decision-making is perhaps the most important component of a manager's
activities. It plays the most important role in the planning process.
2. What are the 7 C's of decision-making?
The 7 C's of decision making are Communication, Conviction, Common Sense,
Composition, Counsel, Circumstance, and Choice.
3. What are the 5 elements of decision making?
The five steps involved in making a decision include the following:
1. Clarify the question asked
2. Gather all information on the question
3. Evaluate all the options gathered
4. Act on the final decision
5. Review your results
CONTRIBUTIONS IN THE FIELD OF MANAGEMENT
1.Explain about the contribution of Michael Porter in the field of
management?
Michael Porter is a Harvard Business School professor and businessman who has
made many contributions to management, including:
 Analytical tools
Porter's work has created analytical tools that help managers, business schools,
and public policy makers, including the five-forces analysis, the value chain, and
generic strategies.
 Strategic management
Porter's work integrated strategic management and industrial organization
economics, elevating strategic management to an academic discipline.
 Competitive advantage
Porter's insights and models help organizations identify competitive advantages
and achieve long-term growth and profitability.
 Economic development
Porter's work has contributed to economic development policymaking at the
national and regional level.
 Industry history
Porter's work emphasizes the importance of studying industry histories to gain
insights.
 Strategic groups
Porter's approach analyses strategic groups instead of entire industries.
 Stage of development
Porter's approach considers an industry's stage of development in policy
decisions.
 Differentiation
Porter's differentiation strategy is when a firm seeks to be unique in its industry
by selecting one or more attributes that buyers value.
2.Explain about the contribution of Peter F. Drucker in the field of
management?
Peter Drucker is known as the "Father of Modern Management" for his many
contributions to the field, including:
 Management by Objectives (MBO)
Drucker's framework for managers and employees to work together to set and
achieve goals. MBO is still relevant today and has helped many organizations
save time and money.
 Decentralization
Drucker believed that businesses should be structured more flat and
decentralized, rather than centralized.
 Customer focus
Drucker emphasized the importance of customer needs and satisfaction as the
driving force behind a business's success.
 Employee treatment
Drucker believed that employees should be treated as assets, not expenses, and
that they should be valued and respected.
 Outsourcing
Drucker advocated for outsourcing activities that aren't essential to the main
business model.
 Soft skills
Drucker emphasized the importance of soft skills, such as empathy and social
responsibility, long before they were widely respected.
 Knowledge work
Drucker recognized the growing importance of knowledge work and intellectual
capital.
 Management as a liberal art
Drucker moved management away from being a purely technical field, and
instead emphasized the importance of management as a liberal art. Drucker's
ideas and insights continue to inspire the world today, and many of his concepts
are still relevant.
3.Explain about the contribution of C.K Prahalad in the field of
management?
Prahalad (1941-2010), one of the world's most influential business thinkers and
one of the most beloved teachers at the University of Michigan, had a huge impact
on business and business education around the world. He created the base of the
pyramid idea and changed the way the world viewed India's economic potential.
Core competence
Prahalad's theory on core competence helped organizations refocus on their core
competencies instead of getting distracted by other business ideas.
 The base of the pyramid
Prahalad's idea of the "base of the pyramid" changed the way people viewed
India's economic potential and how to eradicate poverty through profits. He
believed that poor people should have real power in the marketplace, not just be
patronized.
 Customer relations
Prahalad's corporate strategy encouraged top managers to listen to customers as
the foundation for their businesses.
 Leadership
Prahalad believed that leadership was about having moral direction, mobilizing
people, and making them achieve their best.
 Co-creation
Prahalad believed that organizations and consumers could work together to create
better solutions for customers.
 Books
Prahalad wrote and co-wrote several bestsellers, including The Core Competence
of the Corporation, Competing for the Future, The Future of Competition, The
Fortune at the Bottom of the Pyramid, and The New Age of Innovation.

4.Explain about the contribution of Bernand in the field of management?

Chester Barnard (1886-1961) ,Barnard's management theories are built around
the concept of acceptance theory. This theory states that in order for businesses
to be successful, employees must respect the authority of their managers.
Managers must have enough perceived authority to be able to give legitimate
orders. He was a management theorist who developed principles that included:
 Acceptance theory of authority
Barnard believed that authority comes from the bottom up, and that a manager's
authority is based on the acceptance of their right to give orders. He believed that
power is only confirmed when it is accepted by the person it is addressed to.
 Natural system theory
Barnard believed that organizations are natural cooperative systems, and that
cooperation is essential for their survival. He believed that the primary function
of an executive is to maintain this cooperative system in a state of equilibrium.

 Inducement-contribution theory
Barnard believed that altering the motives of members can help obtain
cooperation and recognition of the need for legitimate authority.
 Organizational code of morality
Barnard believed that an organizational code of morality should override
individual members' personal codes.
 Specialization
Barnard believed that specialization is important because it bridges two major
concepts. He argued that creating the proper combination of specializations
increases organization effectiveness.
Barnard's work was influenced by Max Weber, F.W. Taylor, Henri Fayol, and
Elton Mayo, and inspired theories such as organizational routines and systems
theory.
5.Explain about the contribution of McGregor in the field of management?
Douglas M. McGregor
Professor Douglas McGregor (1906-1964) Douglas McGregor, MIT professor
and author of the highly influential book "The Human Side of Enterprise," was
born in Detroit, Michigan in 1906. While in high school, McGregor worked as
night clerk at the McGregor Institute, a family affair originally established by his
grandfather, but managed by his father and his uncle to provide temporary
accommodation for around 100 transient workers at a time. McGregor played
piano there at its regular services. At 17, McGregor briefly considered becoming
a lay preacher.
Douglas McGregor, an American social psychologist, contributed to management
theory by developing the Theory X and Theory Y concepts:
 Theory X and Theory Y
These two contrasting theories describe how managers perceive and motivate
their employees:
 Theory X: An authoritarian style that assumes employees dislike
work, lack ambition, and prefer to be told what to do. Managers use
a "carrot and stick" approach, rewarding good performance and
punishing poor performance.
 Theory Y: A participative style that assumes employees are self-
motivated and enjoy work. Managers empower employees to make
decisions and work on their own initiative.
 Importance of understanding employee needs
 McGregor's work emphasized the importance of understanding employee
needs and creating a supportive work environment.
 Middle ground
McGregor believed that both Theory X and Theory Y are too extreme and that a
middle ground approach would be most effective.
 Impact on management practices
McGregor's theories have had a lasting impact on management practices.
6.Explain about the contribution of Rensis Likert in the field of
management?
Likert developed his theory of management systems in the 1950s. He outlined a
way of describing typical relationships, degree of involvement, and the roles of
managers and subordinates in industrial settings. Four clusters of arrangements
are identified.
Rensis Likert, a social psychologist, made many contributions to management
theory and organizational behavior, including:
 Likert scale
A scale for measuring attitudes that uses a continuum of choices, such as "strongly
agree," "agree," and "strongly disagree". It's still widely used in psychology and
marketing research.
 Management systems
Likert's theory of management systems describes the roles and relationships of
managers and subordinates in industrial settings. His four systems are:
 Exploitative Authoritative
 Benevolent Authoritative
 Consultative
 Participative:
 Participative management theory
Likert's theory that managers should encourage employee participation in
business decisions because the modern workforce is more intuitive and
independent.
 Interviewing techniques
Likert developed more formal and structured interviewing techniques that are
now standard survey research practices.

6.Explain about the contribution of Mc Kinsey in the field of management?

 James O. McKinsey, a University of Chicago professor and expert on
management accounting, founded the firm.
 Services
McKinsey works with clients in the private, public, and social sectors to help
them solve complex problems and create positive change.
  Clients
McKinsey works with 80% of the world's largest corporations, as well as
governments and nonprofit organizations.
 Locations
McKinsey has over 117 offices worldwide.
 Values
McKinsey's core values include a commitment to rigorous research and training,
and the obligation to advocate for what they believe to be true.
McKinsey & Company has contributed to the field of management in several
ways, including:
 Management research
McKinsey was one of the first organizations to fund management research when
they established the Foundation for Management Research in 1955.
 Management programs
McKinsey offers management programs for all levels of an organization,
including top team, middle management, and frontline employees. These
programs help develop foundational management and leadership skills, as well
as enhance capabilities in areas like strategy, problem solving, and
communication.
 The McKinsey 7-S Model
This framework identifies seven components of an organization that must work
together for effective change management. These components are structure,
strategy, staff, style, systems, shared values, and skills.
 Values
McKinsey's values include putting client interests ahead of the firm's, maintaining
high standards for client service, and observing high ethical standards.
 Global economic trends
McKinsey funds the McKinsey Global Institute, which studies global economic
trends.