1.12 Nature and Significance of Management

Dear students. Welcome back to Eat India Company. Like we learnt business studies class 11 last year, this year too we will learn with Eat India Company as our model company. If you are new here, Eat India Company is an (imaginary) Indian manufacturer of ice creams located in Delhi. Sidharth Gupta and Pujit Tandon are its owners. In this chapter, the owners of Eat India Company are planning to appoint managers for the better running of the company. Sidharth is in favour of hiring managers but Pujit is not.

In this chapter we will convince Pujit why the company should hire managers by explaining the following concepts and questions:

  1. What is management?
  2. What does the manager do? What are the managerial functions?
  3. Why is a manager necessary for a firm?
  4. Management is an art, a science and a profession. How?
  5. Can a manager do all that alone? Why is coordination necessary?

Why should there be Managers?

Concept of Management

  1. Process of Management is the process of planning, organizing, staffing, directing and controlling the enterprise resources efficiently and effectively for achieving the goals of the organisation.
  2. Effectiveness in management is concerned with doing the right task, completing activities and achieving goals.
  3. Efficiency means doing the task correctly and with minimum cost.

Questions & Answers

  1. What are the 5 functions of management? (1 mark)
  2. Managers of Eat India Company have determined in advance that the company is going to produce a new variety of ice cream rich in calcium and this task is assigned to Mr. Augustine, the senior production manager. If the production cost for an ice cream is ₹ 18 and the sale price is ₹ 20, is Mr. Augustine an efficient worker? Why?

Characteristics of Business Management

  1. Business management is a goal oriented process.
  2. Business management is all pervasive.
  3. Business management is multidimensional.
  4. Business management is a continuous process.
  5. Business management is a group activity.
  6. Business management is a dynamic function.
  7. Business management is an intangible force.

Objectives of Business Management

  1. Management fulfils organisational objectives.
    • Survival of the organization
    • Profit for the organization
    • Growth for the organization
  2. Management fulfils social objectives.
    • Using environmental friendly methods of production
    • Providing basic amenities for the employees – such as schools and creches
    • Giving employment opportunities for the disadvantaged sections of the society
  3. Management fulfils personal objectives
    • Salary to employees.
    • Social needs such as peer recognition
    • Higher level needs such as personal growth and development.

Questions & Answers

  1. Eat India Company is a well-known producer of ice-creams in India and abroad. It is famous for its tasty products prepared under the most hygienic conditions. Owned by Pujit Tandon and Sidharth Gupta, the company is in the process of growth but the company is managed by the owners. Now, how will a centralized management system help the managers to achieve higher goals? (5 marks)
  2. Vanshika Malik is the Production Manager at Eat India Company. As an employee, what are her personal objectives? (3 marks)
    As an employ of the Eat India Company, Vanshika Malik is able to draw a competitive salary and perks from the company. Additionally, she is able to fulfil…

Importance of Management

Management is important because it helps in achieving group goals, increases efficiency, creates a dynamic organisation, helps achieve personal objectives and contributes to the development of society.

  1. Management helps in achieving group goals.
  2. Management increases efficiency.
  3. Management helps in achieving personal objectives.
  4. Management helps in the development of the society.
  5. Management creates a dynamic organization.

Questions & Answers

  1. Although Sidharth is greatly in favour of setting up a management, yet the problem is, Pujit is not yet convinced. How can you write a note that can convince Pujit of the importance of management?

Levels of Management

  1. What is Top Management? What are its functions? (3 marks)
    Hints – Consists of senior most executives of the firm and their team – COO, CEO, CMO, CFO, MD, Chairman, President, VP – formulate overall organizational goals, coordinate the activities of different departments according to the overall objectives of the organization, responsible for the welfare and survival of the organization – analyse the business environment, responsible for the activities of the business and their impact on the society.
  2. Why is the job of the top manager stressful and complex? (1 mark)
  3. How is Middle Management formed? What functions does it carry out?
    Hints – HRM, PM, MM, FM, OM, PSup, RM, DM – Subordinate (under) the top managers and superior (above) the operational managers – have to interpret policies formulated by the top managers, ensure that their departments have necessary personnel,
  4. What does Operational Management refer to? Enumerate its functions.
  5. Ram Lal is an employee at Eat India Company. He is among the ten men and women who produce the famous Mango to Tango ice creams, from production to packing and labeling. Does he belong to any of the three levels of management? (1 mark)
    No, Ram Lal does not belong to any of the three levels of management. He belongs to the workforce.

Management is Science, Art and Profession

  1. Why do you think that management is a science? (6 marks)
    1. Science
      1. Systematized body of knowledge
      2. Scientific principles are based on experiments
      3. Science has universal validity
    2. Management
      1. Business management too is a systematized body of knowledge
      2. Principles of management are based on experiments
      3. Principle of business management have universal validity (limited)
  2. Answer – Management and science have a few characteristics in common. Science is a systematized body of knowledge. It has got certain principles which are systematically arranged by scientists all over the world. Secondly, science
  3. Why is management also called inexact science? (2 marks)
    Although business management fulfills all the three aspects of pure sciences such as chemistry or physics, there are limitations with management.
  4. How is management an art?
    1. Art – Art is skillful and personalized application of existing knowledge to achieve desired results.
      1. Existence of theoretical knowledge – Art, such as dancing, painting or public speaking follow certain theoretical knowledge.
      2. Art needs personalized application – Although every art is based on theories, every artist has his/her own unique approach to his/her field of art.
      3. Art is based on continuous practice – If you do not continuously practice, say, dancing or painting, you will not be able to excel in those fields.
      4. Creativity – If you do not have creativity in any field of art, your education and training in that field will not be of any use.
    2. Management as an art
      1. Existence of theoretical knowledge – Fields of management, such as finance, marketing or human resource, are based on theoretical knowledge.
      2. Art needs personalized application – As in art, a manager needs to apply his/her
      3. Art is based on continuous practice
      4. Creativity
  5. Answer – Management is an art for a number of reasons. Any art has the following four characteristics – it is based on certain theoretical knowledge, it needs personalized application, it is based on continuous practice and finally an art will be successful when the artist has a good amount of creativity. Similarly, management too has the above characteristics.
  6. What are the characteristics of management that are similar to profession? (6 marks)
    1. Profession
      1. Well defined body of knowledge
      2. Restricted entry
      3. Professional association
      4. Ethical code of conduct
      5. Service motive
    2. Management
      1. Well defined body of knowledge
      2. Restricted entry
      3. Professional association
      4. Ethical code of conduct
      5. Service motive


  1. Explain the concept of coordination in management. Support the concept with an example. (2 marks)
    Coordination is the process by which activities of different departments are synchronized to ensure unity of action. The sales department cannot sell a particular number of pens if the production department doesn’t coordinate with it. Similarly, the production department cannot produce ice-creams if the purchase department doesn’t buy raw materials for production.
  2. Why is coordination called the essence of management? (2 marks)
    Coordination is called the essence of management because it is the force that binds all the functions and departments of a firm. In the absence of coordination, the binding force weakens and the firm fails to achieve its set goals.
  3. What are the functional differences in a company’s activities? Give an example for functional differences that arise in a company. How can coordination harmonize the situation? (3 marks)
  4. Eat India Company has recently appointed Mr. Alex Henghinton, a specialist in age-defying ice-creams. Being a specialist, Mr. Alex is not ready to listen to his managers because he feels he is too big for the managers. Under what crisis is the company is in? (1 mark)
  5. How do planning, organizing, staffing, directing and controlling help harmonize a firm’s activities? (4 Marks)
  6. What are the features / characteristics of coordination?
    1. Coordination integrates group efforts –
    2. Coordination ensures unity of action –
    3. Coordination is a continuous process –
    4. Coordination is an all pervasive function –
    5. Coordination the responsibility of all the managers –
    6. Coordination is a deliberate function –
  7. Eat India Company has recently achieved ten times more growth in the last month due to high demand for quality milk-products. At the same time, the company is facing a number of internal issues that need to be coordinated. What are the possible issues that a company faces with its growth in size?
    The company has to start coordinating every department such as production, sales, finance, promotion and purchase. For this, the company has to facilitate a strong management for coordination…

Coordination harmonizes, synchronizes and unifies individual efforts for better action and for the achievement of business objectives.

Written by Biju John

Biju John is an educational writer, educator and the author of OM - The Otherwise Men. He gives live classes on Skype and Facebook. You can attend his 3 Day Classes (English & Business Studies) in Delhi, Bangalore, Qatar and Dubai. His Contact number is 91 9810740061.

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