Wednesday, May 24, 2017

Principles of Business Management - Concept of Management

Unit – 1: Concept of Management
Management - Introduction
Management is the coordination of all resources through the process of planning, organising, directing, staffing and controlling in order to attain stated objectives effectively and efficiently.  Effectively means doing the right task, completing activities and achieving goals and efficiently means to attain objectives with least amount of resources at a minimum cost. This process starts at the top and continues in more or less degree at every level of the organisation.
According to Harold Koontz, “Management is an art of getting things done through others and with formally organised groups."
According to F.W. Taylor, “Management is an art of knowing what do you want to do and then seeing that is is done in the best and cheapest way.”
According to Henry Fayol, “To manage is to forecast, to plan, to organize, to command to co-ordinate and control.
George R. Terry, “Management is a distinct process consisting of planning, organising, actuating and controlling performance t determine and accomplish the objectives by the use of people and resources,”
Thus management may be defined as a process including various activities like planning, organising , directing, controlling  co-ordination etc in order to make optimum use of men machinery, materials and money by way of preparing plans, policies and purposes, for achieving organisational goals under healthy internal environment.
Nature or characteristics of Management:

On the basis of critical analysis of  various definitions of management, the main features of management may be stated as follows :
  1. Management is a process: Management is a continuous activity which aims at making optimum use of the available resources like men, machinery, materials, and money, for achieving organisational goals.
  2. Management deals with several functions: Management includes several functions such as planning, organising, staffing, directing co-ordinating, controlling, motivating or actuating, controlling, decision making, leadership and communication.
  3. Management is goal oriented: Every management activity is directed towards achieving predetermined objectives of the organiation.
  4. Management is a group of organized activities: Management plans, organizes, co-ordinates, directs and controls the group efforts so as to achieve organisational goals efficiently and effectively.
  5. Management is basically a factor of production: The factors of production include land, labour, capital and entrepreneurs.  A manager or entrepreneur mobilizes resources like land, labour and capital to produce’ output to satisfy needs of the society and earn profit.
  6. Management is a discipline: Management , although borrows several concept for other social sciences, it has developed its own body of principles and theories so as to become a special discipline or subject of study for potential managers.
  7. Management is  a science and also an art: Science is defined as a systematized body of knowledge and it uses scientific methods of observation measurement, experimentation etc.  Its principles are exact and university applicable. Management has systematized body of knowledge and its principles are evolved on the basis of   observation. But management being a social science, it is not an exact science.  So management is a soft or inexact science.
Art refers to the way of doing specific things i.e. it indicates “ how an objective is to be achieved.  it is the know-how to achieve the desired results.  Art needs continuous practice to reach the level of perfection.  An art is application of science. Thus art and science are interrelated in the sense that putting scientific principles into practice requires art, which needs special knowledge and skills.
Management is both a science as well as an art.  The science of management provides certain principles that can guide managers in the professional efforts, while the art of management deals with tackling every situation in an effective manner.  Planning and organising emphasize the science of management while direction, communication motivation coordination and control emphasize art of management.  Getting work done through people is an art of management.
  1. Management is dynamic: Under dynamic environment management faces several challenges hence efforts are made to develop and use new techniques for managing the organisations effectively and efficiently.  as social change takes place, management also changes to overcome the problems whenever they arise.
  2. Management is a Profession: Profession is an occupation for which specialized skills and training are required and these skills are used not for private profit but for the larger interests of the society.  There is a professional body to control the behaviour of its members.  At present management is not a full fledged profession but it is heading towards becoming a profession.
Scope or Branches of Management:
Management is an all pervasive function since it is required in all types of organized endeavour. Thus, its scope is very large. The following activities are covered under the scope of management:
  1. Planning,
  2. Organisation
  3. Staffing.
  4. Directing,
  5. Coordinating, and
  6. Controlling.
The operational aspects of business management, called the branches of management, are as follows:
  1. Production Management
  2. Marketing Management
  3. Financial Management.
  4. Personnel Management and
  5. Office Management.
1) Production Management: Production means creation of utilities. This creation of utilities takes place when raw materials are converted into finished products. Production management, then, is that branch of management ‘which by scientific planning and regulation sets into motion that part of enterprise to which has been entrusted the task of actual translation of raw material into finished product.’
Plant location and layout, production policy, type of production, plant facilities, material handling, production planning and control, repair and maintenance, research and development, simplification and standardization, quality control and value analysis, etc., are the main problems involved in production management.
2) Marketing Management: Marketing is a sum total of physical activities which are involved in the transfer of goods and services and which provide for their physical distribution. Marketing management refers to the planning, organising, directing and controlling the activities of the persons working in the market division of a business enterprise with the aim of achieving the organisation objectives.
It can be regarded as a process of identifying and assessing the consumer needs with a view to first converting them into products or services and then involving the same to the final consumer or user so as to satisfy their wants with a stress on profitability that ensures the optimum use of the resources available to the enterprise. Market analysis, marketing policy, brand name, pricing, channels of distribution, sales promotion, sale-mix, after sales service, market research, etc. are the problems of marketing management.
3) Financial Management: Finance is viewed as one of the most important factors in every enterprise. Financial management is concerned with the managerial activities pertaining to the procurement and utilization of funds or finance for business purposes. The main functions of financial management include:
(i) Estimation of capital requirements;
(ii) Ensuring a fair return to investors;
(iii) Determining the suitable sources of funds;
(iv) Laying down the optimum and suitable capital
Structure for the enterprise:
(i) Co-coordinating the operations of various departments;
(ii) Preparation, analysis and interpretation of financial statements;
(iii) Laying down a proper dividend policy; and
(iv) Negotiating for outside financing.
4) Personnel Management: Personnel Management is that phase of management which deals with the effective control and use of manpower. Effective management of human resources is one of the most crucial factors associated with the success of an enterprise. Personnel management is concerned with managerial and operative functions. Managerial functions of personnel management include:
(i) Personnel planning;
(ii) Organising by setting up the structure of relationship among jobs, personnel and physical factors to contribute towards organisation goals;
(iii) Directing the employees; and
(iv) Controlling.
The operating functions of personnel management are:
(i) Procurement of right kind and number of persons;
(ii) Training and development of employees;
(iii) Determination of adequate and equitable compensation of employees;
(iv) Integration of the interests of the personnel with that of the enterprise; and
(v) Providing good working conditions and welfare services to the employees.
5) Office Management: The concept of management when applied to office is called ‘office management’. Office management is the technique of planning, coordinating and controlling office activities with a view to achieve common business objectives. One of the functions of management is to organize the office work in such a way that it helps the management in attaining its goals. It works as a service department for other departments.
The success of a business depends upon the efficiency of its administration. The efficiency of the administration depends upon the information supplied to it by the office. The volume of paper work in office has increased manifold in these days due to industrial revolution, population explosion, increased interference by government and complexities of taxation and other laws.
Functions/Elements of Management
According to Henry Fayol, in every organisation manager perform certain functions to achieve results. These functions are broadly classified under five categories:-
  1. Planning: Planning is a process of making decision about future. It provides direction to enterprise activities. Its work is to decide in advance what is to be done, when and where it is to be done, how it is to be done and by whom. The main functions of planning are Set up goals, Forecasting, Search for alternatives source of action and Budgeting.
  2. Organising: It is concerned with the arrangement of an organisation’s resources – people, material, technology and finances in order to achieve enterprise objective. The main functions of organising are Job design, Job specification and Authority and responsibility.
  3. Staffing: Staffing is the function of employing suitable personas for the enterprise. It may be defined as an activity where people are recruited, selected, trained, developed, motivated and compensated for manning various positions.
  4. Directing: According to Dale, direction is telling people what to do and seeing that they do it to the best of their ability. Directing is a function of guiding and supervising the activities of sub ordinates. The four main elements of directing are:-
1. Leadership: It is a process of influencing the action of a person or a group to attain desired objectives. The success of an organisation depends upon the quality of leadership shown by its managers.
2. Motivation: It is the process of stimulating people to take desired courses of action. It is to inspire, encourage and impel people to take required action.
3. Communication: It is a way of reaching other with ideas, facts, and thoughts. Effective communication is important in organisation because managers Can achieve very little without it.
  1. Controlling: It is the management function concerned with monitoring employee’s activities, keeping the organisation on track towards its goals, and making corrections as required. It include four things:
  • setting standard of performance;
  • measuring actual performance;
  • comparing actual performance against the standard ;
  • taking corrective actions to ensure goal accomplishment.
According to Drucker, management is the dynamic life giving element in every organisation. In its absence, an organisation is merely a collection of men, machines, money and material. The importance of management is:-
  1. Optimum Use of Resources: Management ensures optimum utilization of resources by attempting to avoid wastage of all kinds. It helps in putting the resources to the best advantage.
  2. Effective leadership and Motivation: In the absence of management, the working of an enterprise will become random and haphazard in nature. Management creates teamwork and motivates employees to work harder and better by providing guidance, counseling and effective leadership.
  3. Establish Sound Industrial Relations: Management minimizes industrial disputes and contributes to sound industrial relations in an undertaking. Industrial peace is an essential requirement for increasing productivity.
  4. Achievement of Goals: Objectives can be achieved only when the human and non human resources are combined in a proper way. Managers plan carefully, organize the resources properly, hire competent people, and provide necessary guidance. Thus management is goal oriented.
  5. Reduces Costs - It gets maximum results through minimum input by proper planning and by using minimum input & getting maximum output. Management uses physical, human and financial resources in such a manner which results in best combination. This helps in cost reduction.
  6. Establishes Equilibrium - It enables the organisation to survive in changing environment. It keeps in touch with the changing environment. With the change is external environment, the initial co-ordination of organisation must be changed. So it adapts organisation to changing demand of market / changing needs of societies. It is responsible for growth and survival of organisation.
  7. Essentials for Prosperity of Society - Efficient management leads to better economical production which helps in turn to increase the welfare of people. Good management makes a difficult task easier by avoiding wastage of scarce resource. It improves standard of living.
Levels of Management
There are three levels of management which are given below:
1. The Top Management: It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions. The role of the top management can be summarized as follows:
  1. Top management lays down the objectives and broad policies of the enterprise.
  2. It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
  3. It prepares strategic plans & policies for the enterprise.
  4. It appoints the executive for middle level i.e. departmental managers.
  5. It controls & coordinates the activities of all the departments.
  6. It is also responsible for maintaining a contact with the outside world.
  7. It provides guidance and direction.
  8. The top management is also responsible towards the shareholders for the performance of the enterprise.
2. Middle Level Management: The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organisational and directional functions. In small organisation, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as:
    1. They execute the plans of the organisation in accordance with the policies and directives of the top management.
    2. They make plans for the sub-units of the organisation.
    3. They participate in employment & training of lower level management.
    4. They interpret and explain policies from top level management to lower level.
    5. They are responsible for coordinating the activities within the division or department.
    6. It also sends important reports and other important data to top level management.
    7. They evaluate performance of junior managers.
    8. They are also responsible for inspiring lower level managers towards better performance.
3. Lower Level Management: Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees”. In other words, they are concerned with direction and controlling function of management. Their activities includes:
    1. Assigning of jobs and tasks to various workers.
    2. They guide and instruct workers for day to day activities.
    3. They are responsible for the quality as well as quantity of production.
    4. They are also entrusted with the responsibility of maintaining good relation in the organisation.
    5. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers.
    6. They help to solve the grievances of the workers.
    7. They supervise & guide the sub-ordinates.
    8. They are responsible for providing training to the workers.
    9. They arrange necessary materials, machines, tools etc for getting the things done.
    10. They prepare periodical reports about the performance of the workers.
    11. They ensure discipline in the enterprise.
    12. They motivate workers.
    13. They are the image builders of the enterprise because they are in direct contact with the workers.
Difference between Various levels of Management
Points of Difference
Top Level Management
Middle Level Management
Lower Level Management
i. Time Range
It covers span of period
It covers intermediate range
It is concerned with short period
ii. Skills
It requires creative skills
It needs persuasive skills
It is concerned with operative skills
iii. Evaluation
It is difficult to evaluate its achievement
It is less difficult to evaluate its performance
It is easy to evaluate its performance
iv. Persons
It involves few persons
It concerns moderate number of persons
It is concerned with large number of persons
v. Policy formulation
It is concerned with the formulation of policies to a greater extent
It is moderately concerned with policy formulation
It is least concerned with policy formulation

F.W. Taylor and Henry Fayol are generally regarded as the founders of scientific management and administrative management and both provided the bases for science and art of management.
Taylor's Scientific Management
F.W. Taylor is one of the founders (the other two are Max Weber and Henry Fayol) of classical thought/classical theory of management. He suggested scientific approach to management also called scientific management theory. Frederick Winslow Taylor well-known as the founder of scientific management was the first to recognize and emphasis the need for adopting a scientific approach to the task of managing an enterprise. He tried to diagnose the causes of low efficiency in industry and came to the conclusion that much of waste and inefficiency is due to the lack of order and system in the methods of management. He found that the management was usually ignorant of the amount of work that could be done by a worker in a day as also the best method of doing the job. As a result, it remained largely at the mercy of the workers who deliberately shirked work. He therefore, suggested that those responsible for management should adopt a scientific approach in their work, and make use of "scientific method" for achieving higher efficiency. The scientific method consists essentially of:
  1. Observation
  2. Measurement
  3. Experimentation and
  4. Inference.
He advocated a thorough planning of the job by the management and emphasized the necessity of perfect understanding and co-operation between the management and the workers both for the enlargement of profits and the use of scientific investigation and knowledge in industrial work. He summed up his approach in these words:
  1. Science, not rule of thumb
  2. Harmony, not discord
  3. Co-operation, not individualism
  4. Maximum output, in place of restricted output
  5. The development of each man to his greatest efficiency and prosperity.
Elements of Scientific Management: The techniques which Taylor regarded as its essential elements or features may be classified as under:
1. Scientific Task and Rate-Setting (work study): Work study may be defined as the systematic, objective and critical examination of all the factors governing the operational efficiency of any specified activity in order to effect improvement. Work study includes.
(a) Methods Study: The management should try to ensure that the plant is laid out in the best manner and is equipped with the best tools and machinery. The possibilities of eliminating or combining certain operations may be studied.
(b) Motion Study: It is a study of the movement, of an operator (or even of a machine) in performing an operation with the purpose of eliminating useless motions.
(c) Time Study (work measurement): The basic purpose of time study is to determine the proper time for performing the operation. Such study may be conducted after the motion study. Both time study and motion study help in determining the best method of doing a job and the standard time allowed for it.
(d) Fatigue Study: If, a standard task is set without providing for measures to eliminate fatigue, it may either be beyond the workers or the workers may over strain themselves to attain it. It is necessary, therefore, to regulate the working hours and provide for rest pauses at scientifically determined intervals.
(e) Rate-setting: Taylor recommended the differential piece wage system, under which workers performing the standard task within prescribed time are paid a much higher rate per unit than inefficient workers who are not able to come up to the standard set.
2. Planning the Task: Having set the task which an average worker must strive to perform to get wages at the higher piece-rate, necessary steps have to be taken to plan the production thoroughly so that there is no bottlenecks and the work goes on systematically.
3. Selection and Training: Scientific Management requires a radical change in the methods and procedures of selecting workers. It is therefore necessary to entrust the task of selection to a central personnel department. The procedure of selection will also have to be systematised. Proper attention has also to be devoted to the training of the workers in the correct methods of work.
4. Standardization: Standardization may be introduced in respect of the following.
(a) Tools and equipment: By standardization is meant the process of bringing about uniformity. The management must select and store standard tools and implements which will be nearly the best or the best of their kind.
(b) Speed: There is usually an optimum speed for every machine. If it is exceeded, it is likely to result in damage to machinery.
(c) Conditions of Work: To attain standard performance, the maintenance of standard conditions of ventilation, heating, cooling, humidity, floor space, safety etc., is very essential.
(d) Materials: The efficiency of a worker depends on the quality of materials and the method of handling materials.
5. Specialization: Scientific management will not be complete without the introduction of specialization. Under this plan, the two functions of 'planning' and 'doing' are separated in the organisation of the plant. The `functional foremen' are specialists who join their heads to give thought to the planning of the performance of operations in the workshop. Taylor suggested eight functional foremen under his scheme of functional foremanship.
(a) The Route Clerk: To lay down the sequence of operations and instruct the workers concerned about it.
(b) The Instruction Card Clerk: To prepare detailed instructions regarding different aspects of work.
(c) The Time and Cost Clerk: To send all information relating to their pay to the workers and to secure proper returns of work from them.
(d) The Shop Disciplinarian: To deal with cases of breach of discipline and absenteeism.
(e) The Gang Boss: To assemble and set up tools and machines and to teach the workers to make all their personal motions in the quickest and best way.
(f) The Speed Boss: To ensure that machines are run at their best speeds and proper tools are used by the workers.
(g) The Repair Boss: To ensure that each worker keeps his machine in good order and maintains cleanliness around him and his machines.
(h) The Inspector: To show to the worker how to do the work.
6. Mental Revolution: At present, industry is divided into two groups – management and labour. The major problem between these two groups is the division of surplus. The management wants the maximum possible share of the surplus as profit; the workers want, as large share in the form of wages. Taylor has in mind the enormous gain that arises from higher productivity. Such gains can be shared both by the management and workers in the form of increased profits and increased wages.
Henry Fayol's 14 Principles of Management:
The principles of management are given below:
    1. Division of work: Division of work or specialization alone can give maximum productivity and efficiency. Both technical and managerial activities can be performed in the best manner only through division of labour and specialization.
    2. Authority and Responsibility: The right to give order is called authority. The obligation to accomplish is called responsibility. Authority and Responsibility are the two sides of the management coin. They exist together. They are complementary and mutually interdependent.
    3. Discipline: The objectives, rules and regulations, the policies and procedures must be honoured by each member of an organisation. There must be clear and fair agreement on the rules and objectives, on the policies and procedures. There must be penalties (punishment) for non-obedience or indiscipline. No organisation can work smoothly without discipline – preferably voluntary discipline.
    4. Unity of Command: In order to avoid any possible confusion and conflict, each member of an organisation must received orders and instructions only from one superior (boss).
    5. Unity of Direction: All members of an organisation must work together to accomplish common objectives.
    6. Emphasis on Subordination of Personal Interest to General or Common Interest: This is also called principle of co-operation. Each shall work for all and all for each. General or common interest must be supreme in any joint enterprise.
    7. Remuneration: Fair pay with non-financial rewards can act as the best incentive or motivator for good performance. Exploitation of employees in any manner must be eliminated.
    8. Centralization: There must be a good balance between centralization and decentralization of authority and power. Extreme centralization and decentralization must be avoided.
    9. Scalar Chain: The unity of command brings about a chain or hierarchy of command linking all members of the organisation from the top to the bottom. Scalar denotes steps.
    10. Order: Fayol suggested that there is a place for everything. Order or system alone can create a sound organisation and efficient management.
    11. Equity: An organisation consists of a group of people involved in joint effort. Hence, equity (i.e., justice) must be there. Without equity, we cannot have sustained and adequate joint collaboration.
    12. Stability of Tenure: A person needs time to adjust himself with the new work and demonstrate efficiency in due course. Hence, employees and managers must have job security. Security of income and employment is a pre-requisite of sound organisation and management.
    13. Esprit of Co-operation: Esprit de corps is the foundation of a sound organisation. Union is strength. But unity demands co-operation. Pride, loyalty and sense of belonging are responsible for good performance.
    14. Initiative: Creative thinking and capacity to take initiative can give us sound managerial planning and execution of predetermined plans.
Difference between contribution of Taylor and Fayol
Both the persons have contributed to development of science of management. The contribution of these two pioneers in the field of science of management has been reviewed as “The work of Taylor & Fayol was, of course, especially complementary. They both realized that problem of personnel & its management at all levels is the key to individual success. Both applied scientific method to this problem that Taylor worked primarily from operative level, from bottom to upward, while Fayol concentrated on managing director and work downwards, was merely a reflection of their very different careers”. They both differ from each other in following aspects:
Taylor’s Approach
Fayol’s Approach
a) Human Aspect
Taylor disregards human elements and there is more stress on improving men, materials and methods.
Fayol pays due regards on human element. E.g. Principle of initiative, Espirit De’ Corps and Equity recognizes a need for human relations.
b) Status
Father of scientific management.
Father of management principles
c) Efficiency and Administration
Stressed on efficiency.
Stressed on general administration.
d) Approach
It has micro-approach because it is restricted to factory only.
It has macro-approach and discuses general principles of management which are applicable in every field of management.
e) Scope of Principles
These principles are restricted to production activities.
These are applicable in all kinds of organisation regarding their management affairs.
f) Achievement
Scientific management
Administrative management

Evolution of management thoughts
The practice of management is as old as human civilization. The ancient civilizations of Egypt (the great pyramids), Greece (leadership and war tactics of Alexander the great) and Rome displayed the marvelous results of good management practices. The origin of management as a discipline was developed in the late 19th century. Over time, management thinkers have sought ways to organize and classify the voluminous information about management that has been collected and disseminated. These attempts at classification have resulted in the identification of management approaches. The approaches of management are theoretical frameworks for the study of management. Each of the approaches of management are based on somewhat different assumptions about human beings and the organisations for which they work. The different approaches of management are:
a) Early management approaches represented by scientific management (Classical approach or Theories)
b) Modern management approaches represented by behavioral science movement, quantitative approach, systems approach and Contingency approach (Neo-classical approach or theories)
a) THE CLASSICAL APPROACH: The classical approach is the oldest formal approach of management thought. Its roots pre-date the twentieth century. The classical approach of thought generally concerns ways to manage work and organisations more efficiently. Three areas of study that can be grouped under the classical approach are scientific management, administrative management, and bureaucratic management.
(i) Scientific Management: Frederick Winslow Taylor is known as the father of scientific management. Scientific management (also called Taylorism or the Taylor system) is a theory of management that analyzes and synthesizes workflows, with the objective of improving labor productivity. In other words, Traditional rules of thumb are replaced by precise procedures developed after careful study of an individual at work.
(ii) Administrative Management: Administrative management focuses on the management process and principles of management. In contrast to scientific management, which deals largely with jobs and work at the individual level of analysis, administrative management provides a more general theory of management. Henri Fayol is the major contributor to this approach of management thought.
(iii) Bureaucratic Management: Bureaucratic management focuses on the ideal form of organisation. Max Weber was the major contributor to bureaucratic management. Based on observation, Weber concluded that many early organisations were inefficiently managed, with decisions based on personal relationships and loyalty. He proposed that a form of organisation, called a bureaucracy, characterized by division of labor, hierarchy, formalized rules, impersonality, and the selection and promotion of employees based on ability, would lead to more efficient management. Weber also contended that managers' authority in an organisation should be based not on tradition or charisma but on the position held by managers in the organisational hierarchy.
b) Neo-classical approach: It can be studied under the following headings:
a) THE BEHAVIORAL Or SITUATIONAL APPROACH: The behavioral approach of management thought developed, in part, because of perceived weaknesses in the assumptions of the classical approach. The classical approach emphasized efficiency, process, and principles. Some felt that this emphasis disregarded important aspects of organisational life, particularly as it related to human behavior. Thus, the behavioral approach focused on trying to understand the factors that affect human behavior at work.
(i) Human Relations: The Hawthorne Experiments began in 1924 and continued through the early 1930s. A variety of researchers participated in the studies, including Elton Mayo. One of the major conclusions of the Hawthorne studies was that workers' attitudes are associated with productivity. Another was that the workplace is a social system and informal group influence could exert a powerful effect on individual behavior. A third was that the style of supervision is an important factor in increasing workers' job satisfaction.
(ii) Behavioral Science: Behavioral science and the study of organisational behavior emerged in the 1950s and 1960s. The behavioral science approach was a natural progression of the human relations movement. It focused on applying conceptual and analytical tools to the problem of understanding and predicting behavior in the workplace. The behavioral science approach has contributed to the study of management through its focus on personality, attitudes, values, motivation, group behavior, leadership, communication, and conflict, among other issues.
b) THE QUANTITATIVE APPROACH: The quantitative approach focuses on improving decision making via the application of quantitative techniques. Its roots can be traced back to scientific management.
(i) Management Science: Management science (also called operations research) uses mathematical and statistical approaches to solve management problems. It developed during World War II as strategists tried to apply scientific knowledge and methods to the complex problems of war. Industry began to apply management science after the war. The advent of the computer made many management science tools and concepts more practical for industry
(ii) Production And Operations Management: This approach focuses on the operation and control of the production process that transforms resources into finished goods and services. It has its roots in scientific management but became an identifiable area of management study after World War II. It uses many of the tools of management science. Operations management emphasizes productivity and quality of both manufacturing and service organisations. W. Edwards Deming exerted a tremendous influence in shaping modern ideas about improving productivity and quality. Major areas of study within operations management include capacity planning, facilities location, facilities layout, materials requirement planning, scheduling, purchasing and inventory control, quality control, computer integrated manufacturing, just-in-time inventory systems, and flexible manufacturing systems.
c) SYSTEMS APPROACH: The systems approach focuses on understanding the organisation as an open system that transforms inputs into outputs. The systems approach began to have a strong impact on management thought in the 1960s as a way of thinking about managing techniques that would allow managers to relate different specialties and parts of the company to one another, as well as to external environmental factors. The systems approach focuses on the organisation as a whole, its interaction with the environment, and its need to achieve equilibrium.
d) CONTINGENCY APPROACH: The contingency approach focuses on applying management principles and processes as dictated by the unique characteristics of each situation. It emphasizes that there is no one best way to manage and that it depends on various situational factors, such as the external environment, technology, organisational characteristics, characteristics of the manager, and characteristics of the subordinates. Contingency theorists often implicitly or explicitly criticize the classical approach for its emphasis on the universality of management principles; however, most classical writers recognized the need to consider aspects of the situation when applying management principles.
Distinction between classical neoclassical approaches:
Classical Approach
Neo Classical Approach
a) Focus
Funcitons and economic demand of worker
Emotion and human qualities of workers
b) Structure
Impersonal and mechanistic
Social system
c) Application
Autocratic amanagement and strict rule
Democratic process
d) Emphasize
Discipline and rationality
Personal security and social demand
e) Work Goal of worker
Maximum remuneration and reward
Attainment of organisation goal
f) Concept about men
Economic being
Social being
g) Content
Scientific management, administrative management and bureaucratic management
Human relation movement and organisational behaviour
h) Relation
i) Nature


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