Unit - 1

Definition of management

1.1 Definition of management

Modern economic units, today, cannot afford to take random decisions, as they did in the past. Each economic decision needs to be well-researched and well-balanced. One wrong decision can cause the business unit to suffer greatly. As a result, more scientific and logical methods of handling business, evolved over a period of time. This is nothing other than the ‘science of management’.

MEANING OF MANAGEMENT

In other words, using scientifically proven methods and logical and systematic processes to start and run a business enterprise is called ‘Management’ (or business management).

Management is a philosophy of carrying on business operation such that the economic unit achieves its goals in a cost-effective way.

Management is “the force that runs a business and is responsible for its success or failure”.

Definition: -

According to George Terry, “Management is a distinct process consisting of planning, organizing, actuating and controlling, performed to determine and accomplish stated objectives by the use of human beings and other resources”.

According to Mary Parker Follet, “Management is an art of getting things done through others”.

According to Henry Fayol, “To manage is to forecast, to plan, to organize, to command, to coordinate, and to control”.

CHARACTERISTICS / FEATURES / NATURE OF MANAGEMENT

1. Management is an activity or a process: Management is a function and should not be misunderstood to be a person. Often the people who perform this activity of management are referred to as “the management”. But in a strict sense of the word, it denotes only the process of managing or the activity of managing. Being a process. It involves a set of activities / steps to be followed in a particular sequence. The management process consists of planning, organizing, actuating and controlling.
2. Management is a distinct process: It means that management is a separate activity. It can be studied, understood and improved upon as a complete subject. People can obtain training in the field of management so that they can become better managers.
3. Management is purposeful: Management as a philosophy believes in setting goals and achieving them in the most cost-effective manner. In other words, management helps to reach goals by making the best possible use of available resources. The goal of all management efforts is to create a surplus.
4. Management uses the 6 Ms to reach its goals: Management uses the resources of men, money, methods, materials, machines and markets to achieve its goals. These resources are vital to every business. Information is one of the business resources that is as important as the others.
5. Management makes things happen: Management is concerned with the productivity of people. It brings effectiveness and efficiency to the efforts of people. Management keeps things moving in the right direction till you reach the desired goal. In other words, management focuses on results and the best way to achieve them. Management means getting the work done through people.
6. Management is invisible: Management is a hidden force. It is intangible. Only the results of work show the presence or absence of management. Well managed projects show smooth flow of work and obtain desired results within given time limits, in the absence of proper management there will be chaos and confusion and no results or delayed results.
7. Management creates the right environment: Management works to create and maintain an environment where people will work willingly and efficiently towards achieving a given goal. Management creates / designs a structure and processes which encourage people to work sincerely. As a result of management, an appropriate internal environment is created wherein everyone performs to their best capacity.
8. Management is dynamic: Management activities have evolved with passage of time. They have undergone change to adjust to the demands of the organisation. Managers have to be dynamic and innovative to allow suitable changes in the process of management.
9. Management is group activity: Management is getting things done through others. Management giving importance on the need of the team work. The manager should create a feeling of belonging among the members of the group. Efforts and activities of different groups at different levels of the organisation must be directed towards achieving the common goals of the organisation.
10. Management is goal-oriented: Every business enterprise aims to achieve pre-defined goals, Maximizations of profit, increased productivity; reduced costs are certain goals of an enterprise. As stated, earlier management is coordination of all resources to attain such objectives. Thus, management is a goal- oriented activity.

1.2 Science or art

The Science of Management:

Science refers to an organized body of facts and knowledge in a given field/area/subject, arrived at after systematic study, research and observation.

Some sciences are exact Verifiable and accurate viz, physics chemistry etc. But management is an ‘Inexact science’. This is due to the human element. Management is like psychology or economics which are social sciences. This is because in a given situation, we cannot say with certainty how a person will think, feel or act. Thus, management is a science though it is categorized as an inexact / impure science.

There is a body of knowledge and facts which represent the objective truths in management. This knowledge represents what is believed to be the best thinking on the subject of management. Without this science of management, managers would take decisions based on intuition (hunch), past practice or just on trial-and-error basis. Due to the science of management, the actions and decisions of managers get guidance and direction. Managers use the knowledge and information provided by the science of management to handle the business.

The Art of Management:

Art means bringing about the desired result with the application or use of talent and skill.

Talents are basically inherent and inborn. They need to be natured to become skills. Management is also an art. Applying the science of management to actual situations needs creativity and imagination. All real-life situations are not exactly the same as provided in the theory / science of management. The manager has to have the art! skill of using what he has learnt in theory and make it fruitful in practice. Using the general principles given in the theory of management to solve specific and unique problems is not an easy job. It requires a manager’s ability to modify the theoretical knowledge to suit real situations.

All the science of management will be useless if one does not have the ability to use it at the tight time, at the right place, for the right purpose and in the right manner. This ability to apply knowledge to actual situations is the art of management.

Management as Science and an Art:

The science and art of management are like two sides of the same coin. Both have to be mastered if one wants to become a good manager.

E.g., A doctor acquires a lot of knowledge about biology, anatomy and physiological processes. But that alone does not make him a good doctor. He needs to use this knowledge to understand the problem of the patient, diagnose his illness and use his skill and judgment to advise him the right medicines and diet to get well. Unless he develops the skill of applying his knowledge, he cannot be called a good doctor.

Thus, a manager needs both, the science and art of management in order to be effective and efficient.

1.3 Manager vs entrepreneur

Difference between Entrepreneur & Manager

The main difference between entrepreneurs and managers is their role in the organization. The entrepreneur is the owner of the company and the manager is an employee of the company. Entrepreneurs are risk takers and they take financial risks for their businesses. Entrepreneurs have a vision and focus on outcomes and profits.

Who is the entrepreneur?

Very basically, entrepreneurship is a show that carries out entrepreneurship. However, such a person usually has some unique attributes that allow him to succeed in his efforts. He is essentially an initiator and leader. He realized his business idea and started a venture.

Successful entrepreneurs are usually responsible. He is responsible for the success or failure of his venture and he takes this responsibility very seriously. And since he is the only responsible person, he automatically becomes the leader. In fact, leadership qualities are one of the main aspects of entrepreneurship.

Who is the manager?

Managers, on the other hand, are not the owners of the company. Instead, he is the person responsible for managing and managing departments of groups or organizations of people. His day-to-day work is to manage employees and keep the organization running smoothly.

Managers need to have some of the same qualities as an entrepreneur, such as leadership, accountability, and determination. He must also be a good manager of people. Therefore, qualities such as warmth and empathy are also very important for managers.

Difference between Entrepreneur and Manager are:

1. The main difference between an entrepreneur and a manager is their position in the company. An entrepreneur is a visionary person who turns an idea into a business. As he is the owner of the business, he bears all financial and other risks. Managers, on the other hand, are employees and work on salaries. Therefore, he does not have to take any risks.
2. The focus of entrepreneurs is to start a business and later expand it. Managers focus on the day-to-day smooth functioning of their business.
3. Achievements are the main motivation for entrepreneurs. But for managers, motivation comes from the power that accompanies their position.
4. The reward for all the efforts of an entrepreneur is the profit he earned from the company. Since the manager is an employee, his compensation is the salary he withdraws from the company.
5. The entrepreneur can be informal and casual in his role. However, the manager's approach to all issues is very formal.
6. Entrepreneurs are risk takers in nature. He needs to take the calculated risk to further promote the company. Managers, on the other hand, hate risk. His job is to maintain the status quo of the company. Therefore, he cannot afford to take risks.

1.4 Types of managers

There are three main types of managers: general managers, functional managers, and frontline managers. 

General managers are responsible for the overall performance of an organization or one of its major self-contained subunits or divisions.

Functional managers lead a particular function or a subunit within a function. They are responsible for a task, activity, or operation such as accounting, marketing, sales, R&D, production, information technology, or logistics. 

Frontline managers manage employees who are themselves not managers. They are found at the lowest level of the management hierarchy.

For illustration, consider a large diversified enterprise like General Electric. General Electric is active in many different businesses: Among other things, it makes jet engines, power plants, medical equipment, railway locomotives, and lighting products. GE also sells insurance, owns NBC, and offers a wide range of financial services, particularly to industrial customers. GE is organized into different business divisions, and each division has its own functions, such as R&D, production, marketing, sales, and customer services.

GE is thus known as a multidivisional enterprise. Multidivisional enterprises like GE have four main levels of management: the corporate level, the business level, the functional level, and frontline managers. General managers are found at the corporate and business levels. Functional managers are found within the divisions where they manage functions or subunits within those functions. Frontline managers are found deep within functions managing teams of nonmanagement employees.

CORPORATE-LEVEL GENERAL MANAGERS

The principal general manager at the corporate level is the chief executive officer (CEO), who leads the entire enterprise. In a multidivisional enterprise the CEO formulates strategies that span businesses—deciding, for example, whether to enter new businesses through acquisitions or whether to exit a business area. The CEO decides how the enterprise should be organized into different divisions and signs off on major strategic initiatives proposed by the heads of divisions. The CEO exercises control over divisions, monitoring their performance and deciding what incentives to give divisional heads. Finally, the CEO helps develop the human capital of the enterprise.

At General Electric Jeffery Immelt has been the CEO since 2001. Immelt has articulated a grand vision that includes pushing GE into environmentally friendly technologies. Immelt is doing this because he thinks it makes good business sense. He believes that tighter environmental standards are inevitable, that environmentally friendly technologies are also cost-efficient, and that customers will increasingly demand them.

Thus, GE is investing in more fuel-efficient locomotives and jet engines; coal-based power plants that use technologies to strip almost all pollutants out; technologies for sequestering carbon dioxide emissions; water purificationsystems; and power-generating windmills. Under Immelt GE is also exiting some businesses that do not fit his strategic vision, including GE’s insurance business, which he sold to Swiss Reinsurance Co. In 2006 for $6.8 billion.

The CEO of a corporation also manages relationships with the people who own the company— its shareholders. The CEO reports to the board ofdirectors, whose primary function is to make sure the strategy of the company is consistent with the best interests of shareholders. The CEO also normally sits on the board and spends considerable time describing company strategy to shareholders.

Members of the top management team help the CEO in all of this. The team normally includes a chief financial officer (CFO), who is responsible for the overall financing of the corporation. It may also include a chief operating officer (COO), who makes sure operations are run efficiently within the company; and in some high-technology enterprises a chief technology officer (CTO) is responsible for developing new technologies and products within the corporation.

BUSINESS-LEVEL GENERAL MANAGERS

With a multi divisional enterprise such as General Electric, business-level general managershead the different divisions. GE has general managers running its power generation business, medical equipment business, lighting business, and so on. These general managers’ report directly to Jeffery Immelt. Within an organization that is active in just one line of business, such as Burberry or Starbucks, the business and corporate levels are the same.

Business-level general managers lead their divisions—motivating, influencing, and directing their subordinates—and are responsible for divisional performance. Business-level general managers translate the overall strategic vision for the corporation into concrete strategies and plans for their units. Thus, the head of GE’s locomotive business, together with that team, has formulated strategies for making locomotives more environmentally friendly.

These include the development of diesel locomotives with lower emissions and hybrid diesel–electric engines. Business-level managers often have considerable latitude to develop and implement strategies that they believe will improve the performance of their divisions, so long as those strategies are consistent with the overall goals and vision for the entire corporation.

Business level general managers organize operations within their division, deciding how best to divide tasks into functions and departments and how to coordinate those subunits so that strategy can be successfully implemented. Business-level general managers also control activities within their divisions, monitoring performance against goals, intervening to take corrective action when necessary, and developing human capital.

FUNCTIONAL MANAGERS

Below general managers we find functional managers, who are responsible for specific business functions that constitute a company or one of its divisions. Thus, a functional manager’s sphere of responsibility is generally confined to one organizational activity (purchasing, marketing, production, or the like), whereas general managers oversee the operation of the entire company or a self-contained division.

The head of each function leads that function. Functional managers motivate, influence, and direct others within their areas. Although they are not responsible for the overall performance of the organization, functional managers nevertheless have a major strategic role: to develop functional strategies and draft plans in their areas that help fulfil the strategic objectives set by business- and corporate-level general managers.

In GE’s aerospace business, for instance, manufacturing managers develop manufacturing strategies consistent with the corporate objective of producing environmentally friendly products and generating high performance.

They might, for example, decide to implement process improvement programs to improve quality and boost employee productivity. Moreover, functional managers provide most of the information that makes it possible for business- and corporate-level general managers to formulate realistic and attainable strategies. Indeed, because they are closer to customers than are typical general managers, functional managers themselves may generate important ideas that subsequently may become major strategies for the company.

Thus, it is important for general managers to listen closely to the ideas of their functional managers. An equally great responsibility for managers at the functional level is strategy implementation: the execution of corporate- and business-level strategies.

The heads of functions are responsible for developing human capital within their organizations. They also organize their functions into subunits such as departments or teams; exercise control over those subunits; set goals; monitor performance; provide feedback; and make adjustments if necessary. Thus, the manufacturing function might be further subdivided into departments responsible for specific aspects of the manufacturing process.

There might be a procurement department, a production planning department, an inventory management department, and a quality assurance department. Each department will have its own managers, who report to their superiors, the functional heads; those managers will be responsible for leading their units, organizing and controlling them as necessary, strategizing for the tasks under their control, and developing employees within their units.

FRONTLINE MANAGERS

Furthest down the management hierarchy are frontline managers, who manage employees who are themselves not managers. A frontline sales manager might manage 10 salespeople; a frontline manager in manufacturing might manage a work group of employees who physically assemble a product; and a frontline engineering manager in a software company might manage a group of developers writing computer code.

Most complex organizations have many frontline managers. For example, the oil and energy company BP has some 10,000 frontline managers who oversee 80 percent of the organization’s 100,000 employees.

They work in every part of the company— from solar plants in Spain to drilling rigs in the North Sea and marketing teams in Chicago. Their decisions, in aggregate, have an enormous impact on BP’s performance. 13 Most successful managers begin their managerial careers as frontline managers. In this job they encounter the realities of management, which as we will see in the next section often differ from their expectations.

Frontline managers are critical to maintaining the performance of an organization. They lead their teams and units. They strategize about the best way to do things in their units and about the best strategies for their functions and the company. They plan how best to perform the tasks of their units. They organize tasks within their teams, monitor the performance of their subordinates, and try to develop the skills of their subordinates.

As we saw in the case of Tim Jones at Starbucks, who was a frontline manager responsible for the performance of an individual store, frontline managers can have an impact significantly beyond their jobs. In some cases, they can influence the destiny of an entire organization.

1.5 Managerial roles and skills

Managerial roles

Manager assumes multiple roles, to meet the many demands of performing their function. Role is an organized set of behaviours. Henry Mintzberg published 10 management roles in his book "Mintzberg on Management: Inside our Strange World of Organizations," in 1990.the ten roles are divided into 3 groups.

1. Interpersonal role –

This managerial role involves providing information and ideas. It helps in creating communication, connects and relations to develop the superior subordinate relationship.

Interpersonal roles include: -

• Figurehead: a figurehead is the one who performs ceremonial and symbolic duties as head of the organization. For examples – ceremonies, status request, solicitations
• Leader – the leader is the one who is responsible for the motivation and direction of subordinates. They involve in making a proper work environment. For example – build effective team, manage conflicts.
• Liaison – the managers must communicate with internal and external contacts that provide information and favors. For example – work on external boards

2.     Informational role -

The managerial roles in this category involve processing information. They are primarily concerned with information aspects of managerial work.

Informational roles include: -

• Monitor – they gather internal and external information relevant to the organization. For example, handling mails, contacts, handle information such as industry, economic and competitive news.
• Disseminator – the managers are responsible in forwarding the factual and value-based information to the other members of the organization. Forward informational email, conference calls, etc
• Spokesperson – the manager communicates the information to the outside world about organization policies, plans, outcomes, etc. for example board meetings.

3.     Decisional roles –

The managerial roles that involve using information.

Decisional roles include: -

• Entrepreneur – the entrepreneur involves in creating and controlling change within the organization. It means generating new ideas and implementing them. For example - participate in review meeting involving new projects
• Disturbance handler – they are involving in taking corrective action when the organization faces unexpected events and operational breakdowns. For example – participate in review meeting involving disturbances and crises
• Resources allocator – they are involved in taking responsibility of allocation of organizational resources. For example – allocation of human resources
• Negotiator – under this role, the managers are responsible for representing the organization at major negotiations with other organization and individuals. For example – negotiate with vendors and clients

Managerial skills

The roles that a manager plays in the organization require some skills. These are the skills or qualities that an organization looks for in a person to assign him as a manager. Let us see and try to understand the skills required for managing an organization and its working.

1. Technical Skills.

2. Human Skills.

3. Conceptual Skills.

4. Interpersonal and Communication Skills.

5. Decision-Making Skills.

6. Diagnostic and Analytical Skills.

Technical Skill

Technical skill is knowledge of and proficiency in activities involving methods, processes, and procedures. Technical skill is the ability to use the specialized knowledge, procedures, and techniques of a field of activities. Accountants, engineers, surgeons all have their technical skills necessary for their respective professions. Most managers, especially at the lower and middle levels, need technical skills for effective task performance.

Human Skills

Human skills refer to the ability of managers to work effectively with other people both as individual and as members of a group. Human skills are concerned with understanding of people. These are required to win cooperation of others and to build effective work teams.

Conceptual Skill

Conceptual skill is the ability to see the “big picture,” to recognize significant elements in a situation and to understand the relationships among the elements. It is the ability to coordinate and integrate all of an organization’s interests and activities. It requires having the ability to visualize the enterprise as a whole, to envision all the functions involved in a given situation or circumstance, to understand how its parts depend on one another and anticipate how a change in any of its parts will affect the whole. A manager’s ability to think in the abstract and to view the organization holistically is important. Suggesting a new product line for a company, introducing computer technology to the organization’s operations, or entering the international market; for deciding this magnitude, a manager requires conceptual skill is his personality.

Interpersonal and Communication Skills

Communication skill for a manager is a must.  The manager must be able to convey ideas and information to others and receive information and ideas from others effectively. A manager’s job is to control the subordinates and give high-level managers or administrators, information about what is going on.

Communication skill enables a manager to perform them properly. Most of his time, a manager’s job is to interact with people inside and outside of the organization.

Manager’s ability to communication with individuals and groups, controlling and motivation they are what Interpersonal and Communication skill are. A manager requires having an effective Interpersonal and communication skill to keep the responsibilities given to him.

Decision-Making Skill

In simple words, a manager’s job is to make decisions that will lead the organization to the attainment of is goals. Decision making skill is the skill that makes a manager able to recognize opportunities and threat and then select an appropriate course of action to tackle them efficiently so that the organization can benefit them.

Diagnostic and Analytical Skills

A good manager has diagnostic and analytical skill in his bag. Diagnostic skill refers to the ability to visualize the best response to a situation. Analytical skill means, the ability to identify the key variables in a situation. Manager’s diagnostic and analytical skills help him to identify possible approaches to a situation. After that is also helps a manager to visualize the result or outcomes of these approaches. This skill sounds similar to the decision-making skill, but it is the skill required to make the decision.

These are the skills an ideal manager must have. These skills are inter-related and irreplaceable. A manager is appointed for making a decision. So, to make the decision he or she needs to identify a situation which could be opportunities or threat. Conceptual knowledge is essential for this as it helps the manager has a complete understanding of the organization. A manager cannot decide without diagnosing and analysing. Diagnosing and analysing the situation is required to tackle a situation and for this need’s information and resources.

Collecting Information and gathering resources requires communication with colleagues at work and people’s outsides the organization. Persuading, leading, motivating is required and get the best out of them. A manager cannot just give decisions and sit in this office; he needs to have technical skills is for performing the task which was set by the decision. A good manager has all these skills, but it is not necessarily true that all of them are equally important or required for the assigned job or post of a manager. The relative importance of these skills of a manager depends on the manager rank of his in the organizational hierarchy.

Key Takeaways

1. The roles that a manager plays in the organization require having some skills like technical skills to play technical roles, human skills for human roles, conceptual skills, interpersonal skills, communicative skills, decision-making skills etc.
2. These skills are inter-related and irreplaceable.

1.6 Evolution of management- scientific, human relations, system and contingency approaches

Evolution of the Management Thought

Knowing the history behind the evolution of managerial thinking and the evolution of theories is essential. If you are familiar with them, including the development that spawned current business practices, then you will have a better understanding of management principles that can help you manage people more effectively.

The point is that management has changed tons. The emphasis on structure and authority is no longer as strong as it used to be in the past. Now the focus is on the employees. However, there are theories about the factors that motivate employees, but understand that knowing how these theories came about can give you the knowledge you need to manage your employees properly. Read on to understand the evolution of management thinking and management theories.

Evolution of the management concept

The evolution of managerial thinking is a process that began in the early days of man. It started from the time when man saw the need to live in groups. Powerful men were able to organize the masses, share them in various groups. The exchange was made according to the strength, mental capacity and intelligence of the masses.

The point is, management has been practiced in one form or another since civilization began. If you want a good example where advanced management principles were applied, consider the organization of the ancient Roman Catholic Church, military forces, and ancient Greece. These are all excellent examples. But the industrial revolution brought a drastic change. And suddenly, the necessity to develop a more holistic and formal management theory became a necessity.

1. Explain the evolution of managerial thinking
2. Stages in the evolution of managerial thinking

You cannot understand what it implies or appreciate how it happened without looking at the various areas where it happened. For a better understanding, the evolution of management thinking will be shared in four different stages. These include:

1. Prescientific management period
2. Classical theory
3. Neoclassical theory or behavioural approach
4. Max Weber's Bureaucratic Model
5. The prescientific management periods

The industrial revolution that happened within the 18th century had a big impact on management as an entire. It changed the way companies, as well as individuals, raised capital; organize work and the production of goods. Entrepreneurs had access to all factors of production such as land, labour, and capital. Theirs was to make an effort to combine these factors to successfully achieve a specific goal.

However, the new dimension that management took after the industrial revolution cannot be discussed without mentioning notable personalities who contributed their quarter. They were ready to introduce useful ideas and approaches to offer management a particular and universally acceptable direction. Here are some of them.

Professor Charles Babbage - United Kingdom (1729-1871)

Professor Babbage, a renowned mathematics professor at the University of Cambridge, found that manufacturers relied on guesswork and suggestions and urged them to use mathematics and science to be more accurate and productive.

Robert Owens - United Kingdom (1771-1858)

Robert was considered the father of personnel management because of his focus and focus on employee well-being. He introduced cooperation and unions. Robert believed that employees' well-being could determine their performance to a great extent. He promoted the training of workers, the education of their children, canteens in the workplace, the reduction of working hours, among others.

Other contributors to the prescientific management period include:

1. Henry Robson Towne - United States
2. James Watt Junior - United Kingdom
3. Seebohm Rowntree - United Kingdom

Classical theory

But its contribution to the evolution of management is limited. The beginning of what is known as management science began in the last decade of the 19th century. Names like Emerson, F.W. Taylor, H.L. Grant et al. Paved the way for the establishment of what's called scientific management.

During the classical period, managerial thinking focused on work content, standardization, division of labour, and a scientific approach to organization. It was also closely related to the industrial revolution, as well as the rise of large-scale companies.

Neoclassical theory

This period of evolution of management thinking is an improvement on classical theory. In other words, he modified and improved the classical theory. For example, classical theory focused more on the area of   job content, including the management of physical resources, while neoclassical theory placed a deeper emphasis on employee relationships in the work environment.

The bureaucratic model

A German sociologist named Max Weber proposed this model. And it includes a system of rules, the division of labour that depends on functional specialization, legal authority and power, the hierarchy of authority, and the location of employees based on their technical competence.

The evolution of management theories

Organizations have been formed and through the writings of various writers. Its writing consisted of the government of the kingdoms and the management of humans. And these formed the literature that aided in the development of management theories. And these management models were also offered by military, political and religious organizations.

For example, Sun Tzu's book "The Art of War" was written in the 16th century BC. C. Sun was also a general in the Chinese Army. However, Sun's book writings were also used for management purposes.

The book emphasizes that it is possible to achieve success by using the strength of the organization to exploit the weakness of rivals. Another great book was Chanakya's Arthashastra. It was written in the 3rd century BC. C. And focused on the government of the kingdom in regards to the formulation of government policies and people management.

Conclusion

The evolution of management started from civilization. So, what we have now are refined and improved management thoughts and theories.  It will help to improve the knowledge of the process and will effectively use the management principles for the improvement of the organization.

Classical Approach –Fayol

Henry Fayol, the father of recent management, has developed a group of management principles. Fayol wrote perceptibly supported his practical experience as a manager. Fayol argued that there's one "management science" whose principles are often utilized in all management situations regardless of what sort of organization is being managed.

Fayol argued that the activities of an industrial company are often grouped into six categories: (i) technical (production), (ii) commercial (purchase, sale and exchange), (iii) financial (search and optimal use of capital), (iv ) security (protection of property and people), (v) accounting (including statistics); and (vi) managerial.

He developed the subsequent principles underlying the management of all kinds of organizations:

HENRY FAYOL'S FOURTEEN MANAGEMENT PRINCIPLES:

1 Authority and responsibility goes hand in hand Fayol argued that authority flows from responsibility. Managers who exercise authority over others must take responsibility for both decisions and results. He viewed authority as a corollary of responsibility. Authority is both official and private. Official authority springs from the manager's position within the organizational hierarchy and private authority is formed from intelligence, experience, moral worth, past service, etc. A corollary of the principle that no manager should tend authority unless he assumes responsibility is that those that have responsibility should even have corresponding authority so as to enable them to initiate action over others and command the resources necessary for the performance of their functions.

2. Unity of command: This principle holds that an employee should have just one boss and receive instructions from him only. Fayol discovered that if this principle is disobeyed, authority is going to be undermined, discipline are going to be jeopardized, order are going to be disturbed and stability are going to be threatened. Dual control may be a permanent source of conflict. Therefore, in every organization, each subordinate must have a superior whose mandate he must obey.

3. Unity of direction: this suggests that each one the executive and operational activities that relate to a special group with an equivalent objective must be directed by “a boss and an idea. However, it doesn't mean that each one decision must be made up of above. It just means all related activities should be led by one person. For instance, all marketing activities like product strategy and policy, advertising and advertisement, channel policy, product pricing policy, marketing research, etc., should be under the controlled by a manager and directed by an integrated plan.

4. Scalar chain of command: consistent with Fayol, the scalar chain is that the chain of superiors that goes from the very best authority to rock bottom ranks. The road of authority is that the route followed through each link within the chain by all communications that start from or attend the last word authority.

5. Division of labour: this is often the principle of specialization that, consistent with Fayol, applies to all or any sorts of work, both managerial and technical. It helps an individual acquire a skill and precision with which he can do more and better work with an equivalent effort. Therefore, the work of everyone within the organization should be limited the maximum amount as possible to the performance of one leadership role.

6. Discipline: Discipline may be a sine qua non condition for the right functioning of a corporation. The members of a corporation must perform their functions and behave in reference to others in accordance with rules, norms and customs. Consistent with Fayol, the simplest thanks to maintain discipline is: (i) to possess good superiors in the least levels; (ii) agreements (entered into with individual employees or with a union, because the case may be) that are the foremost clear and fair as possible; and (iii) sanctions imposed with criteria.

7. Subordination of the individual interest to the general interest: The interest of the organization is above the interests of the individual and the group. It can only be achieved when senior managers in the organization set an example of honesty, integrity, fairness and fairness. It will involve an attitude and a spirit of sacrificing your own personal interests whenever it is evident that those personal interests are in conflict with the interests of the organization. However, it can be emphasized that social and national interests must take precedence over organizational interests whenever the two are opposed to each other.

8. Remuneration: Employees must receive fair and equitable remuneration. Differences in pay should be based on job differences, in terms of employee qualities, application, responsibility, working conditions, and job difficulty. You must also take into account factors such as cost of living, general economic conditions, demand for labour, and the economic status of the business.

9. Centralization: Fayol believed in centralization. However, he did not contemplate the concentration of all decision-making authority in senior management. However, he argued that centralization and decentralization is a matter of proportion. In a small business with a limited number of employees, the owner-manager can give orders directly to everyone. However, in large organizations, where the worker is separated from the CEO through a long scalar chain, decision-making authority must be distributed among several managers to varying degrees. Here one generally encounters a situation of decentralization with centralized control. The degree of centralization and decentralization also depends on the quality of the administrators.

10. Order: Order, in Fayol's conception, means the right person in the right job and everything in its proper place. This type of order depends on a precise knowledge of the human and resource requirements of the concern and a constant balance between these requirements and resources.

11. Fairness: Means that subordinates should be treated fairly and kindly. This is essential to awaken your devotion and loyalty to the company. Therefore, it is the CEO's duty to instil a sense of fairness at all levels of the scale chain.

12. Stability of staff tenure: Management policies should provide a reasonable sense of job security. The hiring and firing of personnel should not depend on the whims of superiors but on well-conceived personnel policies. He points out that it takes time for an employee to learn his job; If they drop out or are discharged in a short time, the learning time is lost. At the same time, those deemed inappropriate should be eliminated and those deemed competent should be promoted. However, "a middle manager who stays is infinitely preferable to top managers who come and go."

13. Initiative: focuses on the ability, attitude and resourcefulness to act without being asked by others. Managers must create an environment that encourages their subordinates to take initiative and responsibility. Since it provides a sense of great satisfaction to smart employees, managers must sacrifice their personal vanity to encourage their subordinates to show initiative. However, it should be limited, according to Fayol, by respect for authority and discipline.

14. Esprit de Corps: Cohesion and team spirit should be fostered among employees. One of the main characteristics of organized activity is that several people work together in close cooperation to achieve common goals. An environment must be created in the organization that induces people to contribute to the efforts of others in such a way that the combined effort of all together promotes the achievement of the general objectives of the company. Fayol warns against two enemies of the esprit de corps, viz. (i) divide and conquer, and (ii) abuse of written communication. It may be to the company's benefit to divide its enemy, but it will surely be dangerous to divide the workers themselves. Rather they should be soldiers in cohesive and highly interactive task forces. Over-reliance on written communication also tends to disrupt team spirit. Written communication, when necessary, should always be complemented by oral communication because face-to-face contacts tend to promote speed, clarity, and harmony.

CONTRIBUTION FROM F.W TAYLOR

His thoughts about management came from his ample workings with three companies: Midvale Steel Works, Simonds Rolling Mills, and Bethlehem Steel Co.

Taylor concluded that scientific management implies a more complete mental revolution on the part of workers and management, without this mental revolution, scientific management does not exist.

Scientific management 5 principles proposed by Taylor:

1. Science, not a golden rule 2. Harmony, not discord 3. Mental revolution 4. Cooperation, not individualism 5. Development of each and every person towards their greater efficiency and prosperity.

1. Science, not a rule of thumb:

To increase organizational efficiency, the "rule of thumb" method must be replaced by methods developed through scientific work analysis.

Golden rule means the decisions made by the manager based on his personal judgment. Taylor says that even a small manufacturing activity, such as loading iron sheets into rail cars, can be scientifically planned. This will help save time and human energy. Decisions must be based on scientific research with cause-and-effect relationships.

The work assigned to any employee must be observed and analysed with reference to each element or a part of it and therefore the time involved in it to make a decision the simplest way to perform that work and determine the standard performance for it.

2. Harmony, not discord:

Taylor emphasized that there must be complete harmony between the workers and the management since if there is any conflict between the two, it will not be beneficial to either the workers or the management.

Both management and workers must realize the importance of each. To achieve this level, Taylor proposed that an entire mental revolution on the part of both management and workers.

He means that there must be a complete change in the attitude and perspective of workers and management towards each other. It should always be kept in mind that prosperity for an employer cannot exist for long unless it is accompanied by prosperity for the employees of that organization and vice versa.

It is possible to (a) share a part of the surplus with the workers (b) the training of the employees, (c) the division of labour (d) the team spirit (e) the positive attitude (f) the sense of the discipline (g) sincerity, etc.

The management must always be willing to share the profits of the company with the workers and the latter must give their full cooperation and hard work to achieve the organizational objectives. Group action with mutual trust and understanding must be perfect to understand the focus of work. This principle requires that there's an ideal understanding between management and workers which both feel a part of an equivalent family. It helps to produce a synergistic effect as both management and workers work in unison.

3. Mental revolution:

It involves a change in the behaviour of workers and management towards each other. Both must realize the importance of the other and work with full cooperation. Both management and workers should aim to increase the profits of the organization.

To do this, the workers must do their best to make the company profit and, on the other hand, the management should share part of the profits with the workers. Therefore, the mental revolution requires a complete change in the perspective of both the management and the workers. There should be a spirit of union between workers and management.

4. Cooperation, not individualism:

This principle is an extension of the "harmony, not discord" principle and emphasizes mutual cooperation between workers and management. Cooperation, mutual trust, and a sense of goodwill must prevail among both managers and workers. The main motive is to replace internal competition with cooperation.

Both "management" and "workers" must realize the importance of each other. Workers should be considered part of management and allowed to participate in management's decision-making process. Management should always accept their proposal and should also reward them if their suggestions prove beneficial to the organization, viz. Cost reduction or production increase, etc.

At the same time, workers must also resist the strike or make unnecessary demands on management. Workers must be treated as an integral part of the organization and all-important decisions must be made after proper consultation with workers. Both must see themselves as two pillars whose strength alone can guarantee the achievement of the common objectives of the organization.

Taylor also suggested that there should be a proper division of labour and responsibility between the two. Management must always guide, encourage and assist workers.

5. Development of each and every one of the people towards their greater efficiency and prosperity:

The efficiency of any organization also largely depends on the skills and abilities of its employees. Therefore, it was considered essential to provide training to workers to learn the best method developed using the scientific approach. To achieve efficiency, steps must be taken from the employee selection process. Employees must be scientifically selected.

Scientific Management Elements and Tools

1. Separation of planning and execution: Taylor emphasized the separation of planning aspects from the actual performance of the work. Planning should be left to the supervisor and workers should emphasize operational work.
2. Functional foreman: the separation between planning and execution resulted in the development of a supervision system that might require planning work adequately in addition to maintaining the supervision of workers. Thus, Taylor developed the concept of functional foreman based on the specialization of functions.

Functional Foreman

1. Job analysis: it is carried out to find out the best way to do things. The best way to do a job is the one that requires the least movement consequently less time and cost.
2. Standardization: standardization should be maintained with respect to instruments and tools, work period, amount of work, work conditions, production cost, etc.
3. Scientific selection and training of workers: Taylor has suggested that workers be selected on a scientific basis taking into account their education, work experience, skills, physical strength, and so on.
4. Financial incentives: Financial incentives can motivate workers to do their best. Therefore, monetary (bonuses, compensation) and non-monetary (promotion, improvement) incentives must be provided to employees.

Neo-Classical Approaches

Neoclassical organization theory

In general, most people identify neoclassical theory with the human relations movement in which Elton Mayo had pioneered. Mayo and his collaborators carried out the Hawthorne experiments that formed the basis for this theory. In this article, we will talk about the Neoclassical Theory of Organizations.

Introduction to neoclassical theory

Hawthorne's experiments revealed that an informal organization, as well as socio-psychological factors, exert a much greater influence on human behaviour than psychological variables.

Therefore, these findings focused on human beings and their behaviour in organizations.

Therefore, neoclassical theory is also called the behaviour theory of organizations or human relations approach.

The main propositions are the following:

1. Generally speaking, an organization is a social system. Also, it has several interacting parts.
2. There is an informal organization within each formal organization. More importantly, the two affect each other.
3. Human beings are interdependent. Therefore, the organization can predict its
4. Behaviour if you look at social and psychological factors.
5. Motivation is a very complex process. Several socio-psychological factors work together to motivate people at work.
6. Human beings don't always act rationally. In fact, the most irrational behaviour is when they seek rewards at work.
7. Normally, the objectives of the organization conflict with the objectives of each individual. Therefore, it is important to reconcile these objectives.
8. Another important aspect of running an organization is teamwork. However, organizations must work to achieve this.

Furthermore, neoclassical writers offered an organizational design as follows:

1. Flat structure: the scalar chain is shorter. Therefore, communication and motivation are more effective.
2. Decentralization: a decentralized structure allows initiative and autonomy at lower levels.
3. Informal organization: a formal organization represents the official channels of interaction. However, it has many weaknesses. Therefore, an informal organization can fill these gaps and meet people's social and psychological needs.

Weaknesses of Neoclassical theories

While neoclassical theory improves on its predecessors, it has the following weaknesses:

1. Neoclassical theory offers several structures. However, you cannot apply them to all situations. Furthermore, a single structure does not serve the purposes of all organizations.
2. This theory lacks a unified approach. In simpler terms, it is just a modification of classical organizational theory.
3. The Noe Classical theory is based on several assumptions that may not be true. To give you an example, the assumption that it is always possible to find a solution to a problem that satisfies everyone is not true.

Human Relations Approaches

The human rationalists, which also denotes the neoclassicals, focused on the human aspect of business. These theorists emphasize that the organization is a social system and the human factor is the most vital element within it.

There are numerous basic principles of the Human Relations Approach listed below:

Decentralization: The concept of hierarchy employed by classical management theorists is replaced by the thought that individual workers and functional areas (i.e., departments) should have greater autonomy and decision-making power. This needs a greater emphasis on lateral communication so that coordination of efforts and resources can occur. This communication occurs through informal communication channels rather than formal and hierarchical ones.

Participatory Decision Making: Decision making is participatory in the sense that those who make day-to-day decisions include line workers who are not normally considered "management." The greater sovereignty granted to individual employees and the consequent reduction in the "height" and increased scope of control of the organizational structure requires that they have the knowledge and ability to make their own decisions and the communication skills to coordinate their efforts with others without close staff. Supervisor.

Concern for the development of self-motivated employees: The importance of a decentralized and autonomous decision-making system by the members of the organization requires that these members be extremely "self-motivated." The goal of managers in an organization of this type is to design and implement organizational structures that reward that self-motivation and autonomy. Another is negotiating working relationships with subordinates that foster effective two-way communication.

Therefore, the human relations approach implies modifications in the structure of the organization itself, in the nature of the work and in the association between manager and assistant. Each of these changes depends on assumptions about the individual, the organization, and communication, like any other theory of organizations. Elton Mayo and others organized an experiment that came to be known as Hawthorne experiments and explored informal groupings, informal relationships, communication patterns, and internal leadership patterns. Elton Mayo is often popular as a parent at the School of Human Relations. Human relationships defend various factors after performing the Hawthorne experiments mentioned below:

1. Social system: The organization in general is a social system that consists of numerous interacting parts. The social system established individual roles and establishes norms that may differ from those of the formal organization.
2. Social environment: The social climate of work affects workers and is also affected.
3. Informal organization: The informal organization also exists within the framework of the formal organization and affects and is affected by the formal organization.
4. Group dynamics: In the workplace, workers often do not act or react as individuals but as members of a group.
5. Informal Leader: There is an appearance of informal leadership as opposed to formal leadership and the informal leader sets and enforces group norms.
6. Non-financial reward: money is an encouraging element, but not the only motivator of human behaviour. Men have various motivations and socio-psychological factors act as important motivators.

Behavioural Approach

The behavioural approach to management evolved primarily because practicing managers found that adopting the ideas of the classical approach did not achieve full efficiency and harmony within the workplace. The behavioural approach to management showcased what classical advocates missed: the human aspect. Classical theorists viewed organization from a production perspective, advocates of behaviour viewed it from the individual's point of view. The behavioural approach to management shows cased independent behaviour and group processes and recognized the importance of behavioural processes at work.

Some of the main behavioural researchers who made significant contributions to the behavioural approach to management are: Mary Parker Follett, Douglas McGregor, Kurt Lewin, Chester Barnard, Abraham Maslow, George Romans, etc.

Branches of the behavioural approach to management

The behavioural approach has been divided into two branches: the human relations approach and therefore the behavioural science approach. Within the human relations approach, managers must know why their subordinates behave the way they are doing and what psychological and social factors have an impression on them. Supporters of this approach strive to point out how the method and functions of management are influenced by differences in individual behaviour and therefore the influence of groups within the office.

Human relations approach

The term human relations mean the way that managers connect with their subordinates. Managers face many difficulties because staff members generally don't adhere to predetermined and balanced patterns of behaviour. Supporters of the human relations approach feel that management must recognize employees' need for social recognition and acceptance. Management should view the work group as a positive force which will be used productively. Therefore, managers must be proficient in human relations skills alongside technical skills. The initial stimulus for the movement came from Hawthorne's experiments:

1. Lighting experiments

2. Relay assembly testing room

3. Interview program

4. Bank wiring testing room

Behavioural Science Approach

The behavioural science approach is really an extension of the human relations approach. It valued the attitudes, behaviour, and performance of people and groups within organizations. Proponents of the behavioural science approach consider humans to be far more complex than the classical approach's description of economic man and social man's description of the human relations approach. This approach focuses on the character of the work and therefore the degree to which it'll satisfy the human got to demonstrate skills and knowledge.

To achieve better employee performance, communication, motivation, participatory management, leadership and social psychology are integrated into this approach. The behavioural approach recognizes the standard of leadership as a crucial element in managerial success. It focuses on the group relationship and recognizes a part of the individual mindset and group behaviour in organizational effectiveness. Abraham Maslow, Fredrick Herzberg, Douglas McGregor, Victor Vroom, James March, Herbert Simon, Chester Barnard, etc., made significant contributions to behavioural science. Getting closer.

Contributions of the behavioural approach

1. Improved use of teams to realize organizational goals.
2. Emphasis on staff training and development.
3. Use of innovative rewards and incentives techniques.
4. Furthermore, the most focus in modern management theory led to empowering employees through shared information.

Limitations of the behavioural approach to management

Challenges for managers in difficult situations and therefore the reality that human behaviour is complex. This complicated the matter for managers trying to use insights from the behavioural sciences that changed regularly when different behavioural scientists offered different alternatives.

Systems Approach

The systems approach is concerned with thoroughly understanding the organization as an open system that converts inputs into outputs. The systems approach had a major impact on management thinking in the 1960s. During this period, thinking about management practices allowed managers to relate different specialties and parts of the business to each other, as well as to external environmental factors.  The system approach focuses on the organization as a whole, its communication with the environment and its need to achieve balance.

In short, there are important management theories, and each theory plays a different role in understanding what managers do. Management is a global, interdisciplinary field that has developed in parts over the years. Numerous approaches to management theory were developed including the universal process approach, the operational approach, the behavioural approach, the systems approach, the contingency approach, and others. F W Taylor, Adam Smith, Henry Fayol, Elton Mayo and others have contributed to the development of the management concept. The classical management approach had three main categories including scientific management, administrative theory, and bureaucratic management. The scientific direction highlighted the scientific study of working methods to improve the efficiency of workers. Bureaucratic management deals with the characteristics of a perfect organization that operates on a rational basis. Management theory explored the principles that managers could use to synchronize the internal activities of organizations. The behavioural approach arose primarily as a result of Hawthorne's studies. Mary Parker Follet, Elton Mayo and their associates, Abraham Maslow, Douglas McGregor and Chris Argyris were the main protagonists of this school.

Contingency Approach

This approach to management thinking focuses on management principles and concepts that do not have general and universal application under all conditions. Joan Woodward in the 1950s has helped develop this approach to management. The contingency school asserts that management is situational and the study of management recognizes the important variables in the situation. It is distinguished that all the subsystems of the environment are interconnected and interrelated. By studying their interrelationship, management can find a solution to a specific situation. Theorists claimed that there is no effective way of doing things in all business conditions. Methods and techniques that are extremely effective in one situation may not give the same results in another situation. This approach proposes that the role of managers is to recognize the best technique in a particular situation to achieve business objectives.

Managers must develop an understanding of the situation and practical selectivity. Contingency visions are applicable in the development of the organizational structure, in the decision of the degree of decentralization, in the motivation and leadership approach, in the establishment of communication and control systems, in conflict management and in the development and employee training. The contingency approach is associated with the application of management principles and processes as dictated by the unique characteristics of each situation. It depends on various situational factors, like the external environment, technology, organizational characteristics, manager characteristics, and subordinate characteristics.

Concepts of MBO

Management by objectives (MBO)

Management by objectives (MBO) could even be a management model that aims to strengthen the performance of a corporation by clearly defining the objectives agreed by both management and employees. According to the theory, having a voice in goal setting and action plans should ensure better participation and engagement among employees, as well as alignment of goals across the organization.

Management by objectives (MBO) is additionally referred to as management by results (MBR).

The origins of management by objectives (MBO)

The thought of (MBO) was first sketched by Peter Drucker and after that arise by his student George Odiorne, was popular within the 1960s and 1970s. In his book "The Practice of Management", printed in 1954, Drucker defined variety of preferences or importance for the manager of the longer term. With the advantage of hindsight, it's going to seem obvious that managers must have a place to go before embarking on a journey. They get so indulged in their present activities that they forget their main purpose. In some cases, it may be that they focus on this activity as a means of avoiding the uncomfortable truth about the condition of their organization. MBO received a lift when it declared itself an integral a part of “The HP Way,” the widely acclaimed management sort of Hewlett-Packard, a computer company. At every level at Hewlett-Packard, managers had to develop goals and integrate them with those of other managers and the company as a whole. This was done by drawing up written plans that showed what people needed to accomplish if they wanted to achieve those goals. The plans were then shared with others within the corporation and coordinated.

Key management by objectives (MBO) concepts

The core concept of MBO is planning, which suggests that a corporation and its members aren't simply reacting to events and problems, but are proactive. MBO requires employees to line measurable personal goals supported organizational goals. For example, a goal for a engineer could also be to finish the infrastructure of a housing division within subsequent twelve months. Goals are set in writing annually and are continually monitored by managers to verify progress. The rewards are based on the achievement of goals.

MBO Features

A discussion of various MBO definitions highlights the following characteristics:

1. MBO is not merely a technique, but a management philosophy. A technique is applicable only in specific areas, but a philosophy or approach guides and influences all aspects of management. MBO is an approach that includes several techniques for better management.

2. In this approach, superiors and subordinates collectively decide various goals of the organization and individuals. These objectives become the goals to be achieved by various people in the organization. Goal review is also done collectively.

3. Corporate, departmental, and individual objectives are used as a benchmark for measuring performance. A comparison of objectives and actual results will allow managers to judge the performance of subordinates and the higher level will similarly evaluate the performance of managers.

4. MBO provides a periodic performance review. This review is normally done once a year. It emphasizes initiative and the active role of the manager who is responsible for achieving the objectives. The review is forward-looking and provides a basis for planning and corrective actions.

5. MBO objectives provide guidelines for the proper system and procedures. The degree of delegation of authority, determination of responsibility, allocation of resources, etc. It can be decided based on the goals of several people. These goals also become a basis for reward and punishment in the organization.

Need for management by objectives (MBO)

1. The Management by Objectives process assist the members to understand their duties in the workplace.
2. KRAs are designed for each employee based on her interest, specialization, and educational qualification.
3. Members of work force are crystal clear about what is expected of them.
4. The management by objectives process leads to satisfied employees. Avoid job mismatch and unnecessary confusion later on.
5. Members in their own way participate in order to the achieve the goals and objectives of the organization. Each employee has her own role in the workplace.  They tend to stay in the organization for a longer period of time and contribute effectively. They enjoy the workplace and don't treat work as a burden.
6. Management by objectives ensures effective communication between employees. It leads to a positive environment in the workplace.
7. Management by objectives leads to well-defined hierarchies in the workplace. Ensures transparency at all levels. A supervisor from any organization would never interact directly with the Managing Director in case of inquiries. First, she would meet with her chief reporting officer, who would then pass the message on to his superior and so on. Everyone is clear about their position in the organization.
8. The MBO process leads to highly motivated and engaged employees.
9. The MBO process establishes a benchmark for each employee. The superiors establish objectives for each of the team members. Each employee receives a list of specific tasks.

Limitations of management by objectives (MBO)

Management by objectives has the following limitations:

1. It involves setting individual goals and responsibilities. But all work in an organization is a group effort in which the activities are so closely interrelated that no individual can be blamed or rewarded for any end result.
2. It is difficult to make comparative evaluations of individuals because the objectives of each individual are different from those of others in terms of complexity, etc.
3. It is difficult to assess and identify the potential. MBO is only concerned with current job performance.
4. The method is time consuming.
5. MBO assumes a certain level of trust throughout the hierarchy. But organizational life teaches people to be cautious. This inhibits honest dialogue and proper goal setting.
6. MBO is not much suitable to routine worker-level jobs, such as an assembly line. In these types of situations, the more traditional performance appraisal tends to be used. The technique is especially suitable for managerial, professional and sales personnel and for those who work independently.

Advantages of management by objectives (MBO)

1. MBO forces managers not only to plan activities, but to plan for results. Managers define objectives while formulating plans. Once the objectives are clearly established, they act as incentives and standards for control purposes.
2. MBO allows managers to focus on really important and profit-impacting tasks rather than tasks that might have little impact on overall results.
3. MBO establishes clear organizational goals and structures. Identify the key result areas and hold the people in charge of achieving the objectives.
4. Employees commit to perform the work assigned to them as agreed and expected. They clearly know their goals and they also know how to move towards their achievements. Therefore, they do not need to wait for instructions, directions or guidance from their superiors.
5. Helps develop effective control. Control involves setting your own standards, evaluating performance and taking the necessary corrective measures if there is any deviation.
6. Helps management formulate better management training programs based on performance evaluations.
7. People become willing and enthusiastic masters of their own destiny.

Management by objectives (MBO): potential for misuse

MBO can easily be misused and often is. What is supposed to be a system that enables dialogue and growth between the boss and the subordinate with a view to achieving results, often degenerates into a system in which the boss puts constant pressure on the subordinate to produce results and You forget to use MBO for commitment, desire. Contribute, and managerial development. Sometimes even well-meaning managers misuse MBO because they don't have the interpersonal skills or knowledge of human needs to prevent their assessment sessions from turning into critical and chewing periods. Finally, many managers tend to view MBO as a total system that, once installed, can handle all management problems. This has led to forcing problems on the MBO system that it is not equipped to handle and that thwart the good effects it may have on the problems it is designed for.

Key takeaways

1. Knowing the history behind the evolution of managerial thinking and the evolution of theories is essential.

2. The evolution of managerial thinking is a process that began in the early days of man.

3. The industrial revolution that happened within the 18th century had a big impact on management as an entire.

4. Professor Babbage, a renowned mathematics professor at the University of Cambridge, found that manufacturers relied on guesswork and suggestions and urged them to use mathematics and science to be more accurate and productive.

5. The beginning of what is known as management science began in the last decade of the 19th century.

6. Names like Emerson, F. W. Taylor, H. L. Grant et al. Paved the way for the establishment of what's called scientific management.

7. For example, classical theory focussed more on the area of job content, including the management of physical resources, while neoclassical theory placed a deeper emphasis on employees relationships in the work environment.

8. A German sociologist named Max Weber proposed the bureaucratic model.

9. Organisations have been formed and through the writings of various writers.

10. Henry Fayol, the father of recent management, has developed a group of fourteen management principles.

11. Taylor concluded that scientific management implies a more complete mental revolution on the part of workers and management, without this mental revolution, scientific management does not exist.

12. In general, most people identify neoclassical theory with the human relations movement in which Elton Mayo had pioneered.

13. The human rationalists, which also denotes the neoclassicals, focused on the human aspect of business.

14. The behaviour approach to management evolved primarily because practicing managers found that adopting the ideas of the classical approach did not achieve full efficiency and harmony within the workplace.

15. The systems approach is concerned with thoroughly understanding the organization as a open system that converts inputs into outputs.

16. Management by objectives (MBO) may be a strategic management model that aims to enhance the performance of the organization through the clear definition of objectives throughout the organization.

17. According to the idea, having a voice in setting goals and action plans encourages participation and engagement among employees, also as goal alignment throughout the organization.

18. Critics of MBO argue that it leads employees to aim to realize set goals by any means necessary, often at the expenses of the corporate.

19. The core concept of MBO is planning, which suggests that a corporation and its members aren't simply reacting to events and problems, but are proactive.

20. Management by objectives (MBO) could even be a management model that aims to strengthen the performance of a corporation.

1.7 Types of Business Organizations

The Four main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC.

Sole Proprietorship

This is a simplest and most common form of business ownership. A business which is owned and run by someone for their own benefit is called sole proprietorship. The business’ existence is entirely dependent on the owner’s decisions, so when the owner dies, so does the business.

Advantages of sole proprietorship:

1. All profits are subject to the owner

2. There is very little regulation for proprietorships

3. Owners have total flexibility when running the business

4. Very few requirements for starting—often only a business license

Disadvantages:

1. Owner is 100% liable for business debts

2. Equity is limited to the owner’s personal resources

3. Ownership of proprietorship is difficult to transfer

4. No distinction between personal and business income

Partnership

Partnership is of two types: general and limited. In general partnerships, both owners invest their money, property, labor, etc. to the business and are both 100% liable for business debts. In other words, even if you invest a little into a general partnership, you are still potentially responsible for all its debt. The partnerships that do not require a formal agreement, that can be verbal or even implied between the two business owners is called general partnership.

The partnership that requires a formal agreement between the partners is called Limited partnerships. They must also file a certificate of partnership with the state. Limited partnerships allow partners to limit their own liability for business debts according to their portion of ownership or investment.

Advantages of partnerships:

1. Shared resources provide more capital for the business

2. Each partner shares the total profits of the company

3. Similar flexibility and simple design of a proprietorship

4. Inexpensive to establish a business partnership, formal or informal

Disadvantages:

1. Each partner is 100% responsible for debts and losses

2. Selling the business is difficult—requires finding new partner

3. Partnership ends when any partner decides to end it

Corporation

Corporations are, for tax purposes, separate entities and are considered a legal person. This means, among other things, that the profits generated by a corporation are taxed as the “personal income” of the company. Then, any income distributed to the shareholders as dividends or profits are taxed again as the personal income of the owners.

Advantages of a corporation:

1. Limits liability of the owner to debts or losses

2. Profits and losses belong to the corporation

3. Can be transferred to new owners fairly easily

4. Personal assets cannot be seized to pay for business debts

Disadvantages:

1. Corporate operations are costly

2. Establishing a corporation is costly

3. Start a corporate business requires complex paperwork

4. With some exceptions, corporate income is taxed twice

Limited Liability Company (LLC)

Similar to a limited partnership, an LLC provides owners with limited liability while providing some of the income advantages of a partnership. Essentially, the advantages of partnerships and corporations are combined in an LLC, mitigating some of the disadvantages of each.

Advantages of an LLC:

1. Limits liability to the company owners for debts or losses

2. The profits of the LLC are shared by the owners without double-taxation

Disadvantages:

1. Ownership is limited by certain state laws

2. Agreements must be comprehensive and complex

3. Beginning an LLC has high costs due to legal and filing fees

Key Takeaways:

1. There are 4 main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC.

1.8 Sole proprietorship

Introduction

The only trade is that the oldest and most ordinarily used sort of business. It's as old as civilization. Historically, business seems to possess started with this type of organization. With the event of science and technology, business needs have increased and new sorts of organizations are developed. This organization is additionally referred to as sole proprietorship, sole proprietorship, and single entrepreneurship within the only trade association; the individual is on top of things. He makes all the investments, shares all the risks, receives all the profits and manages and controls the business himself.

Businesses are generally small-scale, as sole proprietors rely totally on their own resources. The business is typically run with the assistance of a loved one, but he may hire people to require care of the day-to-day activities of the business. As far as his responsibilities are concerned, it's unlimited.

The creditor also has the proper to say his personal property. Sole proprietors are shaping the fate of concern. It’s the power of the management to work out the longer term of the business. His power is unlimited and his decision is final. In fact, he's the sole organizer, manager, controller, and master of his business.

However, the only proprietor must be someone who has the power to conclude a contract. Business conduct should even be permitted by law. In some cases, you'll be expected to get a license from the competent authority before starting a business. These procedures must be completed beforehand. Usually, as within the case of companies and co-operatives, no other legal form is required to start out one trade business.

Anyone can start or end the sole trading business at any time. This type of business may be a show for one-person, which person's abilities may certainly be limited. He might not be ready to handle all situations himself. Therefore, he can make mistakes. He must take a cautious approach, as his responsibilities are unlimited and can depend upon one person.

Definition:

To give you a transparent picture of your organization's only sort of trade, here are some important definitions.

(I) L.H. Haney:

"Individual entrepreneurship may be a sort of business that takes responsibility, directs the business, and puts the individual in danger of failure alone in its head." consistent with Haney, the business isn't only its management, but its management. It’s within the hands of 1 one that is additionally liable for the risks.

(II) James Stephenson:

A sole proprietor may be a one that runs a business on his own, not only the owner of the capital of the business, but also usually organizes, manages and assumes responsibility for all profits or losses. James Stevenson emphasizes that the only trade business is funded by him and is administered alone consistent with his management capabilities. He’s also liable for the success or failure of this business.

(III)S.R. Davor:

"A sole proprietor is someone who runs his own business without the assistance of a partner. He brings in his own capital and uses all his workforce. He also pays as a gift. I’m being helped by others. "

According to Davar, the only proprietor uses only his resources and doesn't get the assistance of his partner. With the rise in jobs, he may hire some people to assist him get purchased their jobs. Adding a partner changes the form of the organization because it becomes a Partnership issue.

A sole proprietor is someone who uses mm's resources to start out a business, hire people to manage the business on their own, and bear all the advantages and risks of the business on its own.

Characteristics of Personal Business:

(I) Individual Initiatives:

This business starts with the initiative of 1 person. He prepares a blueprint for the venture and coordinates various factors of production. He may hire others to assist, but he has ultimate authority and responsibility. All profits and losses are taken by one individual.

(II) Unlimited Liability:

In a single trade, business liability is unlimited. The owner is liable for all losses arising from the business. Responsibility isn't only the investment in his business, but also his personal property is liable for his business obligations.

(III) Management and Control:

The owner manages the whole business on his own. He makes various plans and executes them under his own supervision. Someone may help him, but the last word control lies with the owner.

(IV) Motivation:

One is the only owner of the business. He receives all profits and suffers losses, if any. There is a direct relationship between effort and reward. The more he works, the more he will earn. He is eager to expand his business activities. He doesn't want to enter the speculative business because of the high risk.

(V) Secret:

All important decisions are made by the owner himself. He keeps all business secrets only to him. Business secrets are very important for small businesses. By keeping the business secret, he prevents competitors from entering the same business.

(VI) There is one sole proprietor and one sole proprietor.

Legally, sole proprietorships and their businesses are not separate entities. The loss of his business is his loss and the debt of his business is his debt.

(VII) Owners and businesses coexist:

In a single trade business, there is no independent business with the owner. Business and owner exist together. If the owner dies, goes bankrupt, or is removed from the scene, the business will be dissolved.

(VIII) Limited Business Area:

The sole proprietorship generally has a limited business area, because of the limited resources and management capabilities of the sole proprietor. He can only arrange limited funds and can oversee small businesses. All decisions are to be made by the owner, so the area of   business is limited by his management ability.

(IX) No legal Proceedings:

You can start a stand-alone trading business without any legal proceedings. No formation or registration is required.

(X) Any start and end:

The sole proprietor may start the business at his will and may dissolve it at his discretion as well.

(XI) Freedom in trade choices:

Sole proprietors are free to decide what type of business they want to start. He is not supposed to consult anyone to make such a decision.

(XII) Profit Sharing:

The sole proprietor is the single owner of the business and he receives all the benefits himself. He puts all his efforts into the business and enjoys all the fruits of his work.

Purpose of Independent Trade Business:

A single trade business is established by one person with his or her own resources.

This form of organization is set up for the following purposes:

(I) Channel Individual funds:

Individuals have a small surplus with them. These funds are not enough to set up a large company. People may not like to risk their money in businesses that have no say or control. Instead of keeping your money idle, it's better to set up a small business. Therefore, a single trade business provides a channel for the productive use of individual funds.

(II) Strengthening Distribution Channels:

The only trading business is generally small-scale. People have set up small retail stores under the sole proprietorship. Retailers are an important link in the distribution chain. He is in direct contact with consumers. Without the active involvement of only one trader, the distribution channel from producer to consumer cannot be successful.

(III) Serving Consumers:

Small traders come into direct contact with consumers. Consumers want to buy their daily requirements from the nearest location. The only trader has a store wherever it is available to consumers. Consumers save time by purchasing daily necessities from the nearest retail store.

(IV) Create self-employed Opportunities:

By launching the only trading business, the owner created jobs for himself. Instead of looking for a job outside, this is a form of organization that helps people create their own jobs.

(V) Avoid Concentration of Wealth:

To avoid the concentration of wealth in a small number of funds, a single trading business helps its distribution among many people. When a large number of people enter different businesses, it may be small, but it helps to distribute economic wealth.

(VI) Supporting Large Companies:

The success of large businesses is also related to the support provided by small business units. Smaller units provide ancillary services to larger units. Larger units require many smaller components, from smaller units. As such, a single trade business serves large units by providing everything they do not want to manufacture in-house. In Japan, all large units rely on supply from small units.

The Only Trade Business Formation:

A single trade business is such a form of organization that does not require any procedures to establish it. Anyone can start a business whenever they want. There are no legal requirements to form a single trading business. However, if some businesses require prior government sanctions, such procedures must be completed.

The usual decisions to launch all businesses are also made in single trade businesses. The first decision is the choice of a particular business area. To make this decision, you must first assess the potential demand for the product if it is in the manufacturing sector, or the presence of the consumer if it is in the retail industry.

Next, you need to evaluate the resource requirements and availability. In general, the only trader relies on family resources to start a business. With the expansion of banking facilities in most places, single companies are now beginning to use credit lines to expand their jobs. Choosing the right site is very important in a single trade business.

Choosing where to start a business is very important, as most retailers are in the hands of single merchants. Customer requirements must be taken into account when choosing a business site.

Customers want to buy their personal necessities at the nearest location, but they want to go to the main shopping centre to buy durable consumer goods such as TVs, refrigerators, washing machines, and music systems. The business is set up with various factors in mind. The stand-alone trading business can be closed by the owner at any time. As with other forms of organization, no legal process is required to liquidate this business. Setting up and liquidating a single trade business is both easy.

Legal Status of a Single Trade Business:

The following points explain the legal position of a single trade business.

(I) There is no specific law that requires registration, etc. for this business. The joint-stock company must be established under the Companies Act of 1956, the Partnership company is subject to the Partnership Act of 1932, and the only trading business is not subject to anything. Such a decree. Therefore, this business may be started and dissolved at the discretion of the owner, regardless of statutory provisions.

(II) Single trade business is subject to general land law. If there is a provision to obtain a license to start a specific business, the sole proprietor also obtains a license before starting such a business. Those who want to start a wine shop are expected to get a license from the state government. Sole proprietors who want to enter this business are certainly expected to comply with this law.

(III) The sole proprietor and her business are the same. Business exists only with sole proprietors. If he dies or otherwise disappears from the scene, the business will be dissolved. The owner and his business have one personality.

(IV) The sole proprietorship's liability is unlimited. When a business is dissolved, there is no distinction between business assets and private assets of a sole proprietor, and business loans and personal loans.

Self-Employed Suitability:

The amount of capital and management skills required for a particular business influences decisions about the shape of the organization. Smaller businesses have fewer capital requirements and sole proprietorships are the most appropriate form of organization.

The need for capital is increasing due to the improvement of industrial technology and the devising of new production methods. Other forms of organizations such as Partnerships and corporations have also become popular. There are certain types of companies where the sole proprietorship is still the most appropriate form of organization. This type of organization is also suitable for certain situations.

These situations are as follows:

(I) If the market is local:

If the market for products is confined to a particular location, the scale of business operations will be small. The amount of capital required is low and normal management skills are sufficient. In this situation, the sole proprietorship is best. Most retailers are managed by only one trader.

(II) If you need personal contact with the customer:

Personal contact with the customer may be required. Customers may have preferences or preferences for certain things. In this situation, a self-employed organization is suitable. Doctors and lawyers need to be in direct contact with patients and clients. Customers may like to sew their clothes together. Therefore, in all of these cases, the sole proprietor will be more useful.

(III) Speculative Business:

In a speculative business, product demand and prices change rapidly. Businessmen need to make quick decisions. Sole proprietors can make immediate decisions depending on the situation. He doesn't have to talk to anyone else. So, he can decide things for himself. No other organization is as speculative as the sole proprietorship.

Social Desirability of Private Business:

Sole proprietorship restrictions have necessitated the development of other forms of organization. The widespread use of other forms of organization does not mean that sole proprietorships have been excluded. Rather, it continues to be the most popular form of organization in all countries. This form of organization also has social desirability.

Its social need is due to the following reasons.

(I) Employment of a large number of people:

This form of organization can be started alone, but he takes others to help. The number of only traders is very large in all countries and they employ many as their helpers. Therefore, sole proprietors can provide employment to a large number of people.

(II) Need for less capital:

This form of organization can be undertaken by anyone by any means. Even people with few resources can start a business on a small scale. Vegetable sellers can start a business for hundreds of rupees and regain capital at the end of the day. Therefore, this type of form encourages people to do independent business.

(III) Low risk:

In general, the sole proprietorship is started on a small scale and less investment is made. Because of the low risk, you can change your business if it is not appropriate.

(IV) Offering low-priced products:

In this way, we provide consumers with products at low prices. The only number of traders is large, they are in fierce competition with each other, and consumers are offered products at competitive rates. In general, business expenses are low. This allows the only trader to sell their products at a lower price.

(V) Equal Distribution of Income:

This form of organization acts as a constraint on the monopoly tendencies of other forms of organization. Many people enter the business. Therefore, this results in an equal distribution of income. Everyone can invest their savings and get a fair return on it. When a business is in the hands of a few, it brings a concentration of wealth in the hands of only some.

(VI) Useful for small producers:

The only trader buys goods from small producers and sells them to consumers. Many intermediaries are excluded from distribution channels. Some of the profits that the intermediary earns in the form of commissions are left to the producers and some are passed on to consumers in the form of low prices.

(VII) Helping Consumers:

Consumers are helped by some traders in making their purchases. The only trader opens a store on the street so that consumers can buy from nearby stores. Merchants supply products even at the front door.

(VIII) Functions as a training centre.

The only trading business offers the opportunity to learn business techniques. With less investment, you can afford to learn by trial and error. You can expand it later by bearing the various strengths and weaknesses of your business. Therefore, this is a good organizational form for receiving business training.

Advantages

1. Easy to form: Forming and organizing a sole proprietor's business is very easy and easy. There is no legal procedure.

2. Easy to manage: A small organization. The owner can easily manage it.

3. Profit incentives: Sole proprietors enjoy all the benefits for themselves. The motivation for this profit is an incentive to work hard.

4. Quick decision: He is the only organizer, so he can make quick decisions. He can act swiftly in response to changes in the market.

5. Customer contact: He is the owner and manager of concern. By building good relationships with our customers, we will be in a position to personally study their tastes and needs.

6. Business secrets: He can keep business secrets for himself. Keeping confidential is an important issue for all types of corporate organizations.

7. Smooth operation: Since he is a sole proprietor, there is no disagreement or controversy. It helps the smooth execution of concerns.

8. Efficiency and economy: Organizations are small. He can be a close director. He can reduce the cost of management and all sorts of waste. He can run his business efficiently.

9. Flexibility: Business changes can be adopted at any time. Flexibility is promoted with a small investment. It can be moved from place to place very easily.

10. Family Training: He gets the help of his family members in maintaining business. His children are trained in business activities.

11. Self-Employed: Easy to get started with small units. Nationalized banks are also supporting this direction.

12. Social Benefits: It offers many individuals an opportunity. Many can become entrepreneurs with limited resources.

13. Tax Benefits: Income tax is levied on the sole proprietor's personal income, not on the interests of concern. Therefore, it is advantageous.

Restrictions or Disadvantages of Sole Proprietors

The Sole Proprietorship also suffers from certain serious limitations (weaknesses).

1. Limited Capital: The use of limited capital means only limited profits. If you need to grow your business, you may not have enough resources.

2. Limited Skills: Since there is only one man, management ability is limited.

3. Limited Borrowing Capacity: The sole proprietor's borrowing capacity is limited to the extent of his financial position.

4. Unlimited liability: The creditor can withdraw the loan amount not only from the assets of the business, but also from his personal assets. Therefore, his liability is unlimited.

5. Make Hurry Decisions: The sole proprietor makes all the decisions himself. So, there may be a hasty and thoughtless decision

6. Short-lived: If the sole proprietor has no children, or if his children are not interested in continuing the business, the business will be terminated. We do not guarantee a continuous presence in this type of business.

7. No division of labour: Since it is a small unit, it is not possible to introduce a division of labour into management.

8. Employee reliance: With business expansion, it is inevitable that owners will rely on paid managers.

9. Limited Business Area: The business is small. Therefore, the activity cannot go beyond a specific area.

10. Lack of Economies of Scale: Sole proprietors have only small businesses. He is unable to do a large business due to lack of financial resources. Therefore, he cannot enjoy the economy of large-scale production, buying and selling.

Key takeaways:

1. A private business is an unincorporated business with only one owner who pays personal income tax on profits.
2. Sole proprietors are easy to set up and dismantle because of the lack of government involvement and are popular with small business owners and contractors.
3. Many sole proprietors will be rebuilt in LLC in sync with the expansion of the company.
4. For example, the debt of a sole proprietor is also the debt of the owner. However, the profits of the sole proprietor are also the profits of the owner, as all profits flow directly to the business owner.
5. The main advantages of sole proprietorship are the benefits of pass-through tax mentioned above, ease of creation, and low rates of creation and maintenance.
6. The disadvantages of sole proprietors are the unlimited liability of owners across businesses and the difficulty of raising capital through established channels, especially through the issuance of shares and the acquisition of bank loans and credit lines. Is.
7. Therefore, an entrepreneur begins as an entity with unlimited liability.
8. As your business grows, you often move to limited liability companies such as LLCs and LLPs, or companies such as S Corp, C Corp, and Benefit Corp.
9. A sole proprietor is very different from a company (corp.), a limited liability company (LLC), or a limited liability Partnership (LLP) in that no separate legal entity is created.
10. As a result, sole proprietorship owners are not exempt from the debt borne by the entity.

1.9 Partnership

Partnership is the relation between two or more persons who have agreed to share profits of a business carried on by all or any of them acting for all.

Features/characteristics of partnership business are-

1. Partnership business comes into existence through an agreement among the partners which may be oral or in writing.
2. At least two persons are required to start a partnership business and maximum number of members is 50, as per the Indian Partnership Act, 1932.
3. Partners agree to share profits in the ratio mentioned in the agreement.
4. Decisions of the business are taken with the consent of all the partners.
5. Business comes to an end on the death, retirement or insolvency of any of the partners.
6. There is mutual agency among the partners, i.e. as an agent, a partner can represent other partners and all partners are liable to acts of one another.

Types of Partnership

Partnership can be divided into certain categories:

a)  Particular Partnership: when the partnership is started for a particular work then it is called particular partnership. When the work is completed, the partnership automatically comes to an end.

b) Fixed-period Partnership: This type of partnership is started for a specific period of time and comes to an end when that period is over.

c)Partnership-at-will: In this type of partnership, the business of the firm continues as long as the partners desire and is terminated when any partner gives a notice of dissolution.

d)Limited Partnership: It is the partnership in which the liability of at least one member is limited to the extent of his capital in the business and the liability of other partners is unlimited.

e)   General Partnership: This type of partnership is formed not for a particular task and the liability of members is unlimited.

Types of partners

There are different kinds of partners namely,

1)     Active Partner: A partner who contributes capital and actively participates in the management and day-to-day working of the business, is known as active partner. He may also be called a working partner.

2)     Sleeping Partner: A partner who contributes capital, shares profit and losses but does not participate in the management and day-to-day working of the business is known as sleeping partner.

3)     Secret Partner: A partner whose membership in the firm is not known to outsiders is known as secret partner. He also contributes capital, shares profits and losses, takes part in the workings of the business and has unlimited liability.

4)     Nominal Partner: A partner who allows the partnership firm to use his/her name but does not contribute capital or take part in the working of the business is known as nominal partner. He does not share profits and losses of the firm but he is liable to the creditor for repayment of the firm’s debts.

5)     Partner by Estoppels or by Holding-out: When a person is not a partner, but poses himself as a partner either by words or in writing or by his acts, he is called partner by estoppels or by holding-out. Such a partner shall be liable to outsiders who deal with the firm on the presumption of that person being a partner. He also does not contribute anything to the business.

6)     Minor as a partner: A minor is a person below 18 years of age. According to Indian Contract Act, a minor cannot enter into a contract. Thus, a minor cannot enter into a contract of partnership. However, a minor may be admitted to the benefits of an existing partnership with the consent of all partners. The minor is not personally liable for liabilities of the firm, but his share in the partnership, property and profits of the firm will be liable for debts of the firm.

Partnership Deed

The document containing the partnership agreement among partners is called Partnership Deed. It contains the terms and conditions of the partnership firm.

The Partnership Act, 1932 does not make it compulsory to have a written agreement. However, to avoid all kinds of misunderstanding and disputes among the partners, it is always good to have a written agreement known as Partnership Deed.

The contents of Partnership Deed are-

1. Name of the firm.
2. Nature and location of business.
3. Duration of partnership.
4. Methods for preparing accounts and their auditing.
5. Rules regarding banking transactions.
6. Profits sharing ratio.
7. Capital invested by each partner.
8. Duties and responsibilities of the partners.
9. Salaries and drawings of the partners.
10. Rules applicable for accounting treatment on admission, retirement or death of the partner.
11. Procedure for dissolving the firm.

Dissolution of Partnership Firm

As we know that after the dissolution of partnership firm the existing relationship between the partner’s changes. But the firm continues its activities. The dissolution of partnership takes place in any of the following ways:

• Change in the existing profit-sharing ratio.
• Admission of a new partner
• The retirement of an existing partner
• Death of an existing partner
• Insolvency of a partner as he becomes incompetent to contract. Thus, he can no longer be a partner in the firm.
• On completion of a specific venture in case, the partnership was formed specifically for that particular venture.
• On expiry of the period for which the partnership was formed.

Dissolution of partnership firm

Section 39 of the Indian Partnership Act 1932 states the dissolution of partnership firm ceases the existence of the organization.

After this, the partnership firm cannot enter into any transaction with anybody. It can only sell the assets to realize the amount, pay the liabilities of the firm and discharge the claims of the partners.

However, the dissolution of a firm may be without or with the intervention of the court. It is noteworthy here that the dissolution of partnership may not necessarily result in the dissolution of the firm.

But, dissolution of partnership firm always results in the dissolution of the partnership.

Following are the ways in which dissolution of a partnership firm takes place:

1. Dissolution by Agreement

A firm may be dissolved if all the partners agree to the dissolution. Also, if there exists a contract between the partners regarding the dissolution, the dissolution may take place in accordance with it.

2. Compulsory Dissolution

In the following cases the dissolution of a firm takes place compulsorily:

• Insolvency of all the partners or all but one partner as this makes them incompetent to enter into a contract.
• When the business of the firm becomes illegal due to some reason.
• When due to some event it becomes unlawful for the partnership firm to carry its business. For example, a partnership firm has a partner who is of another country and India declares war against that country, then he becomes an enemy. Thus, the business becomes unlawful.

3. When certain contingencies happen

The dissolution of the firm takes place subject to a contract among the partners, if:

• The firm is formed for a fixed term, on the expiry of that term.
• The firm is formed to carry out specific venture, on the completion of that venture.
• A partner dies.
• A partner becomes insolvent.

4. Dissolution by Notice

When the partnership is at will, the dissolution of a firm may take place if any one of the partners gives a notice in writing to the other partners stating his intention to dissolve the firm.

5. Dissolution by Court

When a partner files a suit in the court, the court may order the dissolution of the firm on the basis of the following grounds:

• In the case where a partner becomes insane
• In the case where a partner becomes permanently incapable of performing his duties.
• When a partner becomes guilty of misconduct and it affects the firm’s business adversely.
• When a partner continuously commits a breach of the partnership agreement.
• In a case where a partner transfers the whole of his interest in the partnership firm to a third party.
• In a case where the business cannot be carried on except at a loss
• When the court regards the dissolution of the firm to be just and equitable on any ground.

Settlement of Accounts

In a case where the partners do not have an agreement regarding the dissolution of the firm, the following provisions of the Indian Partnership Act 1932 will apply:

1. The firm will pay the losses including the deficiency of capital firstly out of the profits, secondly out of the partner’s capital and lastly by the partners individually in their profit-sharing ratio.
2. The firm shall apply its assets including any contribution to make up the deficiency firstly, for paying the third-party debts, secondly for paying any loan or advance by any partner and lastly for paying back their capitals. Any surplus left after all the above payments is shared by partners in profit sharing ratio.

Key Takeaways

1. Partnership is the relation between two or more persons who have agreed to share profits of a business carried on by all or any of them acting for all.
2. The document containing the partnership agreement among partners is called Partnership Deed. It contains the terms and conditions of the partnership firm.
3. Partners may be active partner, sleeping partner, nominal partner, partner by estoppels or secret partner.
4. A minor may also be a partner.
5. Partnerships may be general, particular, fixed period, limited liability partnership or partnership-at-will.

1.10 Company

A company is a voluntary association of individuals formed to carry on business to earn profits or for non-profit purposes. These persons contribute towards the capital by buying its shares in which it is divided. A company is an association of individuals incorporated as a company possessing a common capital i.e., share capital contributed by the members comprising it for the purpose of employing it in some business to earn profit.

Characteristics of a Company

Following are the main characteristics of a company:

l. Artificial legal person- A company is an artificial person as it is created by law. It has almost all the rights and powers of a natural person. It can enter into contract. It can sue in its own name and can be sued.

2. Incorporated body A company must be registered under Companies Act. By virtue of this, it is vested with corporate personality. It has an identity of its own. Although the capital is contributed by its members called shareholders yet the property purchased out of the capital belongs to the company and not to its shareholders.

3. Capital divisible into shares-The capital of the company is divided into shares. A share is an indivisible unit of capital. The face value of a share is generally of a small denomination which may be of Rs 10, Rs 25 or Rs 100.

4. Transferability of shares - The shares of the company are easily transferable. The shares can be bought and sold in the stock market.

5. Perpetual existence- A company has an independent and separate existence distinct from its shareholders. Changes in its membership due to death, insolvency etc. does not affect its existence and its continuity.

6.Limited Liability - The liability of the shareholders of a company is limited to the extent of face value of shares held by them. No shareholder can be called upon to pay more than the face value of the shares held by them. At the most the shareholders may be asked to pay the unpaid value of shares.

7. Representative Management- The number of shareholders is so large and scattered that they cannot manage the affairs of the company collectively. Therefore, they elect some persons among themselves to manage and administer the company. These elected representatives of shareholders are individually called the ‘directors’ of the company and collectively the Board of Directors.

8. Common seal- A common seal is the official signature of the company. Any document bearing the common seal of the company is legally binding on the company.

TYPES OF COMPANIES-

Companies can be classified under the following heads:

1. On the basis of formation. 2. On the basis of liability. 3. On the basis of ownership.

1. On the basis of formation- On the basis of formation companies can be categorised as: (a) Statutory Company A company formed by a Special Act of parliament or state legislature is called a Statutory Company. Reserve Bank of India, Industrial Financial Corporation of India, Life Insurance Corporation of India, Delhi State Finance Corporation are some of its examples. (b) Registered Company A company formed and registered under the Companies Act, 1956 or earlier Companies Acts is called a Registered Company. The working of such companies is regulated by the provisions of the Companies Act.

2. On the basis of liability-On the basis of liability, companies can be categorised as: (a) Company limited by shares- The liability of the member of such company is limited to the face value of its shares. (b) Company limited by guarantee-theliability of each member of such company is limited to the extent of guarantee undertaken by the member. It may arise in the event of its being wound up. (c) Unlimited Company The company not having any limit on the liability of its members, is called an unlimited company. Liability in such a case extends to the personal property of its shareholders. Such companies do not use the word ‘limited’ at the end of their name. (d) Company under section 25 A company created under section-25 is to promote art, culture and societal aims. Such companies need not use the term limited at the end of their name.

Punjab, Haryana, Delhi chambers of commerce, etc. are the examples of such companies.

3. On the basis of ownership-On the basis of ownership, companies can be categorisedas: (a) Private Company A private company is one which by its Articles of Association: (i) restricts the right of members to transfer its shares; (ii) limits the number of its members to fifty (excluding its past and present employees); (iii) prohibits any invitation to the public to subscribe to its shares, debentures. (iv) The minimum paid up value of the company is one lakh rupees (Rs 100000). The minimum number of shareholders in such a company is two and the company is to add the words ‘private limited’ at the end of its name. Private companies do not involve participation of public in general. (b) Public Company A company which is not a private company is a public company. Its articles of association do not contain the above-mentioned restrictions. Main features of a public company are: (i) The minimum number of members is seven. (ii) There is no restriction on the maximum number of members. (iii) It can invite public for subscription to its shares. (iv) Its shares are freely transferable. (v) It has to add the word ‘Limited’ at the end of its name. (vi) Its minimum paid up capital is five lakhs’ rupees (Rs 500,000).

(c) Government Company A Government company is one in which not less than 51% of its paid-up capital is held by (1) Central Government or (2) State Government, or (3) partly by Central Government and partly by State Government. Example of a Government company is Hindustan Machine Tools Limited, (HMT) State Trading Corporation (STC). Minerals as metals training corporation (MMTC).

(d) Foreign company - A foreign company is one which is incorporated outside India but has a place of business in India, for example Philips, L.G, etc. standard materials. (e) Holding company and Subsidiary company A holding company is a company which controls another company (called subsidiary company) either by acquiring more than half of the equity shares of another company or by controlling the composition of Board of Directors of another company or by controlling a holding company which controls another company. (f) Listed company and unlisted company A company is required to file an application with stock exchange for listing of its securities on a stock exchange. When it qualifies for the admission and continuance of the said securities upon the list of the stock exchange, it is known as listed company. A company whose securities do not appear on the list of the stock exchange is called unlisted company.

1.11 Public and private enterprises

Public enterprises

The enterprises owned and managed by central, state and local government are called public enterprise. The public enterprise includes manufacturing, trading and service organization. Public enterprise also includes some private organization which is owned and controlled by government.

Objectives of public enterprise

1. Economic development

Public enterprise focuses on the economic growth in a planned manner. Private entrepreneurs will not invest where there is low profit. Public enterprises invest in all industries whether they are profitable or not. It helps in rapid industrialization of the country.

2.Development of backward areas

Public sector aims at developing backward areas to reduce regional imbalances. Private sectors focus more on profitability and not on balanced economic and regional development. Government considers the development of different areas while setting up new units.

3.Employment generation

Unemployment is the biggest problem in India. Government invests in industries to increase employment and provide a standard living. To save jobs, government nationalized sick private sector.

4.To provide necessities

Government provides necessities like electricity, coal, gas, water at cheaper rate to the people. Private sector cannot be relied on providing such services. Thus public utilities are provided by public enterprises.

5.To run monopoly sectors

Some industries like defence, nuclear energy, etc are developed by public sector. Such industries are not left for private enterprises. Government has monopoly to run these sectors.

6.Economic surplus

Public enterprise generate surplus for reinvestment. The enterprises use public savings for industrial development and earn money

7.Labour welfare

The public enterprises ensure welfare and social security of employees. They provide developed townships, schools, col­lege and hospitals for their worker.

8.To provide healthy competition to the private sector

Private sector provides goods and services at a competitive price. On the other hand, public sector aims at providing goods and services at a reasonable price. Thus, public enterprises provide healthy competition to private sector which sells goods at same rates.

9.Helps in implementing government plans

The public enterprises help in implementing various plans and policies of government to achieve various targets for output, employment and distribution.

10.Self-reliance

Public enterprises aim at promoting self-reliance in strategic sectors of the national economy. For this purpose, public enterprises have been set up in transpor­tation, communication, energy, Petro-chemicals, and other key and basic industries.

Types of public enterprise

The three forms of public enterprise are

1. Departmental organization

• A departmental organization is a public enterprise which runs as a department of government and under the direction of ministry governed.
• All policy matters and other important decisions are taken by the controlling ministry.
• If the public are not satisfied with the service of departmental organization, then the issue can be raised in parliament.
• This includes
• The Indian Post and Telegraph Department
• All India Radio
• The Door darshan
• The Indian Railways
• Defence
• Atomic Energy etc.

Characteristics

• It is established by the government and its overall control rests with the minister.
• It is a part of the government and is managed like any other government department.
• It is financed through government funds.
• It is subject to budgetary, accounting and audit control.
• Its policy is laid down by the government and it is accountable to the legislature.

Merits

• Secrecy: the departmental undertakings directly report to their respective ministry. The secrecy is maintained by the departmental organization in certain areas like defence industry
• Instrument of social policy: The objective of departmental organization is to maintain social and economic objectives.
• Contribution to government revenue: the surplus of any departmental undertakings leads to increase in government undertakings
• Little scope of misuse of fund: the departmental undertakings are controlled and audited under the ministry concerned. Thus, there are less chances of misuse of fund.
• Direct criticism in parliament: if the public is dissatisfied by the working of departmental undertaking, then the matter can be raised in parliament.

Demerits

• The influence of bureaucracy: the departmental undertakings are controlled by government which results in bureaucracy. The organization have to take permission from legislative for any expenditure, promotion, decisions, etc. because of this important decision get delayed.
• Excessive parliament control: Day to day working of departmental organization gets hampered due to excessive parliament control. In case of any issue, parliament repeatedly questions the working of departmental undertaking.
• Lack of flexibility: Flexibility is necessary for the success of the business. But departmental organization lacks flexibility because its policies cannot be changed.
• No separate funds for expansion: The incomes of the enterprise are merged with the general revenues of the govt. And are not generally used for the expansion of the business.
• No long-term policies: departmental undertakings find difficult to follow long term policy as the officers are transferred frequently.

2.     Public corporation

• A public or statutory corporation is created by a special Act of the parliament or state legislative assembly which defines its powers, functions, privileges and prescribes the pattern of manage­ment.
• Example - State Bank of India, Life Insurance, Corporation of India, Industrial Finance Corporation of India, etc

Features

• It is incorporated under a special act of parliament.
• It is an autonomous body and is free from government control for its internal management.
• It is managed by board of directors which included trained and experience in business management
• The capital is wholly provided by the government
• The employees are recruited as per the board

Merits

• Expert management: the enterprise is run under the guidance of expert and experienced professionals. It has advantage of both departmental and private undertakings.
• Internal autonomy: Governments do not have any interference in day-to-day activities of these organizations. All the decisions can be taken without any hindrances.
• Responsible to parliament: These organizations are accountable to parliament. Their activities are watched by the press and public.
• Flexibility: The organizations are flexible as per the changing requirement of the society. This result in good performance and operational result.
• Promotion of national interest: under the provision of Acts, government is authorized to give policy directions to the statutory corporations’ results in promoting national interest.

Demerits

• Government interference: it is true that statutory corporation is independent in taking decision. But in reality, government has excessive interference.
• Rigidity:  It is a rigid form of organization as any change in its constitution and powers will require amendment of the special act.
• Ignoring commercial approach: The statutory corporations usually face littleCompetition and lack motivation for good performance.

3.   Government companies

• Under the Companies Act, 1956, Government Company has been defined as “any company in which not less than 51% of paid-up share capital is held by the Central Government or by any State Government or Governments or partly by the Cen­tral Government and partly by one or more State Governments”.
• Examples – Hindustan machine tools limited, steel authority of India limited, Hindustan shipyard limited

Features

• It is registered under companies act 1956
• It has a separate legal entity
• The annual reports of the government companies are required to be presented in parliament
• The capital is wholly or partially provided by the government.
• It is managed by the board of directors appointed by the government
• It audits practice are similar to private enterprise and its auditors are Chartered accountant appointed by the government.

Merits

• Simple procedure of establishment: The government companies can be easily formed as there is no bill passed by the parliament or state legislative. It can be formed simply by following the procedure of Companies Act.
• Efficient working on business lines: The government company is fully independent in financial and administrative matters. The directors of board are expert professionals and they run on business principles
• Healthy competition: The companies offer healthy competition to private sector. Thus, goods and services are available at reasonable price without compromising the quality.

Demerits

• Lack of initiative: the government companies have fear of public accountability. As a result, lack of initiative in taking right decision at right time.
• Lack of business experience: the management of such companies are in the hand of administrative service officers who do not have experience in managing the business professionally.
• Change in policies and management: the policies of such companies keep changing as the government changes. This leads to unhealthy situation for the business.

Private enterprises

Meaning of Private enterprise- A Private Enterprise is an entity that operates under the ownership and management of individuals that freely decided to develop a given business idea. Its freedom from government intervention is what makes it different from a government institution.

4 Key Features of Private Enterprises- The main distinguishing feature of private businesses as compared to public companies is that they are managed privately, without any influence or involvement from the government. Here are some additional features that help the private sector and private enterprises stand out:

1. Motive: The main motive of private enterprises is to make a profit. This isn't the case with the public sector, which is more focused on providing essential services or infrastructure for the public.
2. Financing: Private enterprises can obtain financing in a range of ways. Often, private business owners need to raise their own capital to start their businesses, seek out the assistance of investors and shareholders, or take loans. Private enterprises will usually not receive much governmental support unless they are of a certain level of status and influence.
3. Private Control: Private business owners and management teams are the people who make the decisions for these businesses. There can be one decision-maker or several, but the key feature is that there is no state or governmental participation on the decision-making process.
4. Competitive Culture: There's a lot of competition in the world of privateenterprises, which does not exist in the same way in the public space, as private businesses are often vying to be leaders in their respective industries, with the most profits and customer attention. This competitive nature can result in different working conditions and environments for private-sector workers.

How Do Private Companies Work?

Private enterprises or privately-held companies can work in a number of different ways and fall into different categories, depending on their structure and ownership style. Some of the main varieties of private enterprises include S-corps, C-corps, and LLCs.

They can have very different sizes and scales, too. A small independent bakery, for example, can be classed as a private enterprise, and so too can a globally-known smartphone brand or technology company.

Private companies can therefore work in various ways, depending on the industry they're operating in and the scale of their operations.

They have access to bank loans and other financial services too, but many larger private companies eventually choose to go public in order to raise more money as they evolve and expand.

1.12 Organization culture and environment

• Organizational culture" as comprising a number of features, including a shared "pattern of basic assumptions" which group members have acquired over time as they learn to successfully cope with internal and external organizationally relevant problems.
• Organizational culture as a set of shared assumptions that guide behaviours. It is also the pattern of such collective behaviours and assumptions that are taught to new organizational members as a way of perceiving and, even thinking and feeling. Thus, organizational culture affects the way people and groups interact with each other, with clients, and with stakeholders. In addition, organizational culture may affect how much employees identify with an organization.
• The organizational culture influences the way people interact, the context within which knowledge is created, the resistance they will have towards certain changes, and ultimately the way they share (or the way they do not share) knowledge. Organizational culture represents the collective values, beliefs and principles of organizational members. It may also be influenced by factors such as history, type of product, market, technology, strategy, type of employees, management style, and national culture. Culture includes the organization's vision, values, norms, systems, symbols, language, assumptions, environment, location, beliefs and habits.

Creating Positive Organizational Culture

• An organizational culture is created with the combination of certain criteria that are mentioned below −
• The founder of the organization may partly set a culture.
• The environment within which the organization standards may influence its activities to set a culture.
• Sometimes interchange of culture in between different organizations create different new cultures.
• The members of the organization may set a culture that is flexible to adapt.
• New cultures are also created in an organization due to demand of time and situation.
• The culture of an organizational can change due to composition of workforce, merger and acquisition, planned organizational change, and influence of other organizational culture.
• A positive workplace culture is one that leads to increased productivity, better employee morale and the ability to keep skilled workers. Negative attitudes in the workplace, particularly when they are displayed by management or the small business owner, can have a dramatic impact on the entire workforce. Taking the steps to ensure that a positive culture is present in the workplace will go a long way towards keeping your organization running smoothly and keeping your employees happy.

Step 1: Creating a clear vision statement for your company. Employees like to know that the job they are doing is making a difference. By creating a vision statement about where we want our company to be in the future and how we want it to make the world a better place creates an air of striving for betterment in the workplace. This lays the foundation for a positive work culture.

Step 2: Looking for positive attitudes while hiring. Negative people can quickly sour an entire workplace. When hiring employees, look for a friendly smile and an upbeat disposition. Asking questions of new hires to determine how they handle conflict and interactions with others. If we already have negative employees on staff, take them aside to discuss their attitudes and make it clear that we are creating a positive work culture and negativity will not be tolerated.

Step 3: Making an open-door policy. When the boss is inaccessible and distant to employees, they may not feel as though their opinions matter. Establish an open-door policy and encourage interaction with employees. Asking their opinions, listening to what they have to say and remembering to be positive in our dealings with them.

Step 4: Engage our employees in daily operations of the company. Employees may not realize the good that the company is doing behind closed doors. Keeping them informed about exciting new changes or new horizons will help them stay engaged in the company and feel more positive about the future. Be honest and open with our employees.

Step 5: Let our employees know they are appreciated. Employees who are not recognized for the work they do can feel as though their work is unappreciated. Establish reward systems for excellent performance and never forget to thank an employee for a job well done.

Types of Culture, Strong Culture vs. Weak Culture

Strong Culture

• The strength of a company’s organizational culture ultimately determines its success.
• Strategically, changing an organization’s culture takes a determined and effective leader who unselfishly puts the organization first before self. A strong culture is one which is deeply embedded in the ways a business or organization does things.
• With a strong culture, employees and management understand what is required of them and they will try to act in accordance with the core values.
• A company with a strong culture provides clear expectations for employees about their jobs, behaviour, and dress.
• There should also be a clear-cut chain of command. This type of atmosphere fosters a sense of wellbeing in employees and helps them to work towards the greater good of the company. The only danger of a strong organizational culture is a concept called “group think”.
• This is a term coined by Irving Janis that occurs because a group thinks so similarly that they lose the ability to become innovative and make poor decisions. In a strong culture, the organization’s core values are both intensely held and widely shared.
• A key benefit of a strong culture is that there is less need for detailed policies and procedures because the “way things are done around here” is well understood and accepted. There are many great examples of organizations with strong cultures.
• Indeed, organizations built on a clearly defined set of core values, consistently applied, use their strong culture as a source of competitive advantage.
• A strong organizational culture works like strong social glue, which bonds members of an organization together through shared goals. This builds loyalty and commitment among the group and makes them less likely to leave their tight-knit organization.
• Although organizations with strong cultures experience fewer turnovers, it doesn’t mean that a strong culture is better than a weak culture in every instance. A strong culture is difficult to change in an organization and can stifle innovation because members of the organization are used to doing their jobs exactly the same way.
• A strong culture exists when employees respond to stimulus because of their alignment to organizational values. Strong cultures help firms operate like well-oiled machines cruising along with outstanding execution. Minor tweaking of existing procedures enhances performance.
• In thriving, profitable companies, employees embody the values, visions and strategic priorities of their company

Weak Culture

• A weak organizational culture is one in which employees are not clear with what their goals are. A weak culture is evident when most employees have varied opinions about the organization’s mission and values.
• The company is disorganized and this requires extra efforts and time to attain maximal unity of purpose. Employees waste time spinning their wheels, because of the inability to focus on what’s important. Weak organizational culture allows for an increase in turnover of employees because of a lack of corporate cohesiveness and mission. This spirals into low employee morale, and employee disengagement. A key consequence of weak culture is that there is a greater need for procedures, policies, and bureaucracy, in order to get things done in the desired way, within the turn, can add substantially to organizational costs.
• Weak cultures can be advantageous for organizations that benefit, from independent thought and innovation by their members. In an unstable environment, organizations with weak cultures often function better than organizations with strong cultures, because they are much more adaptable to change.
• In order for an organization to succeed, the culture of that organization must fit the environment in which it operates.
• Research indicates that the strongest cultures embrace the importance of Kaizen or continuous improvement. Kaizen cultures require both conscious and subconscious thinking about improvements from everyone.
• Conversely, a weak culture exists when there is little alignment with organizational values and control must be exercised through extensive policies, procedures, and bureaucracy.
• Signs of a weak culture include lack of trust; focus on problems, staff losing confidence in their leaders and systems, and people spending more time focusing on problems rather than opportunities.

Soft Vs Hard Culture:

• Soft work culture can emerge in an organisation where the organisation pursues multiple and conflicting goals. In a soft culture the employees choose to pursue a few objectives which serve personal or sectional interests. A typical example of soft culture can be found in a number of public sector organisations in India where the management feels constrained to take action against employees to maintain high productivity. The culture is welfare oriented; people are held accountable for their mistakes but are not rewarded for good performance.
• Consequently, the employees consider work to be less important than personal and social obligations. Sinha (1990) has presented a case study of a public sector fertilizer company which was established in an industrially backward rural area to promote employment generation and industrial activity. Under pressure from local communities and the government, the company succumbed to overstaffing, converting mechanised operations into manual operations, payment of overtime, and poor discipline. This resulted in huge financial losses (up to 60 percent of the capital) to the company.

Formal vs informal culture:

• The work culture of an organisation, to a large extent, is
• Influenced by the formal components of organisational culture. Roles, responsibilities, accountability, rules and regulations are components of formal culture. They set the expectations that the organisation has from every member and indicates the consequences if these expectations are not fulfilled.
• Informal culture on the other hand has tangible and intangible, specific and non – specific manifestations of shared values, beliefs, and assumptions. This part of organisational culture comprising of artifacts, symbols, ceremonies, rites, and stories is highlighted in almost all the definitions of organizational culture.

1.13 Current trends and issues in management

Recent trends in management-

1. Workforce Diversity

Workforce diversity is the involvement of heterogeneous types of employees in the organization who represents their age, gender, and ethnicity. Due to changes in population dimensions, improved workforce, social pressure, and increased globalization the diversity is constantly increasing.

The world’s increasing globalization requires more interaction among people from diverse cultures, beliefs, and backgrounds. People no longer live and work in an insular marketplace, they are now part of the worldwide economy with competition coming from nearly every continent. Due to these reasons, profit and non-profit organizations need more diversity to become more creative and open to change.

Managing diversity in the workplace has become an important issue for management today. An efficient manager has to manage a diverse workforce from both an individual and organizational approach. May from an individual approach he has to develop a better environment like understanding, empathy, tolerance, and willingness to communicate with his employees. And, from an organizational approach may he has to develop policies, training, practices, and good culture in the organization.

2. Outsourcing

Outsourcing means getting resources from outside. It is the process of providing some parts of jobs to other organizations to bring quality and get the benefit of specialization.

It is an important means of reducing costs and improving quality. If an organization performs every activity by itself, it may not be able to perform the activity efficiently and the quality of product or service may also be inferior. Thus, organizations have to identify certain areas that can be outsourced to minimize the cost of operation and increase the quality of products.

3.Knowledge Management

Knowledge management is the process that helps organizations to identify, select, organize, disseminate, and transfer important information and expertise for organizational prosperity. It emphasizes that knowledge can be turned into business ideas and used for the success of the organization. The effective management of knowledge enables management for effective and efficient problem solving, dynamic learning, strategic planning, and decision making.

It focuses on identifying knowledge, explicating it in such a way that it can be shared formally, and showing its value through reuse. For organizational success, knowledge, as a form of capital, must be exchangeable among persons, and must be able to grow. And, for problem-solving, knowledge, must be captured, so that knowledge management can promote organizational learning, and lead to further knowledge creation.

4. Learning Organization

Learning organization involves institutions where there is the provision of continuous learning to adapt to the changing environment of businesses. You know, the business environment is an ever-changing process. So, to bring new concepts into the business, the innovation of new ideas, models, design, structure, and technology is essential. A business organization performing at the highest level today will not remain the same in the future if there is no provision of learning.

For better learning in the organization, all employees should share information, ideas, knowledge, and work as a team. To cope with the changing environment and new technology, business organizations need to have qualified employees with learning capabilities.

5. Time Management

Time management is prioritizing the activities for using time effectively. It is used for scheduling time. Time is a unique and most important resource and if it is wasted, it can never be recovered.

Time management may help employees who are suffering from a lack of planning, sort out their priorities, etc. It is about balancing different aspects of life which makes the goal achievable. But remember time is always limited.

6. Business Process Reengineering (BPR)

Business process reengineering is a new trend in the management field. It purports that the way work is done should be fundamentally and radically changed so that every effort of the firm is driven to achieve customer satisfaction and thereby greater performance and profitability.

Reengineering is about radical change. It does not mean slight and incremental changes, leaving the basic structure as it was. It means starting from “Scratch”. Reengineering involves redefining the process. It is essential in a condition when the current effort is insufficient for the organizations to satisfy their customers.

7. Conflict Management

Conflict refers to all kinds of opposition or antagonistic interaction between or among individuals and groups. It exists when one party has hampered or is about to hamper the accomplishment of goals.

The manager should identify the reasons for conflicts and solve them through proper ways such as skill encouragement, handling constructive conflict, and resolving dysfunctional conflicts.

8. Stress Management

Stress refers to the body’s psychological, physiological, and emotional response to any demand. Stress occurs when the pressure is greater than resources. Large workload, long work hours, fewer resources, less job security are the major causes of stress to the employees. Stress management is concerned with taking some steps to minimize work stress among working staff. Steps may include changing lifestyle, changing in thinking, and changing in behaviour.

9. Participative Management

It means involving subordinates in the decision-making process with their immediate superiors. Here, both the manager and the subordinates are involved in the decision-making process. It increases the value of the employees by considering them as part of the management.

Participative management empowers subordinates who know the actual problems and can contribute to better decision-making. It is necessary to consults employees of different inter-dependent departments to bring uniformity in their performance.

10. Green Management

Green management focuses on environmental conservation for the sustainable development of business activities. It focuses on promotions of green technology that presents the most viable way of meeting with the new green-related activities.

In today’s business environment managers have to take a step to protect and preserve the natural environment. To save natural resources most of the large organizations are using renewable energy sources, adopting new technology that reduces energy consumption, preserves forests, and conserves water for future use.

Issues in management-

1. Ineffective communication

When you become a manager, the dynamic between you and your fellow team members changes. There's now an element of distance between you and them that you need to bridge. If not, this leads to poor communications, which can impact business operations. Management must facilitate interdepartmental communications through active listening and recognition. After all, just one bad management-employee relationship can have consequences for the whole team.

2. Absence of structure

Overseeing a new team can be tough, especially when you're also adjusting to your new role as manager. However, if your team suffers from a lack of structural input from you, this could undermine their working environment. Some teams require more supervision than others to maintain high productivity levels.

3. Performance problems

Performance problems are one of the main challenges managers face. If your team isn't performing to a high standard, it could cause many problems, including:

• a rise in competitor sales
• Damaged relationships between team members
• Trust issues

4. Underperforming employees

Companies usually have management training in place, which covers how to uphold company conduct when dealing with code of conduct violations and other aspects of employee relations. If you haven't received this, follow up with your HR team. This training ensures that you act in line with company processes and policies when letting an employee go, avoiding any repercussions. Other employees may struggle with the loss of a team member. Be sure to check in with your team and ask for feedback on what you can do to mitigate the impact changes have on the organisational structure.

5. Hiring decisions

Some job postings may receive a high number of applicants and, even after narrowing it down to those with relevant skills, the list of your potential candidates is way too big. However, just because someone has all the right qualifications, it doesn't mean they're a good cultural fit. Failing to understand this could lead to you making the wrong hiring decision, which can impede team performance and morale going forward.

6. Workplace conflicts

Personal or professional conflicts that arise between two colleagues are felt throughout the whole team. Management needs to resolve these conflicts quickly to avoid bigger problems, such as:

• Low productivity levels
• a decrease in team morale
• Top team members quitting

7. Ensuring a competitive environment

It's important to always challenge your team members so that they continue to grow and feel as though they're developing in their role. Talented staff need to feel supported and know that you're doing everything you can to further their career. This prevents them from seeking out different jobs or quitting.

8. Burnout

People management issues are a common problem for managers, and sometimes you lose sight of yourself whilst trying to keep your team healthy. It's important to take time away from work and relax every once in a while. If you're constantly stressed and overwhelmed, this burdens your team and causes you to expect too much of them.

9. De-motivation

De-motivation is a factor that underpins all the following problems. If your team feels unchallenged or run down by ineffectual conflict resolution, de-motivation occurs. One person's motivation level can impact the productivity of the whole team. So, if you don't feel motivated, your team won't either.

10. Transitioning roles

If you're promoted within the same company, you could find yourself managing old co-workers. Some individuals may struggle to take you seriously in your new role and treat you unprofessionally. Likewise, you might find it awkward.

11. Reassuring your team

There are certain management situations that can cause a lot of uncertainty for team members who aren't involved in constant communications. For example, fast-paced business environments often lead to redundancies. It's important to understand what this means for your team and address any confusion that occurs.

References:

1. Robins S.P. And Couiter M., Management, Prentice Hall India, 10th ed.,2009.

2. Stoner JAF, Freeman RE and Gilbert DR, Management, 6th ed., Pearson Education,2004.

3. Tripathy PC & Reddy PN, Principles of Management, Tata McGraw Hill,1999.