Nature and Significance of Management Class 12 Notes

Please refer to the Nature and Significance of Management Class 12 Notes for Business Studies given below. These revision notes and important question answers have been prepared based on the latest NCERT book for Class 12 Business Studies. Our teachers have developed these short notes and Important Questions Class 12 Business Studies as per the latest syllabus for Grade 12 Business Studies issued by CBSE. Read these notes and important questions to get better marks in examinations

Class 12 Business Studies Nature and Significance of Management

Management

1. Management can be defined as, the process of getting things done with the aim of achieving organizational goals effectively and efficiently.

2. Management is defined as the process of planning, organising and controlling an organisation’s operations in order to achieve the target efficiently and effectively. It is essential for all organisations.

3. “Management is the process by which a co-operative group directs actions of others toward common goals.”

                                                               Concepts of Management

✔ Traditional Concept Management is the art of getting things done through others.

✔ Modern Concept Management is defined as the process (refers to the basic steps) to get the things done with the aim of achieving goals effectively and efficiently (effectiveness refers to achievement of task on time and efficiently implies optimum use of resource

Efficiency

Efficiency (completing the work at low cost) means doing the task correctly at minimum cost through optimum utilization of resources

Effectiveness

Effectiveness (Completing the work on time) is concerned with end result means completing the task correctly within stipulated time.

Conclusion: Although efficiency and effectiveness are different yet they are inter related. It is important for management to maintain a balance between the two.

Objectives of Management

Objectives of Management Objectives can be classified into organisational, social or personal

1. Organisational Objectives
✔ Survival It exists for a long time in the competition market.
✔ Profit It provides a vital incentive for the continued successful operations.
✔ Growth Success of an organisation is measured by growth and expansion of activities.

2. Social Objectives
✔ creation of benefit for society.
✔ Use Eco- friendly method
✔ Generate employment opportunity.

3. Personal Objectives of employees
✔ good salary,
✔ promotion,
✔ social recognition,
✔ healthy working conditions

Importance of Management

1. Management Helps Achieving Group Goals It integrates the objective of individual along with organisational goal.

2. Management Increases Efficiency It increases productivity through better planning, organising, directing the activities of the organisation.

3. Management Creates a Dynamic Organisation have to survive in dynamic environment thus manager keep changes in the organisation to match environmental changes.

4. Management Helps in Achieving Personal Objectives Through motivation and leadership, management helps in achieving the personal objectives.

5. Management Helps in the Development of Society It provides good quality products and services, creates employment, generate new technology in that sense it helps in the development of the society.

Features of Management

1. Management is goal oriented process
Management always aims at achieving the organisational objectives.
• The functions and activities of manager lead to the achievement of organisational objectives; for example, if the objective of a company is to sell 1000 computers then manager will plan the course of action, motivate all the employees and organise all the resources keeping in mind the main target of selling 1000 computers.

2. Management is Pervasive
Management is a universal phenomenon. The use of management is not restricted to business firms only it is applicable in profit-making, non-profit-making, business or non-business organisations; even a hospital, school, club and house has to be managed properly. Concept of management is used in the whole world whether it is USA, UK or India

3. Management is Multidimensional
Management does not mean one single activity but it includes three main activities
• Management of work
• Management of people
• Management of operations

4. Management is a continuous process
Management is a continuous or never ending function. All the functions of management are performed continuously, for example planning, organising, staffing, directing and controlling are performed by all the managers all the time. Sometimes, they are doing planning, then staffing or organising etc. Managers perform ongoing series of functions continuously in the organisation.

5. Management is a group activity
Management always refers to a group of people involved in managerial activities. The management functions cannot be performed in isolation. Each individual performs his/her role at his/her status and department, and then only management function can be executed. Even the result of management affects every individual and every department of the organisation so it always refers to a group effort and not the individual effort of one person

6. Management is a dynamic function
Management has to make changes in goal, objectives and other activities according to changes taking place in the environment. The external environment such as social, economic, technical and political environment has great influence over the management.

7. Intangible
Management function cannot be physically seen but its presence can be felt. The presence of management can be felt by seeing the orderliness and coordination in the working environment. It is easier to feel the presence of mismanagement as it leads to chaos and confusion in the organisation. For example, if the inventory of finished products is increasing day by day it clearly indicates mismanagement of marketing and sales.

Functions of Management

Management refers to the activities, and often the group of people, involved in the four general functions:
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling

• Planning
It refers to deciding in advance what to do, how to do and developing a may of achieving goal efficiently and effectively..

• Organizing
Organizing is an essential function of management. It refers to the assigning of duties, grouping tasks, establishing authority and allocating of resources required to carry out a specific plan.

• Staffing
It is function in which qualified people are appointed to different posts relating to their skills and strengths. The activities included in this function are recruiting, hiring, training, evaluating and compensating.

• Directing
Directing is a function that comes after staffing of the organization, it is the function in which the management is supposed to lead, direct to a specific goal and motivate the employees for the achievement of any objective, big or small.

• Controlling
It is a function in which the performance of the organization is measured and then evaluated after which the standard observed is determined to be either good or bad, which then in turn leads to taking preventive and corrective measures

Levels of Management

Top level Management
• They formulate the overall organisational goals and strategies.
• They are responsible for the success and failure of the organisation.
• They are responsible for all the business activity and its impact on society.
• They maintain contact with outside world.
• They coordinate the activities of different departments.
• Top Management It consists of senior most executives who are usually referred to as the Chairman, Chief Executive Officer, President and Vice President.

Middle level Management
• They serve as a link between the top level and lower level management.
• They are responsible for implementation and controlling plans and strategies developed by top management.
• They ensure that their department has the necessary staff.
• They motivate the peoples in their department to achieve desired objectives.
• They cooperate with other departments for smooth functioning of the organisation.
• Middle Management They are usually division heads who are the link between top and lower level of management.

Lower level Management
• They directly oversee the efforts of the workforce.
• They serve a link between the workers and middle level management.
• They ensure availability of resources and good quality of output.
• They provide guidance and training to workers.
• They ensure that good working condition are provides to the workers.
• They are usually the foremen and supervisors who actually carry on the work or perform the activities.

Nature of Management

Management as Science
• Science is a systematic body of knowledge pertaining to a specific field of study that contains general facts.• It establishes cause and effect relationship between two or more variables
• These principles are developed through scientific method of observation and verification through testing.
1. Universally acceptance principles
2. Experimentation & Observation
3. Cause & Effect Relationship
4. Test of Validity & Predictability
Management is a social science.

Management as Profession
• A profession may be defined as an occupation that requires specialized knowledge and intensive academic preparations to which entry is regulated by a representative body
1. Specialized Knowledge
2. Formal Education & Training
3. Social Obligations
4. Code of Conduct
5. Representative Association
Management does not meet the exact criteria of a profession.

Management as Art
• Art implies application of knowledge & skill to trying about desired results.
• An art may be defined as Personalized application of general theoretical principles for achieving best possible results.
1. Practical Knowledge
2. Personal Skill
3. Creativity
4. Perfection through practice
5. Goal-Oriented
Management is a complete art.

Co-ordination

According to Mooney and Reelay, “Co-ordination is orderly arrangement of group efforts to provide unity of action in the pursuit of common goals”

According to Charles Worth, “Co-ordination is the integration of several parts into an orderly hole to achieve the purpose of understanding”.

Essence and Characteristics of Co-ordination

Essence of Co-ordination

1. Co-ordination through Planning – Planning facilitates co-ordination by integrating the various plans through mutual discussion, exchange of ideas. e.g. – co-ordination between finance budget and purchases budget.

2. Co-ordination through Organizing – Mooney considers co-ordination as the very essence of organizing. In fact when a manager groups and assigns various activities to subordinates, and when he creates department’s co-ordination uppermost in his mind.

3. Co-ordination through Staffing – A manager should bear in mind that the right no. of personnel in various positions with right type of education and skills are taken which will ensure right men on the right job.

4. Co-ordination through Directing – The purpose of giving orders, instructions & guidance to the subordinates is served only when there is a harmony between superiors & subordinates.

5. Co-ordination through Controlling – Manager ensures that there should be co-ordination between actual performance & standard performance to achieve organizational goals.

From above discussion, we can very much affirm that co-ordination is the very much essence of management. It is required in each & every function and at each & every stage & therefore it cannot be separated.

Characteristics of Co-ordination

1. Co-ordination Integrates Group Efforts
2. Co-ordination ensure Unity of Action
3. Co-ordination is a Continuous Process
4. Co-ordination is an All Pervasive Function.
5. Co-ordination is the Responsibility of All Managers.
6. Co-ordination is a Deliberate Function.

Importance of Co-ordination

1. Growth in Size When there is a growth in size, the number of people employed by the organisation also increases. Thus to integrate the efforts, co-ordination is needed.

2. Functional Differentiation In an organisation, there are separate department and different goals. The process of linking these activities is achieved by co-ordination.

3. Specialisation Modern organisation is characterised by a high degree of specialisation. Co-ordination is required among different specialists because of their different approaches, judgement etc.

Case Study Nature and Significance of Management Class 12 Business Studies

Question. Ashutosh Goenka was working in ‘Axe Ltd.’, a company manufacturing air purifiers. He found that the profits has started declining from the last six months. Profit has an implication for the survival of the firm, so he analysed the business environment to find out the reasons for this decline. Identify the level of management at which Ashutosh Goenka was working. State three other functions being performed by Ashutosh Goenka.
Ans. Ashutosh Goenka was working at top level of management. The three functions being performed by him at this level are outlined below:
✔ He is responsible for formulating the overall organizational goals and strategies.
✔ He is responsible for all the business activities and its impact on society.
✔ He has to coordinate the activities of different departments in pursuit of common goals.

Question. Rishitosh Mukerjee has recently joined AMV Ltd, a company manufacturing refrigerators. He found that his department was under-staffed and other departments were not cooperating with his department for smooth functioning of the organisation. Therefore, he ensured that his department has the required number of employees and its cooperation with other departments is improved. Idenfity the level at which Rishitosh Mukerjee was working. Also, state three more functions required to be performed by Rishitosh Mukerjee at this level.
Ans. Rishitosh Mukerjee is working at middle level of the management. The three more functions that he has to perform at this level are stated below:
✔ He has to assign duties and responsibilities to the people in his department.
✔ He has to motivate the people in his department to achieve the desired objectives.
✔ He has to interpret the policies framed by top management.

Question. Sridhar’s father is working as a section in-charge in a government office. Identify the level of management at which he is working? State any five functions that he has to perform at this level.
Ans. Sridhar’s father is working as a section in-charge in a government office. He is working at the lower level of management.
✔ He has to perform the following functions at this level of management:
✔ He has to directly oversee the efforts of the workforce.
✔ He has to serve as a link between the workers and middle level managers.
✔ He has to ensure sufficient availability of resources and good quality of output.
✔ He has to provide guidance and training to workers.
✔ He has to ensure that good working conditions are provided to the workers.

Question. Mega Ltd. manufactured water-heaters. In the first year of its operations, the revenue earned by the company was just sufficient to meet its costs. To increase the revenue, the company analysed the reasons behind the less revenues. After analysis, the company decided: to reduce the labour costs by shifting the manufacturing unit to a backward area where labour was available at a very low rate. to start manufacturing solar water-heaters and reduce the production of electric water- heaters slowly. This will not only help in covering the risks but also help in meeting other objectives. Identify and explain the objectives of management discussed above. State any two values which the company wanted to communicate to society.
Ans. The objectives of management discussed above are:
Organisational objectives: An organisation strives to achieve multiple organizational objectives in the interest of its stakeholders like owners, employees etc. The main organizational objectives are survival, profit and growth.
Social Objectives: It is the obligation of every organisation to undertake such activities which will benefit the society at large like using eco-friendly methods, contributing towards weaker sections of the society, generating employment opportunities, promoting literacy etc.
The two values that the company wanted to communicate to the society are:
✔ Rural development
✔ Environment sustainability

Question. XYZ Power Ltd. set up a factory for manufacturing solar lanterns in a remote village as there was no reliable supply of electricity in rural areas. The revenue earned by the company was sufficient to cover the costs and the risks. As the demand of lanterns was increasing day- by-day, the company decided to increase production to generate higher sales. For this/they decided to employ people from a nearby village as very few job opportunities were available in that area. The company also decided to open schools and creches for the children of its employees. Identify and explain the objectives of management discussed above. State any two values which the company wanted to communicate to the society.
Ans. The objectives of management discussed above are:
Organisational objectives: An organisation strives to achieve multiple organizational objectives in the interest of its stakeholders like owners, employees etc. The main organisational objectives are survival, profit and growth.
Social Objectives: It is the obligation of every organisation to undertake such activities which will benefit the society at large like using eco-friendly methods, contributing towards weaker sections of the society, generating employment opportunities, promoting literacy etc.
The two values that the company wanted to communicate to the society are:
✔ Rural development
✔ Promoting literacy

Question. Your grandfather has retired as the Director of a manufacturing company. At what level of management was he working? What functions do you think he was performing at that level? State any two,
Ans. Since he has retired from the post of Director of a manufacturing company, he was working at the top level of management. The main functions that he was performing at this level are outlined below:
✔ He was responsible for the success and failure of the organization.
✔ He was responsible for all the business activities and its impact on society.
✔ He had to coordinate the activities of different departments in pursuit of common goals.

Question. Ritu is the manager of the northern division of a large corporate house. At what level does she work in the organisation? What are her basic functions?
                                                                    OR
Your grandfather has retired from an organisation in which he was responsible for implementing the plans developed by the top management. At which level of management was he working? State one more function performed at this level.
                                                                    OR
Deepak’s father has retired as a purchase manager of a company. At what level of management was he working? What function do you think he was performing at that level of management?
                                                                    OR
Dheeraj is working as an Operations Manager in Tifco Ltd. Name the managerial level at which he is working. State any four functions he will perform as the Operations Manager in this company.
                                                                    OR
Rajat is working as a Regional Manager in Tifco Ltd. Name the level at which he is working. State any four functions he will perform as the Regional Manager in this company.
Ans. Ritu / grandfather / Deepak’s father / Deeraj / Rajat, all of them are working at the middle level of management. The four functions that he will have to perform at this level are stated below:
✔ He has to ensure that his department has the necessary staff.
✔ He has to assign duties and responsibilities to the people in his department.
✔ He has to motivate the people in his department to achieve the desired objectives.
✔ He has to co-operate with the other departments for ensuring smooth functioning of the organization.

Question. Vaibhav Garments Ltd/s target is to produce 10,000 shirts per month at a cost of ?150 per shirt. The production manager could achieve this target at the cost of ?160 per shirt. Do you think the production manager is effective? Give reasons for your answer.
Ans. Yes, the production manager of Vaibhav Garments Ltd. is effective as he could achieve the target to produce 10,000 shirts in a month.

Question. Mr. Nitin Singhania’s father has a good business of iron and steel. He wants to go to the USA for his MBA but his father thinks that he should join the business. On the basis of emerging- trends, do you think that Mr. Singhania should send his son to the USA? Give any three reasons in support of your answer.
Ans. Yes, according to me, Mr. Singhania should send his son to USA for his MBA because management is being recognised as a profession to a great extent because of the following reasons: Well defined body of knowledge: Management is considered to be a well-defined body of knowledge that can be acquired through instructions. As a separate discipline, it contains a set of theories and principles formulated by various management experts. Moreover, it is taught in various schools and colleges all over the world. Ethical code of conduct: Management, in practice, like other professions, is bound by a code of conduct which guides the behaviour of its members. Therefore, acquiring a degree in management will equip him with the good managerial,, skills and approach.
Service motive: A good management course will provide him an insight into the multiple goals that an organisation should pursue. This knowledge will help him to serve both the objectives of profit maximization and social welfare effectively for his company.

Question. Sooraj works as a salesman in a company selling pet accessories and food. He has been given a target of selling 1200 units of the food packets in a month by offering a maximum of 10% discount to his customers. In order to meet his monthly sales target, on the last two days of the month, he offers 15% discount to his customers.
In the context of the above case: Is Sooraj effective in his work? Explain by giving a suitable reason in support of your answer.
Ans. Yes, Sooraj is effective in his work as he has been able to meet his monthly sales target of selling 1200 units of the food packets.

Question. Sujata works as a designer in an export house. As per the terms of an order received by the export house, she has to get 1000 units of denim jackets made in 15 days @ ?2000 per jacket. She is able to complete her target production in 20 days because in order to complete the order in 15 days she would have made the workers work over time. As a result, the cost of production per jacket may have increased by ? 100. In the context of the above case: Is Sujata efficient in her work? Explain by giving a suitable reason in support of your answer.
Ans.Yes, Sujata is efficient in her work as she has been able to get 1000 units of denim jackets made @ ?2000 per jacket.