Unit No.

-1:
Introduction to Management Concept and Managerial Skills.

1. Types of Organisation
2. Steps in Organising
Organization
Organization :
A social unit of people , systematically structured and managed to achieve the collective goals
on a continuing basis.
Need of Organisation:
In organisation management determines the relationship between functions and position, and
subdivides roles and responsibilities with appropriate authority to carry out defined task.
Organisation Structure:
 plan that outlines who reports to whom and who is responsible for what.
 shows the authority and responsibility relationship between the various positions of the organization
 set of planned relationships ( Formal task allotted )between groups .Related to functions , physical
and personal factors .
 should not be static but dynamic, subject to change from time to time.

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Organization Structure For a large and complex
organisation
( A vehicle manufacturing organisation)

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Organization Structure For a large and complex organisation
( A multispecialty Hospital)

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Principles of Organization

1) Objectives:
The objectives of the enterprise influence the organization structure. Every part of the
organization and organization as a whole should be geared to the basic objective determined by the
enterprise.

2) Specialization:
Effective organization must promote specialization. The activities of the enterprise should be
divided according to functions and assigned to persons according to their specialization.

3) Span of control:
The number of subordinates that a managers can supervise directly is called span of control. It is
necessary to have a proper number of subordinates answerable to a manager.

4.Exception:
This principle requires that organization structure should be so designed that managers are
required to go through the exceptional matters only. All the routine decisions should be taken by
subordinates.
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Principles of
Organization
5) Scalar principle:
This is a chain of command. There must be clear lines of authority running from the top to the
bottom.

6) Unity of command:
Each subordinate should have only one supervisor whose command he has to obey.

7) Delegation:
Proper authority and responsibility should be delegated at the lower levels of the organization also.

8)Responsibility:
A superior should be held responsible for the acts of his subordinates.

9) Authority:
Authority and responsibility of each manager must be clearly defined.

.
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Principles of
Organization
10) Efficiency:
The organization should be able to attain the mission and objectives at minimum cost.

11) Simplicity:
The organization structure should be as simple as possible with minimum number of levels

12) Flexibility:
The organization should be flexible, should be adaptable to changing circumstances

13) Balance:
There should be balance in the size of various departments, between centralization and decentralization.

14) Stability:
It refers to the capacity of the organization to withstand the losses of key personnel without much loss .

15)Communication:
Process of transmitting instructions, ideas, suggestions and information within and outside of
organization .
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Principles of
Organization
16) Unity of direction:
There must be one objective and one plan for a group of activities having the same objective.

17) Personal abilities:

Organization structure must ensure optimum use of human resources. There is need for proper selection,
placement and training.
14) Stability:
It refers to the capacity of the organization to withstand the losses of key personnel without much loss .

15)Communication:
Process of transmitting instructions, ideas, suggestions and information within and outside of organization .

16) Unity of direction:

There must be one objective and one plan for a group of activities having the same objective.
17) Personal abilities:
Organization structure must ensure optimum use of human resources. There is need for proper selection,
placement and training.

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Summary
Organizational structure :
Organizational chart that shows who reports to whom and who is responsible for what.
Principles of Organization :
1 ) Objectives 2) Specialization
3) Span of control 4) Exception
5) Scalar principle 6) Unity of command
7) Delegation 8) Responsibility
9) Authority 10) Efficiency
11) Simplicity 12) Flexibility
13) Balance 14) Stability
15) Communication 16) Unity of direction

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Organization

Organizational structure :

It is a plan that outlines who reports to whom and who is responsible for what. It defines how
activities such as task allocation, coordination, and supervision are directed toward the achievement of
organizational goal.

Features of Organizational structure:

 shows the authority and responsibility relationship between the various positions of the organization

 set of planned relationships ( Formal task allotted )between groups .Related to functions , physical and
personal factors .

 should not be static but dynamic, subject to change from time to time in as business environment
changes.

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 Types of Organization
structures

Following are the organisation structures-

1. Line, Military or Scalar Organization
2. Functional Organization
3. Line and Staff Organization

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1. Line, Military or Scalar Organization
► Orders and instructions issued from the top level is followed by the people below.
► In line organization authority flows vertically downward
from top to bottom throughout the organization.
► As the flow of authority moves from top to bottom,

this is also called line or scalar organization.

► People at different levels know to whom they are accountable.
► The quantum of authority is highest at the top and

reduces at each successive level.

► The superior communicates his decision and orders to his
subordinates. The subordinates, in turn, can communicate

them to those who are immediately under them.

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Line, Military or Scalar Organization

The advantages of line organization are -

 Simple: It is simple and easy to understand.
 Flexibility: Is flexible and easy to expand or contract.
 Fixed Responsibility: Clear division of authority and responsibility, hence no scope of shifting the responsibility.
 Unity of command and better discipline.
 Quick Decisions: It encourages speedy action.
Disadvantages
 Lack of specialisation.
 Over reliance on superiors decision: As line executives decisions are implemented to the bottom
 It overloads a few key executives.
 Inadequate communication: Chances of delay in communicating the orders to subordinates by superiors
therefore, possibility of distortion, due to long channel.
 Authority Leadership: It encourages dictatorial way of working.
Applications:
 Suitable for factories of small and medium size, where the number of subordinate and operational staff is less.
 Suitable for continuous process such as sugar, paper, oil refining, spinning and weaving industries, textiles, etc.
 Suitable where automatic plants are used.

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2. Functional Organization

► Functional organization is created by grouping ,

various activities of whole of the enterprise
according to certain functions like production,
marketing, finance, personnel etc.

► Each functional area is put under the charge of

functional specialists.(Manager)

► A functional incharge directs the subordinates

throughout the organization in his particular
area of business operation.

► Subordinates receive orders and instructions

not from one superior but from several
functional specialist.

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Functional Organization
Advantages of functional organization
Quality of work is better due to specialisation .
 Mass production by standardisation and specialisation.
Wastage of materials, man and machine hours are reduced due to expert guidance is available
Unnecessary overloading of responsibilities will not be there, as was in the case of line organization.
 Clarity in functioning and no duplication .

Disadvantages
As line workers will not be using their skills, their initiative cannot be utilised.
 It is very difficult to fix up the responsibility to any one foreman in case something goes wrong.
Workers will always be confused about the authority and activity of each expert.
Lack of coordination among functional executives and subordinates.
 By employing high waged experts, the total cost of job may become high.
 Industrial relationships become more complex.

Application:
A pure functionalised system is rarely found in practice. This is appropriate for large manufacturing using concerns which
are capable of expansion in future.

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 3. Line and Staff Organization
► Line and staff organization has advantages of both
line and functional organization.

► Line authority flows down the chain of command

► Line executives have supervisory authority and

control over subordinates. Authority flows from top
to bottom as it does in the line organization
► In addition, specialists called staff are recruited to
advise the line executives on important matters.

► Staff authority is the right to advise or counsel those

with line authority.
► The staff officials do not have any power of
command in the organization as they are employed
only to provide expert advice to the line manager.

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Line and Staff Organization
Advantages :
 Specialized and expert advice from staff executives is available.
 Reduction of burden on line managers.
 Better decisions, as staff specialists help the line managers
 Unity of command
 Flexible when compared to functional organization.
 Less wastage of material, man and machine hours.
 Quality of product is improved.

Disadvantages :
 If allocation of duties between line and staff is not clear, it may give rise to confusions.
 There might be conflict between line and staff executives.
 Since staff is not accountable, they may not perform well.
 Product cost will increase because of high salaries of staff executives

Application:
 Now-a-days this type of organization is preferred for medium and large scale industries.
 It is applied in automobile industries and other intermittent nature of industries

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Steps in organizing

After determining the objectives of enterprise the following step to be followed:

1. Identification of activities
2. Grouping of activities.
3. Assignment of responsibilities.
4. Granting authority - Delegation of authority
5. Establishing relationship - Providing physical facilities and proper environment

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Summary
 Types of organization :
1. Line, Military or Scalar Organization :
Advantages: Simple, Flexible, Fixed Responsibility, Unity of command and better discipline. Quick Decisions.
Disadvantages : Lack of specialisation, Over reliance , Overloads a few key executives, Inadequate
communication.
Applications: Suitable for factories of small and medium scale.

2. Functional Organization :
Advantages: Quality of work due to specialisation,
Disadvantages : Difficult to fix up the responsibility , confusion may occur about authority and responsibility.
Applications: Suitable for factories of small and medium .

3. Line and Staff Organization

Advantages: Specialized and expert advice , Better decisions,
Disadvantages :Might be conflict between line and staff executives.
Applications: Suitable for medium and large scale industries.

 Steps in organizing: . 1. Identification of activities 2. Grouping of activities. 3. Assignment of responsibilities.

4. Granting authority - Delegation of authority 5. Establishing relationship .
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Functional Areas of Management

Areas of Management:
All the activities performed in company are grouped
Under functional departments. This is known as areas
of management.
► There are four functional areas of management namely
1. Production management.
2. Finance management.
3. Marketing management.
4. Human resource management.

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Functional Areas of Management -1. Production management

 Objective of Production Management is:

“To produce goods and services of right quality and quantity
at the right time and right manufacturing cost”
 Planning, controlling and directing of the resources
i e men, material, machine, equipment.
 Also known as operational management.
 Production management involves the following functions:
(a) Product planning and development.
(b) Plant location, layout and maintenance.
(c) Production Control.
(d) Purchasing of material and Materials management .
(e) Research and Development

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Functional Areas of Management- 2. Marketing Management

► Marketing Management is planning, organizing, controlling and implementing of marketing policies

to distribute the products to the buyers to generate an acceptable profit.

► The major objectives of marketing management are: creation of demand, customer satisfaction,
market share, generation of profits, creation of good will and public image.

► The sub-activities are:

(1) Advertising: Giving information about products to buyers.
(2) Marketing research: Systematic collection and analysis
of data relating to the marketing of goods and services.
(3) Sales management: Movement of products and services
from producers to consumers

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Functional Areas of Management- 3. Financial Management

Financial Management is planning, organizing, directing and controlling the financial activities like
procurement and utilization of funds of the enterprise
► The objectives are:
1) To ensure regular and adequate supply of funds to the organization.
2) To ensure adequate returns to the shareholders
3) To ensure optimum funds utilization
4) To ensure safety on investments
5) To plan a sound capital structure
► Functions are
1) Financial planning and forecasting
2) Determination of capital composition
3) Fund investment, &maintaining proper liquidity
4) Disposal of surplus and financial controls

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Functional Areas of Management- 4. Human Resource (Personnel) Management
Human Resource Management includes the processes of planning, selecting, recruiting and inducting
employees in an organization.
 The objectives include
a) Effective utilization of human resources
b) Motivation
c) Creating policies and procedures
d) Growth and development of Human resources

► Functions of human resource management:

i) Man power planning ii) Recruitment & selection

iii) Performance appraisal iv) Training
v) Wage and salary administration vi) Compensation and rewards
vii) Industrial relations viii) Employee communication

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Managerial Skills

Following three types of managerial skills that are essential to

fulfil specific tasks in an organization .
1. Technical skills
2. Conceptual skills
3. Human or interpersonal management skills

1. Technical Skills
► Technical skills involve the knowledge of and proficiency in
activities involving methods, processes and procedures.
► These skills involve the use of tools, equipment, procedures, and
techniques of the industry.
► Technical skills are most important for supervisory level or first-
level managers.
► As we go through a hierarchy from the bottom to higher levels, the
technical skills lose their importance
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Managerial Skills- 2. Conceptual Skills
 Abilities to see the organization as a whole.
 Includes analytical , creative and inter relationships
skills
 Helpful to managers to look outside their
department‘s goals.
 Mostly required for top managers, less critical for
mid- level managers, and not required for first-level
managers.

These can be classified as

 Decision making skills:

Ability of a person to take timely and accurate
decisions.
 Organizational skills:
It helps to select and fix right people at right work

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Managerial Skills- 3.Human or Interpersonal Managerial Skills
 Ability of a manager to work effectively with people.
 Helps to build a team and create an environment in which
people feel secure and free to express their opinions
 These skills are equally essential for managers at all levels
in the company.

They are classified as:

Communicating skills:
It is the ability to convey information to the other.
Improper, insufficient and poorly expressed information
can create confusion.
Motivating skills:
It inspires people to do what the manager wants them to
do.
Leadership skills:
This skill helps the manager to lead the people working
under him. It is the ability to inspire confidence and trust.

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Summary

 There are four functional areas of management namely :

1. Production management. 2. Finance management.
3. Marketing management. 4. Human resource management.

 Three types of managerial skills-

1. Technical skills
2. Conceptual skills
3. Human or interpersonal
management skills

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