This GSEB Class 12 Organization of Commerce and Management Notes Chapter 1 Nature and Significance of Management covers all the important topics and concepts as mentioned in the chapter.

Nature and Significance of Management Class 12 GSEB Notes

Meaning of Management:
Whenever more than one person collectively do work, planning becomes necessary for work being completed in a organized manner, authority, duties and responsibilities needs to be delegated, direction also needs to be provided and controlling becomes necessary to ensure that work is ‘ completed as decided. The group of such functions means Management.

Definitions of Management:
According to Koontz and O’Donnell, “Management is the art of getting things done through others.”
According to Dr George R. Terry, “Management is such a process which plans and controls men, machines, material, method, money and market. It provides leadership co¬ordination and direction to human efforts which help to achieve the business objectives.”

Nature of Management:

• (1) Management is a Universal process.
• (2) Management is a Goal oriented activity to achieve specific goals.
• (3) Management is a Group activity where in two or more persons are involved.
• (4) Management is a continuous process.
• Management is a human activity undertaken by human being for human element.
• Decision making process is a function of Management.
• Management is a science. It is an art of getting work done from man. According to modern opinion, it is a profession.

Importance / Significance of Management:

• Management is necessary in each field or activity.
• It becomes possible to make optimum use of resources because of Management.
• Management is unavoidable function for the accomplishment of objectives of business unit.
• Success or failure of business depends upon Management.
• Job (employment) opportunities increase because of efficient Management.
• Profit can be maximized by making optimum use of resources.
• Business units provide goods at reasonable rate and contribute to welfare of the society.
• Efficient Management is necessary for economic, social and national development of the economy.

Management is a science, an art and a profession:

• Management is a science: Management has the characteristics of science. It includes systematic knowledge, universality, cause and effect relationship, it is based on collection of facts, analysis and experiments and verification of principles. Hence, management is a science.
• Management is an art: Art means employment of skill and expertise of an individual while doing work for which one should have theoretical knowledge. While implementing rules and principles of management, personal skill, guts and smartness is necessary. Hence management is an art. Still however management is not only a science or an art but it is positive combination of both.
• Management is a profession: Profession is an activity where specialized knowledge in specific field is acquired and it is used for the welfare of the society by charging fees.

Characteristics of a Profession:

• Specialised knowledge is required for any type of profession. Similarly for management degree of BBA, MBA is necessary.
• In management because of experience and training knowledge increases (gets enhanced)
  and there is scope for research, (becomes innovative).
• Like other profession in the field of management also there are associations.
• In each profession code of conduct has to be followed. (5) Moral responsibility is important matter in profession.
• Thus, management is developing like an independent profession.

Levels of Management:
There are mainly three levels of management:
1. Top Level of Management:
The supreme authority for the management of business unit is known as the top level management.

Functions of Top Level Management:

• To decide primary and subsidiary objectives.
• To work as trustees.
• Delegation of authority and responsibility after appointing The Chief Executive Officer and Higher officers.
• To give approval to different departmental budgets.
• To take strategic decisions.
• To follow legal provisions.
• To resolve complex problems as per legal provisions.
• The formation, implementation and supervision of various plans.
• Profit distribution, dividend declaration, creation of reserve and reinvestment of profit.
• Studying reports of various activity and issue instructions accordingly.

2. Middle Level of Management:
Middle level management is a chain linking top level management to bottom level management. It includes departmental heads, divisional officers and experts.

Functions of Middle Level Management:

• To implement orders and instructions of Chief Executive Officer.
• To prepare budget for their department and send it to top level for approval.
• For the achievement of objectives to decide necessary policy, rules and regulations and formulate structure.
• To take necessary steps to increase efficiency and effectiveness of their departmental functions.
• To take steps to motivate employees of the department.
• To keep in touch with other departments continuously.
• To supervise functions of sub-divisions.
• To supervise departmental functions, get information, analyze the same and provide direction.
• To help top level management in taking policy decisions.

3. Bottom Level of Management:
This level is also known as bottom level or supervisor’s level. It includes supervisors, jobbers, foremen, etc. The function of this level is the implementation of the decisions and policies decided by the top management.

Functions of Bottom Level of Management:

• To supervise functions of employees.
• To increase the discipline and boost the morale of the employees.
• To plan the daily routine work of the department.
• To perform functions relating to employees.
• To receive instructions, orders and programme from the departmental officers.
• To perform functions like layout, repairs and maintenance of the machinery.
• To make arrangements for necessary equipments, raw-material, etc. for workers.
• To bring proper solution of the employees’/workers’ problems.
• To execute policies and implement decisions taken by top level of management.
• To send various reports, workers’ suggestions and complaints to the middle level of management.

The points of differences between Top Level of Management, Middle level of Management and Bottom level of Management:

• Management and Administration,
• What does it includes
• Authority and Responsibility
• Number of Members
• Competence
• Formation of objectives and policies
• Accountability and
• Decisions.

Functions of Management:
Management is a process. There is difference of opinion among various subject experts about which functions are required to be included.

• Planning: Functions of management begins with planning. Planning means selection of facts for the expected results and to establish inter-relationship between them, as well as observation of necessary activities and forecasting for the same anticipation. The ‘Planning’ is the basis for the other functions of management.
• Organizing: Organisation is a structure for assignment of authority and responsibility among individuals working for the achievement of common objectives. The organization is created for the achievement of goals, policies and programmes, etc. as decided by planning.
• Staffing: According to Dr George Terry, “Staffing is concerned with availing, maintaining and developing satisfactory man-power.” At present it includes men power planning, human resource development, evaluation of work, job analysis, etc. Success of any enterprise depends upon its staff.
• Directing: Direction means to guide and supervise the employees for the accomplishment of objectives. Without direction other functions of management are useless.
• Controlling: According to Peter Drucker, “Controlling is the function of maintaining balance among efforts and results, resources and objectives.” Controlling is the last function of management. It is a corrective activity.

Meaning of Co-ordination:
Co-ordination is necessary in the each process of management starting from planning to controlling. To bring co-operation and harmony among the different functions carried out by different employees departments in the business unit is called co-ordination.

Characteristics of Co-ordination:

• Manage-ment process from planning to controlling; is not possible without co-ordination.
• This function is made at each level of management.
• Effective communication is necessary for success.
• Co-ordination is not possible without co-operation.
• Optimum use of resources becomes possible because of co-ordination.
• Co-ordination is present in every part of the management.

Importance of Co-ordination:

• Various functions of management become effective.
• All the functions can be executed easily.
• No work remains unattended/ incomplete or gets duplicated.
• It maintains harmony among various departments.
• Co-ordination enables to maintain balance between order and time of business activity performed by various departments.
• Co-ordination leads to accomplishment of pre-determined objectives.

Functional areas of Management:
The functional areas of management are:

• Marketing Management
• Human Resource Management
• Financial Management and
• Production Management.

1. Marketing Management:
Meaning: In a broad sense marketing management is the activity of providing goods and services from producers to customers.

Functions of Marketing Management:

• Product or Product-mix
• Price
• Distribution and
• Promotion.

2. Human Resource Management: Meaning:
Human resource management is the process, which takes into consideration matters like proficiency, knowledge, intelligence, likes and dislikes, personal development, necessity, etc. of employees integrates them with business objectives and channelizes the business towards the path of success and profitability.

Functions of Human Resource Management:

• It includes selection, training, promotion and direction to the employees.
• It enables to accomplish business objectives by way of integrating them with individual objectives.
• It manages human resource as valuable asset of the business.
• By providing training to the employees, their development should be planned.
• Placing employees at the right places by evaluating their performance.
• By efficient human resource management labour turnover ratio can be reduced and skillful employees can be retained for longer duration.
• Human resource management can provide conducive atmosphere to employees to boost their enthusiasm and efficiency.

Importance of Human Resource Management:

• Employees’ efficiency increases.
• Business profitability increases.
• Business prestige increases.
• Higher standards for the quality of goods and services can be maintained.
• Employees unity/oneness can be developed.
• Maximum utilization of resources.
• Reduction of labour turnover ratio.
• Job satisfaction among employees gets enhanced.
• Employees’ job satisfaction increases.
• Human resource management increases job satisfaction of employees/ workers, where by industrial peace is created.

3. Financial Management:
Financial manage¬ment means necessary finance should be arranged at the right time and to utilize the same effectively in business.

Functions of Financial Management:

• To estimate financial needs.
• Financial planning.
• To prepare budget
• Allocation of funds.
• To decide capital structure and select sources for acquisition of capital.
• Procedure for procurement of funds.
• To exercise control to ensure proper utilization of. funds.
• Formation of financial policy.
• Taxation planning
• To make arrangement for the assets.

4. Production Management:
Production management is the process that includes production planning, deciding programmes, maintaining co-ordination, direction and keeping control.

Functions of Production Management:

• Production planning
• Production research,
• Product development as well as selection of product-mix
• Selection of technology and machines
• Selection of business location as well as layout
• Estimate about material requirement and other needs of production
• Production control
• Quality control
• Cost control, maintenance of productivity and increase of productivity and
• To adopt variation and simplification in production.