Nature and Significance of Management Class 12 Notes: CBSE Business Studies Chapter 1

Definition of Management

“Management is defined as the process of planning, organising, actuating and controlling an organisation’s operations to achieve coordination of the human and material resources essential in the effective and efficient attainment of objectives.” 

Robert L. Trewelly and M. Gene Newport

Concept of Management

Management is a process that aims to bring the efforts of the people working in the organisation to achieve a common objective effectively and efficiently.

• Process: The term process refers to the primary activities performed in an organisation by the management to achieve the objective. It includes planning, organising, staffing, directing, and controlling.

• Effectively: The term effectively refers to the completion of the given task in the allotted time frame.

• Efficient: The term efficient means completing the task within minimum cost as well as optimum utilisation of resources.

Difference between Effectiveness and Efficiency

Characteristics of Management

1. Goal-Oriented Process: Every organisation has its own set of objectives to achieve as a result. It is through management that the efforts of the people working in the organisation are directed toward the accomplishment of these objectives. Hence, we can say management is a goal-oriented process. It is fruitless to operate if an organisation doesn't have a set goal.

2. All Pervasive: Management is a universal process. It is necessary in all types of organisations whether big or small and is performed at every level of authority; top, middle, or lower.  The five activities of management are the same for all organisations irrespective of economic, social, or political boundaries. It's just that the methodology differs but the basics and foundation remain the same.

3. Multidimensional: Management has three important dimensions. These are as follows:

• Management of work: Every enterprise has a purpose behind its existence. The major purpose is the performance of certain works for the accomplishment of results. Management converts the work to be performed in terms of goals and helps in achieving them. For example: A hospital operates for the treatment of patients. A supermarket exists for the fulfilment of the day-to-day demands of people.

• Management of people: Management unites the efforts of the group of individuals working in the enterprise so that they can work together as a team. Human resources or manpower is said to be the biggest asset of an organisation. The task of management is to get things done by individuals as well as groups of people.

• Management of operations: Every enterprise has some basic product or service to deliver which requires a production process, and a set of operations where the inputs are converted to the final product, this is the management of operations.

4. Continuous Process: Management is a continuous process as it consists of a series of interrelated activities. These functions should be performed in a systematic and orderly manner and in a proper sequence. It is a never-ending process. The activities include functions like planning, organising, directing, staffing, and controlling.

5. A Group Activity: Management is a group activity as it is concerned with the efforts of a group of individuals. It unites the efforts of the members in the group and directs them towards the attainment of a common objective.

6. A Dynamic Function: The business policies and practices of the organisation need to be changed according to the business environment which consists of various social, economic, and political factors. The world is changing dynamically in all aspects so new practices and conventions must be followed to cater to the ever-changing needs of the environment.

7. Intangible Force: Management is an invisible force. It cannot be seen, but it can be felt through the achievement of objectives.

Objectives of Management

Objectives are the desired results that drive the management to work towards it. There are three objectives of management:

1. Organisational Objectives: Organisational objectives are those objectives that are set by the management of an organisation within a predetermined period. An organisation has different types of objectives to be achieved, these objectives are determined in consideration of the different interests of the stakeholders. The main objective of an organisation is the optimum utilisation of resources most effectively and efficiently. It is further divided into three parts- survival, profit, and growth.

• Survival: Ensuring survival in the market in the long run by making positive decisions concerning business activities is the primary objective of management. Earning enough revenue to cover the cost of production is of utmost importance to an organisation.

• Profitability: Any person or individual who runs a business has the ultimate objective of earning profit. Management ensures it earns sufficient profit to meet its various needs. Management makes the best use of men, money, materials, machinery, and other resources to earn profit. A good amount of profit provides better returns to investors in terms of dividends, interest, etc.

• Growth: Management should aim towards continuously improving the performance of the organisation. It is the general objective of management to secure maximum results through minimum resources to increase prosperity and growth. The growth of an organisation can be measured in various ways and depending upon various parameters. The growth indicators can vary from organisation to organisation. Some may consider an increase in sales volume, some may look for an increasing number of products, etc.

2. Social Objectives: Any organisation that operates, doesn't solely have an objective of profit-making. It also has some social obligations or social objectives to fulfil towards society. This may differ from organisation to organisation. For example: Some aim at providing basic infrastructure to the people living around, some aim at providing maximum employment, and some aim at producing products that are environment friendly.

3. Personal Objectives: Every individual joins an organisation to pursue their objectives. Some join for a good package salary, some join for greater recognition, and some just for survival. So, this depends from individual to individual. An organisation needs to identify personal objectives to integrate them with the organisational objectives to bring harmony to the organisation. 

Importance of Management

1. Achievement of group objectives: Management creates coordination and team spirit in the group of individuals. Management also inspires the members of the groups to make their best contribution towards the achievement of the common objective. This common objective is set by the management itself.

2. Optimum utilisation of resources: Management brings together men, money, materials, and machines in the right proportion to reduce cost and maximise production.

3. Minimisation of Cost: Management improves efficiency and reduces cost through better planning, sound organisation, and effective control. By eliminating wastage and minimum cost, management helps an organisation face cutthroat competition.

4. Social development: Management increases the standard of living of the people by providing good quality products and services at minimum cost. It also helps in generating employment opportunities and adopting new technologies.

5. Achievement of personal objectives: Every individual joins an organisation to pursue their objectives. Some join for a good package salary, some join for greater recognition, and some just for survival. So, this depends from individual to individual. Management plays an important role in identifying personal objectives to integrate them with the organisational objectives to bring harmony to the organisation, as well as the successful fulfilment of the personal objectives of the individuals. 

Nature of Management 

Management has evolved, and it has become very dynamic in modern times. Earlier it was based on a set of rules and regulations or we may state them as conventions that evolve slowly and gradually as per the ever-changing needs.

Management can be an art, science, or a profession.

Management as an Art

Art refers to putting the knowledge and capabilities into practice to achieve the desired results. It can be acquired through various methods like observation, study, and experience. 

The basic features are as follows :

1. Existence of theoretical Knowledge: Art involves the application of theoretical knowledge. Management is the art of getting things done through individuals for the accomplishment of desired results by putting the available knowledge into practice.

2. Personalised application: The use of knowledge varies from person to person and hence management is an individual skill. Two different people can perform the same type of work but will always differ in the way they perform. For example: two singers will always perform differently.

3. Based on practice and creativity: Management is goal-oriented and result-oriented. As for art, management also requires practice, continuous practice hones the skills and creativity of an individual.

Hence, management can be considered as an art, as both require skills, practice, and creativity.

Management as a Science : 

A systematised body of information that can be learned by observation and experimentation is referred to as science. It is made of universally acknowledged concepts that define the relationships between causes and effects. 

The following are the essential characteristics of science:

1. A well-organised body of knowledge: Management is a systematised body of knowledge with its own set of ideas and concepts based on cause-and-effect relationships.

2. Principle-based on experiments and observation: Fundamental principles of management are developed through experiments and observations. Their results can be tested and verified.

3. Universal Validity: The principles of management have no universal validity and application like that of science. The basics of management are imparted to the managers, the rest has to be tailored as per the requirements of the organisation and environment.

Thus, management is a science, but a social science as it is based on human behaviour. Human behaviour cannot be subjected to experiments and therefore management can be called soft science.

Management as a Profession.

A vocation that requires specific knowledge, practical training, service motivation, and a code of conduct is referred to as a profession.

The following are the essential characteristics of a profession:

1. Specialised Knowledge: Management has its own set of principles, and concepts and is a well-defined body of knowledge.

2. Restricted Entry: Every profession has restricted entry through examination or educational degree. However, to build a career in management, it is not necessary to have an educational degree, etc.

3. Statutory Body: Every profession is regulated by a legally recognised body like ICAI for a chartered accountant. Management also has associations like the All India Management Association but management associations are not statutory bodies.

4. Code of Conduct: Like every profession, managers also have a code of conduct, but it does not legally bind a manager as compared to the professional code of conduct.

5. Service Motive: Managers aim to serve society similarly to other professions.

Levels of Management

There are three levels in management – top level, middle level, and lower level.

• Top Level Management: Top-level management comprises the chief executing officer, board of directors, managing directors, president, vice president, etc. Their responsibility is to decide organisational goals, frame policies, formulate strategies, and approve budgets. They are responsible for all the major policy-making in the organisation. 

• Middle-Level Management: Middle-level management comprises departmental heads, branch managers, and divisional heads. Their responsibility is to execute the plans and policies framed by the top-level management. They are the ones who connect with the lower-level management and instruct, guide, and motivate them to reach the goal.

• Lower Level Management: Lower or operational level management comprises foramen, supervisors, office managers, etc. Their responsibility is the implementation of the work and policies under the guidance of middle-level management. They also bring employees' or workers’ grievances to the knowledge of middle-level management and maintain discipline among the workers.  

The Functions of Management

• Planning: Planning is a process of setting goals and objectives and formulating a strategy and an action plan to achieve them. It bridges the gap between our current position and our desired position. This is the basic function of an organisation and is the first step of management. 

• Organising: Organising is the process of establishing authority and responsibility relationships. It involves assigning tasks to individuals and allocating resources for the same.

• Staffing: Staffing is a process of placing the right person on the right job at the right time. It includes recruitment, selection, placement, induction, and training of employees. It can be called the Human Resource function of the organisation. 

• Directing: Directing refers to the process of leading, influencing, and motivating the individuals working in the organisation to complete the assigned task effectively and efficiently. The employees need to be constantly motivated to perform better. Leadership and motivation are the key components of directing as a function. It tends to bring out the best in an employee.

• Controlling: Controlling is the process of keeping a check on the performance of the organisation and comparing it with the standards set. Also, corrective actions are taken, in case any deviation is found between the actual and desired results.

Coordination - The Essence of Management

Coordination is a force that synchronises all five functions and levels of management to achieve the goal of the organisation. Coordination is implicit and inherent in all the functions of an organisation.

Without coordination, there are chances of overlapping, duplication, delays, and chaos in the work. The function of coordination starts from the planning function itself. Coordination thus synchronises the different efforts and actions of various units of the organisation.

Characteristics of Coordination 

• Coordination integrates group efforts: Coordination integrates group efforts and ensures that the performance of the organisation is as per the standards set.

• Coordination ensures unity of action: Coordination is a force that binds the various departments and ensures that all efforts are directed towards achieving the organisational goals.

• Coordination is a never-ending process: Coordination is a continuous and never-ending process. It is required from beginning to end, at all levels of management as well as in all the functions of the organisation

• Coordination is the responsibility of all managers: It is the duty of all the people working in the organisation to work responsibly and coordinate with each other to achieve the objectives or the goals of the organisation.

• Coordination is a deliberate function: Management deliberately needs to coordinate the efforts of different people working in the organisation. Coordination cannot be established by itself rather it is a deliberate and conscious effort on the part of every manager.

• Coordination is an all-pervasive function: Coordination is something which is required everywhere and in every organisation be it big or small. It is needed at all levels and in every function of the management.

Importance of Coordination 

• Growth in Size: Coordination harmonises individual goals with organisational goals. This results in the growth of the organisation which increases the number of people employed with it.

• Functional Differentiation: The various departments of the organisation have their objectives, policies, and their style of working. But to achieve organisational objectives coordination is important to link the activities of all departments.

• Specialisation: Coordination integrates all the specialist's activities into a collective effort. 

5 Important Topics of Business Studies Class 12 Chapter 1 you shouldn’t Miss!

Importance of Class 12 Business Studies Chapter 1 Notes PDF Notes

• The Class 12 Business Studies Chapter 1 Notes PDF is important for students aiming to score better marks in their exams. 

• These notes provide a well-structured summary of the chapter, focusing on the key concepts such as the meaning, functions, and importance of management. 

• By studying these notes, students can easily review the essential topics, clarify their understanding, and reinforce their knowledge. 

• The PDF format allows for convenient access and revision anytime, ensuring students can prepare effectively and efficiently for their exams.

Tips for Learning the Class 12 Business Studies Chapter 1 Nature and Significance of Management Notes

• Start by grasping the basic definition of management and why it is essential in business operations.

• Pay special attention to the five key functions of management—Planning, Organising, Staffing, Directing, and Controlling. Understand how each function contributes to the overall management process.

• Use real-life examples to relate the theoretical concepts to practical scenarios. This will help in better retention and understanding.

• Regular revision of key concepts, such as the objectives and levels of management, will reinforce your knowledge and help you recall information quickly during exams.

• Utilise Vedantu’s well-organised notes to review important topics and clarify doubts. The concise explanations in these notes can make complex issues easier to understand.

• After studying the chapter, practice with questions from previous years’ papers and sample papers to test your understanding and improve your exam readiness.

Conclusion

Chapter 1, Nature and Significance of Management, is fundamental for understanding the role and importance of management in business. It covers key concepts such as the functions, objectives, and levels of management, all of which are crucial for any aspiring business professional. Vedantu’s notes offer a clear and concise summary of these topics, making it easier for students to grasp the material and prepare effectively for their exams. 

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