General Principles of Business Management for AAI AO

Part 1 – Definitions

Management : Management is an essential activity of every organization. Not only in business organization but management is every-where in human and business life. It is just like air without which we cannot live. Management means getting things done successfully from others. Theo Haiman has defined this term

  • (1) Management as a noun,
  • (2) Management as a discipline and
  • (3) Management as a process/functions.

As per this third definition of Management, it’s a functional term, Luther Gullik also stated this term in keyword ‘POSDCORB’+‘C’
It means from planning to control all functions together or group of these functions is called management.

Characteristics of Management : Management is, (1) Universal (2) a social process (3) getting thing done (4) unifying force (5) target oriented (6) dynamic (7) a system of authority (8) Decision-making (9) continuous process (10) born as well as
acquired ability (11) proper utilization of resources (12) Intangible (13) science as well as an art (14) regarded as a professional mgt. (15) a distinct activity.

Significance of Management : Management is considered to be the brain of business. Without management a person or business can not live properly. In shortwe can say; “Anything + Management = success” and “Anything – Management = Nothing/ ‘O’.
● Functions of Management – ‘POSDCORB’ + ‘C’.
● ‘Administration and Management’ – There are three different views given by three different schools of thoughts – (1) American – ‘Administration’ and ‘Management’ are different. (2) British – ‘Management’ is a generic term, includes
‘Administration’. (3) French – ‘Administration’ and ‘Management’ are one.

Management as a ‘Science’ or an ‘Art’?
1) Management is a social science
2) Management is an Art
3) Management is both a science and an art.
Management possesses characteristic of both a science and an art.

Professional Management : Concept – Management which possesses
professional characteristics is called professional Management.

Characteristics – (1) Existance of knowledge (2) Knowledge acquisition (3)
Professional Association (4) Ethics (5) Service motive.

Need – Professional mgt. is necessary in India due to the following reasons.
1) Major portion of our economy is unorganised.
2) Poor Infrastructure.
3) Less utilization of modern technology.
4) Low productive efficiency.
5) Wide spread poverty and unemployment.

Terms to Remember
● Management : “Management means getting things done through other people
● Functional Definition of ‘Management’ / ‘POSDCORB’ + ‘C’ : “From
planning to control whatever process / functions are; all these functions together
are called management.”
● ‘Administration’ : “Administration is mainly a top level function related with
the deciding of major objectives and policies.”
● Professional Management : “Management which possesses professional
characteristics is called professional management.”
● ‘LPG’ : ‘Liberalisation’, ‘Privatisation’ and Globalisation.

Part 2

Taylor, Fayol and Weber laid the foundation of classical approach to
management theory. Mayo was one of those thinkers who developed the neoclassical approach. Taylor concentrated on improving the productivity at shop floor
by adopting scientific methods. His scientific management theory proved to be an
eyeopener to the management which hither to depended on intuition, trial and error,
and rule of thumb methods. Taylor’s scientific management is concerned with
finding one Best way for doing a job. He has stated certain principles of scientific
management and also prescribed the techniques for putting scientific management in

He has stressed the need of mental revolution on the part of both the
employer and employees. Henri Fayol, was the first thinker to point out basic
principles of management and their universal application in all types of
organizations. Fayol’s fourteen principles of management and functions of
management gave him recognition as father of principles of management. Max
Weber developed the ideal model of authority system based on rationality and
legality and called it as bureaucracy. It is an impersonalized authority structure
characterised by formal rules and regulations and professionalization.

Mayo brought to notice the importance of human relations and informal groups at work setting.
Hawthorne experiments conducted during the period from 1924 to 1932 provided
new insights into group norms and behaviour. These experiments made the
beginning of human relations movement in management and changed the traditional
thinking of management towards workers from economic man to social man.

Terms to Remember

● Scientific Management : Use of Scientific methods to define ‘one best
way’ for the job to be done.
● Unity of Command : The principle which tells that employees should
receive orders from one superior only.
● Unity of direction : One head and one plan for a group having common
● Espirit de corps : Unity is strength.
● Bureaucracy : Weber’s authority structure model based on rational-legal
authority with formal rules and impersonal relationships.
● Mental revolution : A basic change in the attitude of employer and

Part 3

A) Planning :
Planning means to look ahead and to estimate the future course of action on the
basis of past experience and the present situations. Planning decides in advance the
answers of the question of what to do, why to do, how to do, when to do, and who is
to it.

Planning is the primary and intellectual process. It is the base of controlling
l) Characteristics : Primary Function 2) Intellectual work
3) Related with Future 4) Objectives Based
5) Continuous Process 6) Base for control.

Importance of Planning
1) Attainment of objectives.
2) Minimizes Uncertainty.
3) Better Utilization of Resources
4) Minimizes Cost.
5) Better Use of technology.
6) Facilitates Decision Making.
7) Facilitates to control.

Steps in Planning process
1) Estimating professional opportunities
2) Setting of objectives.
3) Forecasting
4) Establishing the sequence of activities
5) Determining of Alternative courses

6) Selection of Alter native courses
7) Budgeting
8) Follow-Up

Functional Types of Planning.
1) Financial Planning : It is the process of estimating capital requirement and
determining its utilization.
2) Production Planning : It is related with setting the production target,
forecosting and scheduling production process and arrangement of all production
3) Personnel Planning : It is related with guessing the need of people, making
plan for the recruitment and further development of human resource.
4) Marketing Planning : It is concerned with setting of marketing objectives
and planning the flow of goals and services form producer to consume.
B) Decision Making :
Decision making is rational process related with selection of option out of so
many options after analyzing the all options.

Characteristics of Decision Making:
1) Selection of Best Alternatives
2) Intellectual Activity
3) Goal Oriented
4) Continuous Activity
5) Means to an end.
6) Related to situation

Decision Making Process:
1) Setting specific objective
2) Identification of Problem
3) Search for alternatives
4) Evaluation & Choice of alternatives
5) Action & Follow -up

Techniques of Decision-Marking:
There are two types of techniques
1) Traditional Techniques : This type of decision – making techniques includes
Experimental Technique, Majority Based technique, Forecasting Based
technique etc.
2) Modern or Scientific Techniques -Under this category there are following few
modern techniques like Analytical, Financial, statistical, Behavioural and special
Techniques etc.

Terms to Remember
1) Forecasting 2) Intellectual Process
3) Goal – oriented 4) Identification
5) Professional 6) Opportunities
7) Establishing 8) Alternative courses
9) Uncertainties 10) Maximization
11) Resources 12) Utilization
13 facilitates 14) Technology
15) Traditional 16) Scientific
17) Break-Even-Point 18) Operation Research
19) Co- relation & Regression 20) Behavioural
21) Programme Evaluation & Review Technique (PERT)
22) Critical Path Method (CPM)

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