Principles of Management

UNIT I INTRODUCTION TO MANAGEMENT AND ORGANIZATIONS

Definition of Management – Science or Art – Manager Vs Entrepreneur -
types of managers managerial roles and skills – Evolution of Management –
Scientific, human relations , system and contingency approaches – Types of
Business organization - Sole proprietorship, partnership, company-public and
private sector enterprises - Organization culture and Environment – Current
trends and issues in Management.

PRINCIPLES OF MANAGEMENT
What is Management?
Management is the process of planning, Organizing, Directing,
Staffing and controlling the various activities of the people to achieve the
objectives of an organization.
What is an organization?
An organization is a group of people working together to create surplus.
What is Principles of Management?
Principles of Management are the essential, underlying factors that form
the foundations of successful management.
DEFINITION OF MANAGEMENT:
 Management is the process of giving direction and controlling the various
activities of the people to achieve the objectives of an organization.
 According to Knootz and Weihrich “Management is the process of designing
and maintaining of an environment in which individuals working together in
groups efficiently accomplish selected aims”.
NATURE OF MANAGEMENT:
1. Managers carry out their managerial function.
2. Applies to any kind of Organisation.
3. Applies to managers at all Organisational levels.
4. Aim is to create a surplus.
5. Concerned with productivity, implies effectiveness and efficiency.
6. Management of 4 M’s in the Orgn– Men, Machine, Materials & money.
CHARACTERISTICS OF MANAGEMENT :
1. Management is Universal.
2. Management is dynamic.
3. Management is a group of managers.
4. Management is Purposeful.
5. Management is goal oriented.
6. Management is integrative Function.
7. Management is a Social process.
8. Management is a Multi-faceted discipline.
9. Management is a continuous process.
10. Management is a system of authority.
11. Management is intangible.
12. Management is profession, an art as well as a science

FUNCTIONS OF MANAGEMENT:
1. Planning-What to do, when to do & how to do.
2. Organizing -Identification and grouping the activities to be performed.
3. Staffing- Recruiting,Training & development.
4. Directing-
• Supervision
•Motivation
• Communication
5. Controlling-Checking and verifying the activities.
1.Planning:
 It is the basic function of management.
 It deals with chalking out a future course of action & deciding in advance the
most appropriate course of actions for achievement of pre-determined goals.
 According to KOONTZ, “Planning is deciding in advance
– what to do, when to do & how to do. It bridges the gap from where we are &
where we want to be”.
 A plan is a future course of actions.
 Planning is necessary to ensure proper utilization of human & non human
resources.
 It also helps in avoiding confusion, uncertainties, risks, wastages etc.
2. Organizing:
 It is the process of bringing together physical, financial and human
resources and developing productive relationship amongst them for
achievement of organizational goals.
 According to Henry Fayol, “To organize a business is to provide it with
everything useful or it’s functioning i.e. raw material, tools, capital and
personnel’s”.
 Organizing as a process involves:
• Identification of activities.
• Classification of grouping of activities.
• Assignment of duties.
• Delegation of authority and creation of responsibility.
• Coordinating authority and responsibility relationships.
3. Staffing:
 The main purpose of staffing is to put right man on right job.
 According to Kootz & O’Donell, “Managerial function of staffing involves
manning the organization structure through proper and effective selection,
appraisal & development of personnel to fill the roles designed un the
structure”.
 Staffing involves:
• Manpower Planning (estimating man power in terms of searching, choose
the person and giving the right place).
• Recruitment, selection & placement.
• Training & development.
• Remuneration.
• Performance appraisal.
• Promotions & transfer.
4. Directing:
 It is that part of managerial function which actuates the organizational methods
to work efficiently for achievement of organizational purposes.
 Direction is that inert-personnel aspect of management which deals directly
 with influencing, guiding, supervising, motivating sub-ordinate for the
achievement of organizational goals.
 Direction has following elements:
• Supervision
• Motivation
• Leadership
• Communication
5. Controlling:
 The purpose of controlling is to ensure that everything occurs in conformities
with the standards.
 According to Theo Haimann, “Controlling is the process of checking whether
or not proper progress is being made towards the objectives and goals and
acting, if necessary, to correct any deviation”.
 According to Koontz & O’Donell “Controlling is the measurement &
correction of performance activities of subordinates in order to make sure
that the enterprise objectives and plans desired to obtain them as being
accomplished”.
 Therefore, controlling has following steps:
(i) Establishment of standard performance.
(ii) Measurement of actual performance.
(iii) Comparison of actual performance with the standards and
finding out deviation if any.
(iv)Corrective action.
MANAGEMENT IS SCIENCE OR ART?
MANAGEMENT AS A SCIENCE
 Science is a systematic body of knowledge pertaining to a specific field of study
that contains general facts which explains a phenomenon.
 These principles are developed through scientific method of observation
and verification through testing. Science is characterized by following main
features:
1. Universally acceptance principles –
 Scientific principles represent basic truth about a particular field of
enquiry.
 Management also contains some fundamental principles which can
be applied universally like the Principle of Unity of Command i.e.
one man, one boss. This principle is applicable to all type of
organization.
2. Experimentation & Observation –
 They have been developed through experiments & practical
experiences of large no. of managers. E.g. it is observed that
reasonable remuneration to personal helps in creating a
satisfied work force.
3. Cause & Effect Relationship –
 If workers are given bonuses, fair wages they will work hard but
when not treated in fair and just manner, reduces productivity
of organization.
4. Test of Validity & Predictability –
 Principles of management can also be tested for validity. E.g.
principle of unity of command can be tested by comparing two
persons - one having single boss and one having 2 bosses. The
performance of 1st person will be better than 2nd.
MANAGEMENT AS AN 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.
Art has the following characters –
1. Practical Knowledge:
 Every art requires practical knowledge therefore learning of theory is
not sufficient.
  It is very important to know practical application of theoretical
principles. E.g. to become a good painter, the person may not only
be knowing different colour and brushes but different designs,
dimensions, situations etc to use them appropriately.
 A manager can never be successful just by obtaining degree or
diploma in management; he must have also know how to apply
various principles in real situations by functioning in capacity of
manager.
2. Personal Skill:
 Although theoretical base may be same for every artist, but each
one has his own style and approach towards his job.
 That is why the level of success and quality of performance differs
from one person to another. E.g. there are several qualified
painters but M.F. Hussain is recognized for his style.
 Similarly, management as an art is also personalized.
 Every manager has his own way of managing things based on
his knowledge, experience and personality, that is why some
managers are known as good managers (like Aditya Birla, Rahul
Bajaj) whereas others as bad.
3. Creativity:
 Every artist has an element of creativity in line which requires
combination of intelligence & imagination.
 Management is also creative in nature like any other art.
 It combines human and non-human resources in useful way so as to
achieve desired results. (ex: Ilayaraja)
4. Perfection through practice: Practice makes a man perfect.
5. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete
results. In the same manner, management is also directed towards
accomplishment of pre-determined goals.
MANAGEMENT AS BOTH SCIENCE AND ART
Management is both an art and a science. The above-mentioned points
clearly reveal that management combines features of both sciences as
well as art. They are complementary to each other (like tea and biscuit,
bread and butter etc.).
LEVELS OF MANAGEMENT:
 The term “Levels of Management’ refers to a line of separation between
various managerial positions in an organization.
 The number of levels in management increases when the size of the
business and work force increase and vice versa.
 The level of management determines a chain of command, the amount of
authority & status enjoyed by any managerial position.
The levels of management can be classified in three broad categories:
1. Top Level Management / Administrative Level
2. Middle Level Management / Executory
3. Low Level Management / Supervisory / Operative / First-Line
Managers
Managers at all these levels perform different functions. The role of managers at all
the three levels are discussed below:
LEVELS OF MANAGEMENT
1. Top Level of Management:
 It consists of board of directors, chief executive or managing director.
 The top management is the ultimate source of authority and it manages
goals and policies for an enterprise.
 It devotes more time on planning and coordinating functions.
Their role can be emphasized as
a. Top management lays down the objectives and broad policies of the
enterprise.
b. It issues necessary instructions for preparation of department
budgets, procedures, schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
 f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
2. Middle Level of Management
 The branch managers and departmental managers constitute middle
level.
 They are responsible to the top management for the functioning of their
department.
 They devote more time to organizational and directional functions.
 In small organization, there is only one layer of middle level of
management but in big enterprises, there may be senior and junior
middle level management.
Their role can be emphasized as -
a. They execute the plans of the organization in accordance with the
policies and directives of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower
level.
e. They are responsible for coordinating the activities within the division or
department.
f. It also sends important reports and other important data to top level
management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower-level managers towards
better performance.
3. Lower Level of Management
 It consists of supervisors, foreman, section officers, superintendent etc.
 According to R.C. Davis, “Supervisory management refers to those
executives whose work has to be largely with personal oversight and
direction of operative employees”.
 In other words, they are concerned with direction and controlling
function of management.
Their activities include -
a. Assigning of jobs and tasks to various workers.
b. They guide and instruct workers for day-to-day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good
relation in the organization.
e. They communicate workers problems, suggestions, and
recommendatory appeals etc. to the higher level and higher-level goals
and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the
things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
MANAGERIAL SKILLS:
 Conceptual skills.
 Human Skills.
 Technical Skills.
 Design Skills – Decision making.
NEED FOR MANAGEMENT:
 To increase efficiency.
 To crystallize the nature of Management job.
 To improve research in Management.
 To attain social goals.
IMPORTANCE OF MANAGEMENT
 Achievement of group goals.
 Optimum utilization of resources.
 Fulfillment of social obligations.
 Economic growth.
 Stability.
  Human Development.
 Meets the challenge of change.
DIFFERENCES BETWEEN ENTREPRENEUR AND MANAGER
1. A person, who creates an enterprise, by taking a financial risk in order to get
profit, is called an entrepreneur.
An individual who takes the responsibility of controlling and administering the
organisation is known as a manager.
2. An entrepreneur focuses on business start-up whereas the main focus of a
manager is to manage ongoing operations.
3. Achievements work as a motivation for entrepreneurs. On the other hand, the
primary motivation is the power.
4. The manager’s approach to the task is formal which is just opposite of an
entrepreneur.
5. An entrepreneur is the owner of the enterprise while a manager is just an
employee of the company.
6. A manager gets salary as remuneration for the work performed by him.
Conversely, profit is the reward for the entrepreneur.
7. An entrepreneur’s decisions are driven by inductive logic, courage, and
determination; that is why the decision making is intuitive. On the contrary, the
decision making of a manager is calculative, as they are driven by deductive logic,
the collection of information and advice.
8. The major driving force of an entrepreneur is creativity and innovation. As
against this, a manager maintains the existing state of affairs.
9. While entrepreneur is a risk taker, the manager is risk averse.
ROLES OF A MANAGER
1. Interpersonal Role - Interacting with people inside and outside the
organisation.
(i) Figurehead – as a symbolic head of an organisation, the manager
performs routine duties of a legal nature.
(ii) Leader – Hiring, Training, motivating and guiding subordinates.
(iii) Liaison - Interacting with other managers outside the organisation
 to obtain favours and information.
2. Informational Role – Serving as a focal point for exchange of Information.
(iv)Monitor – Seeks and receive information concerning internal and external
events so as to gain understanding of the organisation and its environment.
(v) Disseminator – Transmits information to subordinates, peers
and superiors within the Organisation.
(vi) Spokesperson – Speaking on behalf of the organisation and
transmitting information on organisation plans, policies and actions
to outsiders
Each of the approaches of management are based on somewhat different
assumptions about human beings and the organizations for which they
work.
The different approaches of management are
a) Classical approach,
b) Behavioural approach,
c) Quantitative approach,
d) Systems approach,
e) Contingency approach.
THE CLASSICAL APPROACH:
 The classical approach is the oldest formal approach of management
thought.
 Its roots pre-date the twentieth century. The classical approach of thought
generally, concerns ways to manage work and organizations more
efficiently.
 Three areas of study that can be grouped under the classical approach are
scientific management, administrative management, and bureaucratic
management.
(i) Scientific Management:
 Frederick Winslow Taylor is known as the father of scientific management.
Scientific management (also called Taylorism or the Taylor system) is a
theory of management that analyses and synthesizes workflows, with the
objective of improving labour productivity.
 In other words, Traditional rules of thumb are replaced by precise
procedures developed after careful study of an individual at work.
(ii) Administrative Management:
 Administrative management focuses on the management process and
principles of management.
 In contrast to scientific management, which deals largely with jobs and
work at the individual level of analysis, administrative management
provides a more general theory of management.
 Henri Fayol is the major contributor to this approach of management
thought.
(iii) Bureaucratic Management.
 Bureaucratic management focuses on the ideal form of organization.
 Max Weber was the major contributor to bureaucratic management.
 Based on observation, Weber concluded that many early organizations
were inefficiently managed, with decisions based on personal relationships
and loyalty.
 He proposed that a form of organization, called a bureaucracy,
characterized by division of labour, hierarchy, formalized rules,
impersonality, and the selection and promotion of employees based on
ability, would lead to more efficient management.
 Weber also contended that managers' authority in an organization should
be based not on tradition or charisma but on the position held by
managers in the organizational hierarchy.
THE BEHAVIORAL APPROACH:
The behavioural approach of management thought developed, in part,
because of perceived weaknesses in the assumptions of the classical
approach. The classical approach emphasized efficiency, process, and
principles.
 Some felt that this emphasis disregarded important aspects of
organizational life, particularly as it related to human behavior. Thus, the
behavioral approach focused on trying to understand the factors that affect
human behavior at work.
(i) Human Relations:
 The Hawthorne Experiments began in 1924 and continued through the early
1930s. A variety of researchers participated in the studies, including Elton
Mayo.
 One of the major conclusions of the Hawthorne studies was that workers'
attitudes are associated with productivity.
 Another was that the workplace is a social system and informal group influence
could exert a powerful effect on individual behavior. A third was that the style
of supervision is an important factor in increasing workers' job satisfaction.
(ii) Behavioral Science:
 Behavioral science and the study of organizational behavior emerged in the
1950s and 1960s.
 The behavioral science approach was a natural progression of the human
relations movement.
 It focused on applying conceptual and analytical tools to the problem of
understanding and predicting behavior in the workplace.
 The behavioral science approach has contributed to the study of management
through its focus on personality, attitudes, values, motivation, group behavior,
leadership, communication, and conflict, among other issues.
THE QUANTITATIVE APPROACH:
 The quantitative approach focuses on improving decision making via the
application of quantitative techniques.
 Its roots can be traced back to scientific management.
(i) Management Science (Operations Research):
 Uses mathematical and statistical approaches to solve management problems.
 It developed during World War II as strategists tried to apply scientific
knowledge and methods to the complex problems of war.
 Industry began to apply management science after the war. The advent of the
computer made many management science tools and concepts more practical
for industry
(ii) Production and Operations Management.
 This approach focuses on the operation and control of the production process
that transforms resources into finished goods and services
It has its roots in scientific management but became an identifiable area of
management study after World War II.
 Operations management emphasizes productivity and quality of both
manufacturing and service organizations.
 W. Edwards Deming exerted a tremendous influence in shaping modern ideas
about improving productivity and quality.
 Major areas of study within operations management include capacity planning,
facilities location, facilities layout, materials requirement planning, scheduling,
purchasing and inventory control, quality control, computer integrated
manufacturing, just-in-time inventory systems, and flexible manufacturing
systems.
SYSTEMS APPROACH:
The simplified block diagram of the systems approach is given below.
 The systems approach focuses on understanding the organization as an open
system that transforms inputs into outputs.
 The systems approach began to have a strong impact on management thought
in the 1960s as a way of thinking about managing techniques that would allow
managers to relate different specialties and parts of the company to one
another, as well as to external environmental factors.
 The systems approach focuses on the organization as a whole, its interaction
with the environment, and its need to achieve equilibrium
CONTINGENCY APPROACH:
 The contingency approach focuses on applying management principles and
processes as dictated by the unique characteristics of each situation.
 It emphasizes that there is no one best way to manage and that it depends on
various situational factors, such as the external environment, technology,
organizational characteristics, characteristics of the manager, and
characteristics of the subordinates
HENRY FAYOL'S 14 PRINCIPLES OF MANAGEMENT:
The principles of management are given below:
1. Division of work: The work should be divided into different task and each
task is performed by a person who is specialised in that area.
2. Authority and Responsibility: The right to give order is called authority.
The obligation to accomplish is called responsibility. Authority and Responsibility
are the two sides of the management coin. They exist together. They are
complementary and mutually interdependent.
3. Discipline: The objectives, rules and regulations, the policies and
procedures must be honoured by each member of an organization. There must be
penalties (punishment) for non-obedience or indiscipline. No organization can
work smoothly without discipline.
4. Unity of Command: In order to avoid any possible confusion and conflict,
each member of an organization must receive orders and instructions only from
one superior (boss).
5. Unity of Direction: All members of an organization must work together to
accomplish common objectives.
6. Emphasis on Subordination of Personal Interest to General or
Common Interest: This is also called principle of co-operation. Each shall work
for all and all for each. General or common interest must be supreme in any joint
enterprise.
7. Remuneration: Fair pay with non-financial rewards can act as the
best incentive or motivator for good performance. Exploitation of employees in
any manner must be eliminated.
8. Centralization: There must be a good balance between centralization and
decentralization of authority and power. Extreme centralization and
decentralization must be avoided.
9. Scalar Chain: The unity of command brings about a chain or hierarchy of
command linking all members of the organization from the top to the bottom.
10. Order: Fayol suggested that there is a place for everything. Order or system alone
can create a sound organization and efficient management.
11. Equity: An organization consists of a group of people involved in joint effort.
Hence, equity (i.e., justice) must be there. Without equity, we cannot have
sustained and adequate joint collaboration.
12. Stability of Tenure: A person needs time to adjust himself with the new work and
demonstrate efficiency in due course. Hence, employees and managers must have
job security.
13. Esprit of Co-operation: Union is strength. But unity demands co-operation.
14. Initiative: Creative thinking and capacity to take initiative can give us sound
managerial planning and execution of predetermined plans.
SCIENTIFIC MANAGEMENT:
Father of Scientific Management F.W. Taylor (1856 –1915)
“The art of knowing exactly what you want men to do and see that they do it in the
best and cheapest way.”
Management a Science based upon certain clearly defined principles.
Principles of Scientific Management,
 Science not rules of thumb.
 Harmony not discords.
 Co-operation not individualism.
 Maximum output in place of restricted output.
 Development of each individual to his greatest efficiency and prosperity.
 Mental Revolution – Workers and Management, Workmen towards their work,
their fellowmen and towards their employees. Mental attitude of the two
parties.
Techniques of Scientific Management
1. Time Study
2. Motion Study
3. Scientific task Planning
4. Standardization and simplification
5. Differential piece rate system
6. Functional foremanship – According to Taylor, one supervisor cannot be an
expert in all aspects of work supervision.
In system of Functional Foremanship in which eight supervisors supervise a
workers job.
a. Route Clerk
b. Instruction card clerk
c. Time and cost clerk
d. Shop disciplinarian
e. Gang boss
f. Speed boss
g. Repair boss
h. Inspector
BUSINESS ORGANIZATION
 A business organization is an individual or group of people that collaborate to
achieve certain commercial goals.
 Some business organizations are formed to earn income for owners. Other
business organizations, called non-profits, are formed for public purposes.
 These businesses often raise money and utilize other resources to provide or
support public programs
TYPES OF BUSINESS ORGANIZATION:
1. PRIVATE SECTOR- it is the part of the economy, sometimes referred to as
the citizen sector, which is run by private individuals or groups, usually as a
means of enterprise for profit, and is not controlled by the State.
2. PUBLIC SECTOR-
 The part of an economy that is controlled by the state.
 The public sector is the part of the economy concerned with
providing various governmental services.
 In most countries the public sector includes such services as the
military, police, infrastructure (public roads, bridges, tunnels, water
supply, sewers, electrical grids, telecommunications, etc.), public
transit, public education, along with health care and those working
for the government itself, such as elected officials.
 The public sector might provide services that a non-payer cannot be
excluded from (such as street lighting), services which benefit all of
society rather than just the individual who uses the service.
3. PRIVATELY HELD-
A privately held company or close corporation is a business
company owned either by non-governmental organizations or by a
relatively small number of shareholders or company members which does
not offer or trade its company stock (shares) to the general public on the
stock market exchanges, but rather the company's stock is offered, owned
and traded or exchanged privately.
4. PUBLICALLY HELD-
A public, publicly traded, publicly held company, or public
corporation is a corporation whose ownership is dispersed among the
general public in many shares of stock which are freely traded on a stock
exchange or in over the counter markets. In some jurisdictions, public
companies over a certain size must be listed on an exchange.
5. SOLE PROPRIETORS- owned by a single person.
Merits:
 Easiest and least expensive form of ownership to organize.
 Sole proprietors are in complete control, within the law, to make all
decisions.
 Sole proprietors receive all income generated by the business to keep or
reinvest.
 Profits from the business flow-through directly to the owner's personal
tax return.
 The business is easy to dissolve, if desired.
Demerits:
 Unlimited liability and are legally responsible for all debts against the
business.
  Their business and personal assets are 100% at risk.
 Has almost been ability to raise investment funds.
 Are limited to using funds from personal savings or consumer loans.
 Have a hard time attracting high-calibre employees, or those that are
motivated by the opportunity to own a part of the business.
 Employee benefits such as owner's medical insurance premiums are not
directly deductible from business income (partially deductible as an
adjustment to income).
6. PARTNERSHIP- owned by a group of persons together towards a goal.
Merits:
 Partnerships are relatively easy to establish; however time should be
invested in developing the partnership agreement.
 With more than one owner, the ability to raise funds may be increased.
 The profits from the business flow directly through to the partners'
personal taxes.
 Prospective employees may be attracted to the business if given the
incentive to become a partner.
Demerits:
 Partners are jointly and individually liable for the actions of the other
partners.
 Profits must be shared with others.
 Since decisions are shared, disagreements can occur.
 Some employee benefits are not deductible from business income on tax
returns.
 The partnerships have a limited life; it may end upon a partner
withdrawal or death.
ORGANIZATION CULTURE AND ENVIRONMENT:
1) INTERNAL ENVIRONMENTAL FACTORS:
 The internal environment is the environment that has a direct impact on the
business.
 The internal factors are generally controllable because the company has control
over these factors.
  It can alter or modify these factors. The internal environmental factors are
resources, capabilities and culture.
i) Resources: A good starting point to identify company resources is to look at
tangible, intangible and human resources. Tangible resources are the easiest to
identify and evaluate: financial resources and physical assets are identifies and
valued in the firm’s financial statements. Such intangible recourses include
reputational assets (brands, image, etc.) and technological assets (proprietary
technology and know-how).
ii) Capabilities: Resources are not productive on
their own. The most productive tasks require that resources collaborate closely
together within teams. The term organizational capabilities are used to refer to a
firm’s capacity for undertaking a particular productive activity.
iii) Culture: It is the specific collection of values and norms that are shared by
people and groups in an organization and that helps in achieving the
organizational goals.
2) EXTERNAL ENVIRONMENT FACTORS:
 It refers to the environment that has an indirect influence on the business.
 The factors are uncontrollable by the business.
 The two types of external environment are task environment and general
environment.
a) TASK ENVIRONMENTAL FACTORS:
 These are external factors close to the company that have a direct impact
on the organizations process. These factors include:
i) Shareholders: Any person or company that owns at least one share (a
percentage of ownership) in a company is known as shareholder. A shareholder
may also be referred to as a "stockholder". As organization requires greater
inward investment for growth they face increasing pressure to move from private
ownership to public. However, this movement unleashes the forces of
shareholder pressure on the strategy of organizations.
ii) Suppliers: An individual or an organization involved in the process of making a product
or service available for use or consumption by a consumer or business user is
known as supplier. Increase in raw material prices will have a knock-on effect on
the marketing mix strategy of an organization. iii) Distributors: Entity that
buys non-competing products or product-lines, warehouses them, and resells
them to retailers or direct to the end users or customers is known as distributor.
Most distributors provide strong manpower and cash support to the supplier or
manufacturer's promotional efforts. They usually also provide a range of services
(such as product information, estimates, technical support, after-sales services,
credit) to their customers. Often getting products to the end customers can be a
major issue for firms. The distributors used will determine the final price of the
product and how it is presented to the end customer.
iv) Customers: A person, company, or other entity which buys goods and
services produced by another person, company, or other entity is known as
customer. Organizations survive on the basis of meeting the needs, wants and
providing benefits for their customers. Failure to do so will result in a failed
business strategy.
v) Competitors: A company in the same industry or a similar industry which
offers a similar product or service is known as competitor. The presence of one or
more competitors can reduce the prices of goods and services as the companies
attempt to gain a larger market share. Competition also requires companies to
become more efficient in order to reduce costs. Fast-food restaurants McDonald's
and Burger King are competitors, as are Coca-Cola and Pepsi, and Wal-Mart and
Target.
vi) Media: Positive or adverse media attention on an organisation’s product or
service can in some cases make or break an organisation. Consumer
programmes with a wider and more direct audience can also have a very
powerful and positive impact, forcing organisations to change their tactics.
b) GENERAL ENVIRONMENTAL FACTORS:
i) Political Factors: Political factors include government regulations and legal
issues and define both formal and informal rules under which the firm must
operate. Some examples include:
• tax policy
• employment laws
• environmental regulations
• trade restrictions and tariffs
• political stability
ii)Economic Factors: Economic factors affect the purchasing power of potential
customers and the firm's cost of capital. The following are examples of factors in
the macroeconomy:
• economic growth
• interest rates
• exchange rates
• inflation rate
iii) Social Factors: Social factors include the demographic and cultural
aspects of the external macro environment. These factors affect customer needs
and the size of potential markets. Some social factors include: • health
consciousness
• population growth rate
• age distribution
• career attitudes
• emphasis on safety
iv) Technological Factors: Technological factors can lower barriers to entry,
reduce minimum efficient production levels, and influence outsourcing decisions.
Some technological factors include:
• R&D activity
• automation
• technology
• rate of technological change
TRENDS AND CHALLENGES OF MANAGEMENT IN GLOBAL SCENARIO :
Current trends in management:
1. Globalization
 2. Technology
3. Sustainability and corporate social responsibility
4. Study of psychology
5. Business ecosystem
Issues in management:
1. Globalization
2. Quality and productivity
3. Ethics and social responsibility
4. Technological development
5. Innovation and changes
6. Work force diversity
7. Multicultural effects