Revision Notes for Class 12 Business Studies Chapter 1 Nature and Significance of Management 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 Class XII Business Studies www vedantu com 1 Difference between Effectiveness and Efficiency Basis Effectiveness Efficiency Meaning It refers to the process of completing the assigned task within the given time frame It refers to completing the assigned task with minimum wastage and at a minimum cost Objective To achieve the targets on time Optimum use of resources and at minimum cost Main element Time Cost 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 towards 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 follows 3 Multidimensional Management has three important dimensions These are as 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 Class XII Business Studies www vedantu com 2 achieving them For example A hospital operates for the treatment of patients A supermarket exists for the fulfilment of 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 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 Class XII Business Studies www vedantu com 3 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