Saturday, 6 May 2023

Basics of Management ABM CAIIB

 01. Management is necessary for making our life or any task or venture we

undertake, including any industrial, business or service activity, successful.

02. The term ‘Management’ could be referring to the persons running an

organisation collectively, who are responsible for decision making.

03. The three components of management refer to their organising skills, their

skills as an entrepreneur and getting the best out of their team members.

04. The skills for organising would obviously include the traditional skills,

principles and the techniques of management which have evolved over a period

of time and are continuously evolving.

05. Henri Fayol, widely acknowledged as the founder of modem management

methods, was an early management writer who was instrumental in contributing

immensely to ‘formal organisation theory’.

06. The theory propounded by Henri Fayol included the six types of organisational

activities, which also included management. It also explained the various functions

and principles of management.

07. Frederick Winslow Taylor, introduced methods to improve the industrial

efficiency.

08. Taylor’s book ‘The Principles of Scientific Management’, published in the year

1911, is the most influential management book of the twentieth century.

09. Scientific management, also known as ‘Taylorism’, is a management theory

which was used for analysing and synthesizing workflows with the main objective

of improvement of economic efficiency and labour productivity.

10. Peter Drucker, the famous Management Guru, in his book Management: tasks,

responsibilities, practices.

11. Management is not common sense alone but a discipline, a culture and an art

and science at the same time.

12. Management represents people, and their achievements or failures denote

the effectiveness of management or mismanagement of the organisation’s affairs.


13. Productivity is very important in any business organisation, and there is a 

continuous demand on the people at the helm of affairs to increase productivity 

for increasing profits to meet the expectations of the stakeholders and the society. 

14. The process of management involves multiple actions performed in a series to 

achieve the objectives of the business enterprise. 

15. The process of management can be classified as a social process as it involves 

relationships and co-operation between people and their team effort.

16. The complexity of management has laid down the foundation of breaking

down each activity into various parts or sub-activities so that we can understand 

the complete significance of each activity. This is the reason for division of

management tasks into different elements: planning, organising, staffing,

directing and controlling. 

16. A manager is responsible for planning, for directing and leading the workers 

and other staff, and for monitoring and controlling performances at work, through 

proper governance and risk management.

17. The System School of Management thought was propounded by Daniel Katz, 

an American Psychologist, and Ludwig Von Bertalanffy, an Australian Biologist. 

They advocated the concept of management being an open system, which is 

required to interact with the environment constantly for getting resources, which

are both valuable and limited.

18. The main objective of the research undertaken by the systems school was to 

understand the external environment and conditions faced by an organisation 

and finding ways of handling such conditions. 

19. The open system approach is important because of the interaction between an 

organisation and the outside forces and the outside influence impacting the 

actions taken by the organisation. 

20. The Contingency School of Management thought was an offshoot of the 

scientific, behavioural and systems approaches to management, and stated that 

there cannot be a unique way of managing an organisation and which can be 

labelled as the best way to manage or lead a business.


21. The best or the optimal way shall always depend or be contingent on the

internal and external environment. In other words, there cannot be a standard

solution to various business situations faced by the management. Each leader

might deal with the same situation in different ways, depending on his/her

leadership style.

22. The contingency school of management thought is criticised for being reactive

and for failure to be proactive and for not providing some standard principles and

procedures to be applied in specific situations.

This approach can turn out to be expensive in terms of money and time and

development of a proper theory of management principles becomes almost

impossible.

23. The Contemporary School of Management theory continues to advance

because of constant evolution of business practices and management techniques,

especially in the wake of technological advancements.

24. Total Quality Management focuses on the management of an organisation for

delivering high quality goods and services to its customers. The approach

originated in Japan after the Second World War.

25. The four main elements of Total Quality Management approach are:

a) Employee involvement:

b) Customer focus:

c) Standardisation:

d) Continuous Monitoring:

26. Deming, Juran and Crosby were three main contributors to the Total Quality

Management approach.

27. William Edwards Deming considered the quality of people more important

than the quality of products and accorded greater importance to how efficiently

the management planned, implemented and improved the projects.

28. William Edwards Deming laid down the fourteen principles of Total Quality

Management:


29. Learning Organisation may be defined as an organisation where all the 

employees take part in identifying and solving the problems which it faces, and 

which permits the organisation to continuously enhance its capacity to grow and 

learn, so as to achieve the organisational goals. 

30. A Learning Organisation shall be organised from the angle of problem-

solving and not from the perspective of efficiency and shall have a structure which 

is based on teamwork, employees who are empowered and shall have an open 

information system.

31. The major contributor to Learning Organisation school of thought is Peter 

Senge, has defined Learning Organisations in his book, The Fifth Discipline: The 

Art & Practice of Learning Organization.

32. The five disciplines of a Learning Organisation are:

1. Personal Master

2. Shared vision

3. Mental Models

4. Team learning

5. Systems Thinking

33. A Learning Organisation is important because:

a) It always tries to find improved and innovative ways of doing things and 

staying ahead of the competition.

b) The effectiveness and efficiency of a learning organisation is very high.

c) A learning organisation has higher productivity and output.

d) A learning organisation helps in enhancing the image of the company.


34. Several issues which are faced by the management include:

a) Which business model to adopt?

b) How to manage the information explosion?

c) How to manage the changes taking place every now and then?

d) How to face the threat of globalisation?

e) How to manage the impact of environmental sustainability?

35. Business models are based on the type of clients to be served, the product

offerings, the revenue earning model, ways of differentiating and sustaining

competitive advantages, and the manner in which products or services are

provided.

36. The management of a business entity shall be able to perform better if it

understands the business model followed by the organisation.

37. A business model covers the important operational characteristics and key

structural features of the business.

38. Some of the Business Models are

a) Solution Providing or Consulting Services Model

b) Profit Pyramid Model

c) Multi-component Systems Model

d) Advertisement Model

e) Switchboard Model

f) Time Model

g) Efficiency model


39. Under Solution Providing or Consulting Services Model, the business may

provide consulting services which help improve the client’s operations. IBM has

used this model.

40. Under Profit Pyramid Model, the customers are provided low-priced products

initially and gradually they are moved to expensive products, where the business

earns higher profits. General Motors followed this model.

41. Multi-component Systems Models have been used by companies like Gillette

and HP.

42. Advertisement Models offer the basic product free and make money through

advertising. YouTube, Google etc. are live examples.

43. Switchboard Model allows a firm to acts as an intermediary for connecting

multiple sellers with multiple buyers. eBay, Amazon, Flipkart are businesses which

have used this model successfully.

44. Time Model depends on how fast research and development happens. A

business which pioneers some new idea shall be successful initially, till other

competitors join the bandwagon.

45. A business following Efficiency model just waits for the market to mature with

standardisation of the product and enters with low-cost and low-margin products

with mass appeal. Southwest Airlines, Wal-Mart and Dell have been using this

model.

46. Blockbuster model is used by industries which are having the protection under

patent laws, like pharma and film industry, where profits depend on a few items

and are driven by star appeal.

47. Profit multiplier model involves developing concepts which may or may not be

profitable but are used for driving other products through synergy. The

management looks at the whole picture in such cases. For example, Walt Disney

used cartoon characters for developing theme parks, merchandise, and licensing

opportunities, which gave them huge profits.

48. Entrepreneurial model deals with offering specialized products or services to

clients which are not attractive to large competitors but have potential of fast

growth. There are so many cases today where big companies like Tata’s have

acquired smaller players with potential, e.g., IMG was acquired by Tata’s.


49. Under De Facto industry standard model free products may be offered at a

very low cost to increase the market share and for saturating the market to make

everybody talk about the product as a great brand and industry standard.

Subsequently, the users are offered high-end and high-margin products.

Microsoft indulged into this strategy.

50. Business models invariably involve the optimisation of profits by using

optimum product mix.

51. Economic growth must be inclusive to provide sustainable jobs and promote

equality.

52. Strategic management is defined as the process by which a firm manages the

formulation and implementation of its strategy.

53. The word strategy comes from the Greek word, strategos, meaning the

“General’s views”.

54. A Strategy combines explicit statements and implicit beliefs and

understandings in and around an organization about

Mission; • Vision; Clientele; Resources; • Present and Future

55. A strategy encompasses the pattern of organizational actions that have been

taken and those that are to be taken by an organization, in pursuing its objectives.

56. Strategy outlines the means by which a firm intends to create unique value for

customers and other important stakeholders.

57. Strategic Management involves those decisions and actions of the

management that determine the long-term performance of a business entity.

58. The various elements of strategic management include scanning of the

external and internal environment, formulation of long term strategic plans,

implementation of strategy and the evaluation and control process.

59. A plan is an arrangement, a pattern, a programme, or a scheme for a definite

purpose.

60. A plan is very concrete in nature and does not allow for deviation.

61. A plan provides a coherent framework from which to build and a sure

direction to follow, with intermittent milestones to pass, to reach an end goal.



62. A strategy is a blueprint, layout, design, or idea used to accomplish a specific

goal.

63. A strategy is very flexible and open for adaptation and change when needed.

64. Strategy is most useful when creativity, collaboration, and innovation are of

the utmost importance.

65. A strategy encourages openness and debate from every side of the equation.

66. A strategy embraces questions and out-of-the-box, effective answers.

67. A strategy allows for a natural flow of thought and continual momentum that

builds, till success is reached.

68. The strategy followed by a business entity can be equated with a master plan,

which contains details as to how the mission and business goals of the entity shall

be achieved.

69. The purpose of the strategy of the organization is maximizing the competitive

advantages and, at the same time, minimizing the competitive disadvantages.

70. A typical business entity normally considers three different types of strategies,

as under:

a) Corporate strategy

b) Business strategy

c) Functional strategy

71. Corporate strategy of a company covers the overall direction followed by the

company.

72. Corporate strategy would spell out the general attitude of the company

towards growing and managing its different business lines, products and services.

73. A corporate strategy may be classified under the three different categories of

stability, growth, and retrenchment.

74. Business strategy would normally be prepared at the level of the business unit

or at the level of product or service and it normally highlights the improvement in


the specific industry or market ranking of the business entity’s products or

services produced or delivered by that business unit.

75. A business strategy could be competitive or cooperatives.

76. Under a competitive strategy, a company might try to differentiate its services.

77. A cooperative strategy may form an alliance with other companies to extend

its reach to global markets and get a competitive advantage.

78. Functional strategy refers to the approach adopted by functional areas for

achieving the objectives of the business unit and the company by maximizing the

productivity of available resources.

79. Functional strategy involves the development and fostering a distinctive

capability to create a competitive advantage.

80. In practice, a business entity may use all the three types of strategies (

Corporate strategy; Business strategy and Functional strategy ) at the same time.

81. Strategic Management has the following four basic elements:

The context (Environmental Scanning)

Strategy Implementation

Strategy Formulation

Strategy Evaluation & Control

82. The Context (Environmental Scanning) refers to monitoring, evaluation and

dissemination of information received from the internal and external

environments. The information is provided to the key people in the organisation

with the overall objective of identifying both internal as well as external strategic

factors, which can impact the future of the organisation.

83. SWOT Analysis is one of the easiest ways of conducting environment scanning.

84. The acronym SWOT refers the Strengths, Weaknesses, Opportunities, and

Threats, applicable to a specific organisation.

85. Strengths and Weaknesses form part of the internal environment of an

organisation and could cover the organisation structure, the resources available to

an organisation and the overall organisational culture.



86. The core competencies of an organisation depend on its strengths.

87. The internal environment can usually be controlled by the top management in

the short run.

88. The Opportunities and Threats form part of external factors and are generally

outside the ambit of the top management’s short-term control. These factors

could be general, as well as specific factors. The general factors generally impact

the entire economy or an industry whereas the specific factors might impact a

specific industry or an organisation.

89. The internal and external environmental factors form the context within which

an organisation exists.

90. Strategy Formulation requires, on the basis of information gathered from

situation analysis, to set strategic direction through business mission and vision

statements, and establish strategic objectives to reach there, and generate,

evaluate and select corporate, business and functional strategies to pursue.

91. Creating vision is the essential act of leadership.

92. The vision must relate to the expectations of its customers, while being grand

enough and imaginative enough to fuel the employees’ spirit.

93. The vision gives the organization its energy.

94. The vision usually requires a “leap of faith” and an “act of courage”.

95. A vision is an optimistic, inspiring picture that brings with it the responsibility

to make it happen.

96. A vision is a dream of greatness!

97. Vision is a simple statement or understanding of what the firm will be in the

future.

98. A vision is forward looking and identifies the desired long-term status.

99. A vision statement should answer the basic question, “What do we want to

become?”

100. A clear vision provides the foundation for developing a comprehensive

mission statement.



101. Ideally, vision statement should be short, preferably one sentence.

102. The mission statement is usually depicted as the starting point in the

strategic planning process.

103. The mission statement spells out the underlying motivation for being in

business in the first place - the contribution to society that the firm aspires to

make.

104. A mission statement is called a statement of purpose, a statement of

philosophy, a statement of beliefs, a statement of business principles, or a

statement “defining our business,”.

105. A mission statement reveals what an organization wants to be and whom it

wants to serve.

106. Organizational mission statements should include ten components:

customers, products or services, markets, technology, concern for survival, growth

and profitability, philosophy, self-concept, concern for public image, and concern

for employees.

107. Successful strategies are dependent on effective implementation.

108. Strategy implementation is the fine art of detailing: what all is to be done,

when various tasks are to be performed, where are they to be performed, how

they are to be performed and who will perform.

109. Strategy implementation is the process of executing the strategy – of taking

the actions that put the strategy into effect and ensure that organizational

decisions are consistent with it.

110. While strategy formulation is the process of deciding what to do, strategy

implementation is the process of performing all the activities necessary to do

what has been formulated.

111. Strategy evaluation is a logical step to obtain feedback from strategy’s

performance and taking corrective actions, if needed, in the light of constant

external and internal changes. Strategy evaluation is needed because success

today does not guarantee success tomorrow.


112. Phases of Strategic Management – A business entity normally develops its

strategy in the following four phases –

Basic Budgetary Planning

Forecast-based Planning

Externally Oriented (Strategic) Planning

Strategic Management

113. The three most important benefits of strategic management are as under:

a) The management gets a clearer sense of strategic vision of the business

entity.

b) Management is able to clearly focus on strategically important issues,

faced by the entity.

c) The dynamic environment can be better understood by management.

114. strategic management is crucial for the success of an organisation in the

long-term and may mark the difference between a successful and an unsuccessful

organisation.

115. Management is the process of creating an environment which helps

individuals, who work in groups, to achieve business goals established by the

various stakeholders. T

116. The process of Management involves planning, organising, staffing, directing

and controlling.

117. The various management approaches and thoughts include the Classical

Basics of Management or Traditional School, the Neoclassical or Behavioural

School, the Quantitative School or Management Science, the System School, the

Contingency School and the Contemporary School.

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