December 12, 2011

Management and Entrepreneurship: Science, Theory and Practice

Definition of Management: Its Nature and Purpose

Management of an organization is the process of establishing objectives and goals of the organization periodically, designing the work system and the organization structure, and maintaining an environment in which individuals, working together in groups, accomplish their aims and objectives and goals of the organization effectively and efficiently (Narayana Rao). (3rd December 2008, Version 1 of this article)

The above definition was a modification of the definition given by Koontz and O'Donnell.

The definition implies the following.

(i) Management is a process.
(ii) Management applies to every kind of organization, government, profit making, or nonprofit making.
(iii) It applies to managers at all levels in the organization.
(iv) Management is concerned with effectiveness and efficiency. Effectiveness is producing the product or service the customer wants in business context with the required functional benefits and product attributes at the price he is willing to pay. Efficiency is minimization of resources to produce the saleable output.

Weirich and Koontz

Weihrich and Koontz defined Management and explained it as follows in the tenth edition of their book Management: A Global Perspective (p.4).

"Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently and accomplish selected aims." This definition needs to be expanded:

1. As managers, people carry out the managerial functions of planning, organizing, staffing, leading, and controlling.
2. Management applies to any kind of organization.
3. It applies to managers at all organizational levels.
4. The aim of all managers is the same: to create a surplus.
5. Managing is concerned with productivity; this implies effectiveness and effciency.

Functions of Management

The process of management can be better understood by breaking it down into the five basic functions of a manager – planning, organizing, resourcing, leading and controlling. All the management concepts, principles, theories and techniques can be grouped under these five functions.

Management Functions at Different Organizational Unit Levels

All managers carry out managerial functions. However the proportion of time spent for each function may differ from level to level. The top managers may spend more time on planning in choosing the corporate objectives and business unit objectives and in developing the work system and the organization structure. The first level supervisors may spend more time in leading the staff under them and in doing operational control.

Managerial Skills

Managers require four kinds of skills: technical, human, conceptual and design.

1. Technical skills are knowledge of and proficiency in working with the tools and specific techniques on given processes. For example, mechanics work with tools, and their supervisors should have the ability to train them how to use these tools and periodically evaluate and improve the skills of the staff under them. Similarly accounts use various formats of accounting records like journal, ledger, trial balance, balance sheet and use various procedures like entry, posting, reconciliation and reversing etc. and the supervisor of the accountants has to know these records and procedures to train the staff under him and evaluate their work for accuracy. The first level supervisors have to demonstrate or use their technical skills on a day to day basis as managers.

2. Human skills are the concepts, methods and techniques that facilitate working with people. Managers have to create an environment in which people feel comfortable, motivated, secure, and committed to the objectives and goals of the group or the organizational unit in which they are members.

3. Conceptual skill is the ability to see the “big picture.” It is the ability to recognize significant issues or elements in a situation and to understand the relationships among these key issues.

4. Design skill is the ability to solve problems in ways that benefit the enterprise. To be effective managers in the organization must be capable of doing more than just seeing a problem (If they merely confine their attention to the problem, they become ‘problem watchers’ and they will not fulfill their responsibility). They Must have, in addition to the skill of identifying key problems, the skill of a good design engineer to work out a practical solution to a problem in the light of the realities they face in the situation.

The intensity or frequency with which these groups of skills are applied varies with the managerial level.

First line supervisors use their technical skills on a day to day to basis to observe the working of the staff in the department or section and guide them in carrying out the allotted tasks as per the specification of the customer or the design and in proper use of machines and tools. Quality and quantity control on a continuous becomes the important responsibility of first line supervisors and technical skills play a very important part in this role.

At the top level, conceptual skills and design skills have to be employed to recognize the opportunities and threats that keep on emerging in the environment. Solutions to benefit from the opportunities and contain the ill effects of threats have to be developed.


While thinking of entrepreneurship as starting and managing small businesses is popular, the concept is applicable and extended accordingly to large organizations and to managers carrying out entrepreneurial roles through which they initiate changes to take advantage of opportunities in the business environment. The essence of entrepreneurship is innovation, entry into a new market or introduction of new product. Even employing new technology is innovation and it is also entrepreneurship as it brings a new business entity into existence.

Entrepreneur and Intrapreneur

Gifford Pinchot made a distinction between the two terms. Intrapreneur is a person who undertakes innovative initiatives while operating within the organizations. Entrepreneurs or intrapreneurs have the ability to see an opportunity, and to make efforts obtain the necessary capital, labor and other resources to put together an operating unit. They are willing to take the personal risk of success and failure.

Entrepreneurship, which is the starting of a new business unit is the result of successful execution of number of activities and executives who have the ability to carry on these activities are said to be having entrepreneurial orientation.

Sensing and spotting opportunities, assessing opportunities, selecting opportunities, and executing upon opportunities are described as four important steps in the entrepreneurship process (Tatfi). Managers in the organization who act like self employed persons are termed as entrepreneurial leaders.

Article originally posted at

Tatfi, Seyed Abbas Mousavi,

No comments:

Post a Comment