IGNOU Study Notes BRL-003 | CH-1 [ MANAGEMENT PERSPECTIVE IN RETAILING ]

UNIT 1 MANAGEMENT PERSPECTIVES IN RETAILING

Structure
1.0 Objectives
1.1 Introduction
1.2 Concept of Management
    1.2.1 Definition of Management
    1.2.2 Management and Administration
    1.2.3 Management Science Vs Art
    1.2.4 Nature and Scope of Management
1.3 Approaches to Management Thought
    1.3.1 Scientific Management
    1.3.2 Henry Fayol's Principles of Modern Management Theory
1.4 Functions of Management
    1.4.1 Planning
    1.4.2 Organizing
    1.4.3 Staffing
    1.4.4 Directing
    1.4.5 Controlling
1.5 Managerial Skills
1.6 Ethical Responsibilities of a Retailer
    1.6.1 Responsibility Towards Stakeholders
    1.6.2 Responsibility Towards Customers
    1.6.3 Responsibility Towards Society
1.7 Let Us Sum Up
1.8 Key Words
1.9 Terminal Questions

1.0 OBJECTIVES

After studying this unit, you should be able to :
• explain the meaning and concept of management;
• distinguish between management and administration ;
• discuss the functions of management ;
• discuss the principles and features of scientific management;
• explain the principles of management;
• identify the skills required by a manager, and
• discuss about the ethical issues involved in managing a retail organization.

1.1 INTRODUCTION

→ We come across these words like management, managers, administration, planning. organization, coonfination and so on very often. Sometimes these words are also used interchangeably. It is very important to understand that management is a field that is not very far away from daily life. If we look closely into our life we apply this concept of management at every point of our life. We try to utilize time effectively by planning a schedule for works to be done. We try to utilize money effectively by making a budget for expenses. In other words we try to "manage" our lives more effectively. In this unit, you will learn the concept of management and how it serves as a tool for successfully running a retail organization. You will also learn the various functions that are involved in the process of managing a firm and the essential skills of a good manager. In other words you will learn as to how the knowledge of management can help in your profession.

1.2 CONCEPT OF MANAGEMENT

→ Management is essential at all levels of an organization. No organization can survive without proper management. That is why it is essential to learn clearly what the concept of management is?

1.2.1 Definition of Management

→ Management is the process of planning, organizing, leading and controlling the efforts of an organization to utilize the organization's resources effectively to achieve its goals.
→ For instance, the success of a shopping mall would depend on how the people come together to utilize their money, time and intelligence to locate , procure and sell goods in order to make profit.
→ However definitions of management can be broadly classified into four groups based on various schools of thought. These schools are:
→ 1) Process School, 2) Human Relations School, 3) Decision School, 4) Systems and Contingency School Let us learn them briefly.

1. Process School:
• The Process School looks at management as a series of functions combined to achieve the common organizational purpose.
2. Human Relations School:
• It perceives management as the process of developing human resources through managing interpersonal relations Here the focus is on the people and their development.
3. Decision School: • This school looks at management as a process of choice making.
• If an organization is performing well, then this school interprets the success as a result of the right kind of decisions made by the managers.
4. Systems and Contingency School:
• According to systems school, organizations are considered as dynamic systems with specific objectives to achieve.
• Each system contains smaller units or subsystems with specific goal.

1.2.2 Management and Administration

→ There can be seen a difference in the terms management and administration at the managerial levels.

1. Based on the nature of enterprise:
• According to one view, the word administration is purely used with respect to government enterprises that have a social or political orientation and whose objective is non - economic in nature.
• For instance, public a dministrations services.
• On the other hand, management would be a term preferred with respect to enterprises that are profit or surplus generation oriented

2. Based on the managerial levels :
•American school of thought believes that administration is more of a policy and objective setting function.
• Management is an operative function within those policies and objectives set by administration
• In other words , administration is a broader concept than management.

1.2.3 Management - Science Vs Art

→ The management theory provides a broad framework for understanding the dynamics of managing an organization which have been derived after studying a wide range of applications and practices within an industry.
→ This theory can provide insights to improve performance across various organizations.
→ However implementing such principles will need great skill.
→ Able managers are those who can understand organizational problems and take timely and right kind of decisions.
→ So in simple terms, the concept of management in theory is a science however, in practice it is an art.

1.2.4 Nature and Scope of Management

→ The following are the essential features of the management.
1. Universality:
• Management is a universal phenomenon in the sense that it is common and essential element in all enterprises.
• The management theory can be applied in all organizations in all managerial situations regardless the size, nature and location of the organizations.
• Whether it is a small convenience store or a local super market or a multi - product large hypermarket, management can be implemented in all the organization.
2. Social Process:
• Management is impossible without the involvement of people and relations.
• Management involves activities such as employing. developing, retaining and motivating people. Hence, it is seen as a social process.
3.Intangible :
• Management is something that cannot be seen or touched.
• It is an unseen force that runs an organization.
• Only the results of the process can be seen in - terms of sales, profits, satisfaction of employees or stakeholders and so on.
4. Continuous Process:
• Management is an ongoing process.
• The objectives that an organization tries to achieve are time bound, the cycle of management continues to operate as long as there is an organization.
5. Composite Process:
• Although management functions can be studied and learnt separately , they cannot be implemented independent of each other . So , each function is linked to the other or each function serves as a means to achieve the other.
6. Coordinating Force:
• Management is a binding force of all elements of an organization.
• It is through management that all men , material , money machinery , markets are brought together for business activity.
7. Goal - Oriented:
• Management is always aimed at achieving organizational objectives.
• The performance of an organization is measured by the extent to which the desired objectives are attained.
8. Creative Organ:
• The constant pursuit of the management theory is to innovate.
• Generation of new methods, strategies, and processes is the essence of management.
• Although management derives solutions to organizational problems from past experiences, at the same time, it works towards re - inventing or conceiving new solutions.

1.3 APPROACHES TO MANAGEMENT THOUGHT

→ Management is a body of systematic knowledge of principles. techniques and theories developed through constant study of the practices within organizations.
→ The following section will be dealing with the perspectives of various management gurus and the principles they advocate.

1.3.1 Scientific Management

→ Scientific management as proposed by Fredrick Winslow Taylor revolutionised the work practices since 1910.

1. Principles of Scientific Management

(i) Repalcement of rules-of-thumb with science:
• According to Taylor l, most activities that are done using traditional methods have to he replaced with researched scientific approach.
• This helped not only to simplify the effor but also to scientific the productivity of individuals.
(ii) Cooperation between management and labour:
• Productivity function is a function of synergy between the people who plan and the people who execute.
• That is why cooperation and coordination is essential between the management and labour.
(iii) Harmony in group action:
• All the members in a group should be directed towards achieving the same organizational goals.
(iv) Maximum output:
• Productivity is the ratio of output and input.
• The greater the output the greater is the productivity.
• The management should always aim at maximising its output.
• Output also reflects organizational efficiency.
(v) Development of workers:
• Its principal focus should be on providing opportunities for the workmen in the organization to grow along with the firm.
• Development is not just in terms of work knowledge and skill but overall development of the standards of living.

2. Features of Scientific Management

i. Separation of planning and execution:
• Scientific management proposes that planning and execution should not be done at the same levels.
• The concept of line and staff functions is a result of this feature.
• Line function in an organization is responsible for the execution of a task and staff.
• This which is an advisory function, and it is used frequently into planning and control.
ii. Functional foremanship:
• This is the early form of departmentation and functional assignment of jobs.
iii. Job analysis: It is the process of defining a job and the behaviours that are necessary to perform those jobs which enables individuals to understand their job profiles more clearly and reduces role conflict that comes with a job.
vi. Standardisation:
• For procedures and activities that involve complexity ani are done over a period of time it is convenient to standardise.
• For example billing and cash receipts in a huge retailing organization cần be very complet and time consuming.
• However, in modern day markets, bar codes, point-of. sales systems have simplified the process and made process more effective. v. Scientific selection and training of workers:
• Another major feature of scientific management is that it proposes a systematic and scientific testing for choosing employees.
• Aptitude, attitude and psychometric tests give greater amount of accurate information on an individual's psychological aspects. • This helps in choosing the right kind of people for the jobs.
• Same way training can also be more scientific.
vi. Financial incentives:
• Taylor's perspective towards employee compensation was hugely in terms of financial rewards.
• He felt that the basic impetus for motivation of employees was financial expectations.
• So, it is the need that has to be met first.
vii. Economy:
• Higher productivity levels can be achieved by increasing the output.
• They can also be achieved by achieving the same output levels with reduced input.
• This means better capacity utilisation or reduction of wastage which results in economy of resources but working at higher levels of efficiency.
viii. Mental revolution:
• The important essence of mental revolution is that individuals in the organization should be flexible enough to think and innovate.
• Changing environments and conditions pose a constant challenge to every organization.
• Mental revolution focuses on the company's ability to respond to productively and successfully.

1.3.2 Henry Fayol's Principles of Modern Management Theory

→ Father of modem management thought was Henry Fayo.
→ Who in his book, proposod the following principles for administration.
1. Division of work:
• All work has to be divided into simpler activities and jobs and given a sphere of operation.
• This is done to reduce job conflict and interference and also to develop specialisation of work.
2. Authority and responsibility: • Power and accountability should go hand in hand.
• When a specific work is assigned to an individual in a retail organization, a certain amount of authority to utilise resources should also be given.
• At the same time, the individual should be made responsible and accountable for the job and people assigned.
3. Discipline:
• lt is pertinent that every individual adhered to the rules and regulations within the organization, reduces chaos and create an environiment for the harmony and smooth functioníng of the organization.
4. Unity of command:
• It is necessary to ensure that employees receive commands from one source.
5. Centralisation:
• Fayol believed centralisation was essential and that decision making should always be controlled at one centre.
6. Unity of direction:
• According to this principle, a set of activities having the same objective should be under the direction of a single manager.
• There should be only one plan of action for such a set of activities since the objective is the same.
7. Scalar chains:
• Scalar chain ensures linear relationships between the superior and subordinate.
• This in turn creates a clear two way communication channel that can be handled casily and effectively.
8. Subordination of individual interest to general interest:
• The manager should ensure that the employee puts the company's interest in high priority to his own needs.
• The concept also professes that if the individual is motivated to align his goals with the organization's gouls, then organizational goal can be achieved smoothly.
9. Remuneration:
• The pay of the employee should commensurate with the kind and level of the job that the employee performs.
10. Order:
• There is always a right place for everything in the organization.
• His reduces effort and time of doing a work.
10. Iaitiative:
• The manager should not only just lead by example but also be able to provide the nocessary stimulation to the employees to be self motivated.
• The better the motivation level, the better the performance standards.
12. Stability of tenure:
• Any employee who has a constant fear of losing job will work at very low levels of motivation.
• Job security has a very important role in motivating eumployees.
• The more the job security, the more the employees are committed jo the tasks of the organization.
13. Equity:
• All employees should be treated equally as far as law and policy is concemed.
• The employees should not be discriminated in terms of cadre, especially in terms of social justice.
14. Esprit de corps:
• It means 'in unity lies strength'.
• The manager should be able to create a harmonious environment in the organization.
• He/she should build up an organization culture where the individuals share a strong sense of belonging to cach other and the organization.
• This will improve teamwork in the organization and automatically result in hetter productivity.

1.4 FUNCTIONS OF MANAGEMENT

→ There are some common functions that every organization has to perform for its survivat and those shall be discussed in this section.

1.4.1 Planning
→ Planning means pre-determining a future course of action.
→ The most fundamental function of management is planning because it precedes all functions and activities in an organization.
→ There are various phases of planning and various kinds of plans.
1. Mission or Purpose:
• A mission is a long term plan that is usually stated for the life period of the frim.
• It can encompass the business definition of a firm by stating what business The firm undertakes and which customer it caters to.
2. Objectives & Goals:
• Objectives and goals are the ends towards which all the business activity is directed.
• Objectives should be specific, measurable, achievable, realistic and time-bound.
• Objectives can be long term or short term.
3. Ploicies:
• Policies are usually long-term standing plans of a company that reflect the governance issues and the philosphy of the top management.
• Policy is a plan of action to guide decision and actions.
• An organization can have many policies such as policies on wage, credit, recruitment, labour and so on.
• Policies are generally referred to as solutions to recuring problems.
4. Strategies:
• A strategy is a game plan that is designed to achieve the objective.
• Strategy is a plan that usually gives the company a competitive advantage.
5. Procedure:
• A procedure would be series of interrelated steps that can be used to respond to a structured problem.
6. Rule:
• A rule is an explicit statement as what an employee can catified do.
• It is also a code for employee behaviour.
• A rule is never flexible.

1.4.2 Organizing
→ It is the process of dividing work into convenient tasks and duties in the form of ponitions, grouping of varic positions into departiments and sections, assigning duties to individual positions and delegating authority to each position so that the work is carried out as planned.
1. Job Analysis & Design: • Complex tasks have to be broken into simpler activities and johs h to be defined along with their work profiles.
• Then for each job clear joh description (details about the job in terms df the rank, jotr title, work profilend responsibilities) and job specification (the qualitics and qualification that s required in anyone who would take up the job) has to be stated.
2. Departmentation:
• All activities related to buying a shopping centre can be grouped into a Purchase Department.
• Similarly selection and training can be grouped into the Human Resource Department.
• The fundamental use of departmentation is to define work sphere, eliminate repetition and encourage specialisation.
3. Span of Mamgement:
• Span of supervisionfmeans the number of people that report to a superior job.
• Based on numher of relations formed for each designation, wide or tall spans can be formed.
4. Delegation:
• For the execution of every job a certain amount of decision making power is necessary.
• It is also essential to make that individual accountable for the resources and the work assigned.
• Every job has to be delegated with authority and responsibility.
5. Organizational Structure:
• It is a graphical representation of the total organization in terms of the hierarchy of relationships and reaponsibilities.
• An organization structure helps to identify any job and its position in the whole organization.

1.4.3 Staffing
It is the process of providing the right kind of people for all the jobs designed in the organizing function.
Staffing mainly consists of the following activities.
1. Procurement
• This phase involves searching for the right kind of individuals as per the job specitlication by inviting them for selection process and then choosing the most suitable candidates from them.
• This phase includes functions such as recruitment, selection and induction.
2. Development:
• This phase involves functions such as training and development.
• It also has to easure that it caters to the overall development of the employee not just in terms of his work skill but also in terms of his knowledge. personality and standards of living.
3 Maintenance:
• Maintenance phase revolves mostly on how the employee is retained in the organization.
• Remuneration and compensation issues, motivational issues and other benefits become a major part of this phase However, along with wage and salary administration this phase
4. Separation:
• Another important phase that involves the employee leaving the organization.
• There could be many reasons such as retirement, death, dismissal, Voluntary Retirement Scheme (VRS), Compulsory Retirement Scheme (CRS) and so on for the separation of an employee with an organization and each of them need to be dealt in a different manner.

1.4.4 Directing:
→ Directing is the process of securing willing obedience from the subordinates without destroying their initintive and creativity.
→ Directing involves mannging people and the work through the means of the following functions:
1. Motivation:
• It means motivation is stimulation induced by self or by others to perform more and better in order to achieve organizational objectives.
2. Leadership:
• Leadership is the ability of a manager to get his subordinates to follow him.
• Leader's main objective is to gain respect and acceptance from his subordinates.
3. Communication:
• Communication is the process of transferring information from the source to the receiver.
• The communication can be formal or informal in an organization depending on its purpose.
• This helps to build a two way communication channel in the organization which is ideal for modern day organizational setup.

1.4.5 Controlling
→ Controlling function enables management to ensure that the achievement is in accordance with the established plans.
It involves:
1. Establishment of performance standards
2 Measuring actual performance
3. Comparing actualperformangésto standards
4. Identifying deviations if any
5. Tisking corrective action

1.5 MANAGERIAL SKILLS

→ An effective manager not only possesses teh knowledge of how to do things but also the skills to get them done. According to Robert L Katz there are are prinicipally,
Four skills that a manager should invariably possess in order to function effectively.
They are as follows:
1. Technical Skills: Knowledge and proficiency in designing and formation of Methods, Policies and Procedures
2. Human Skills: Interpersonal Skills, Leadership Skills and so on.
3. Conceptual Skills: Ability to recognise the relationship between various elements of an organization.
4. Design Skills: Ability to be innovative and creative and to be able to think out of the box to find solutions to problems.

1.6 ETHICAL RESPONSIBILITIES OF A RETAILER

One of the most important concerns for modern day managers is social responsibility. The fact that organization deal with human beings internally and externally, it naturally confers responsibility on them to be ethical.
The social responsibility of the organization can be basically classified from three perspectives which are follows:

1.6.1 Responsibility Towards Stakeholders

In every business there are a large number of individuals and organization that hold stake. This not only ensures satisfaction from the stakeholders but alos builds trust giving the company a very strong goodwill in the business.

1.6.2 Responsibility Towars Customers

The most important of any business is its customers, rightly referred to be the king. Businesses survises solely because of their customers. It can keep in tune with customer requierments. Providing proper information and support to consumers. educating customers.

1.6.3 Responsibility Towards Society

The company also has a greater task of protecing the interests of its society. it is essential that the company keeps society happy. Companies now-a-days have been focussing on Corporate Social responsibilities. Companies build public utilities, establish sports clubs, do social service and so on to fulfil their obligation towards the society.