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[Finance and Management]

Chapter- 1



According to Koontaz and O' Donnell,

"Management is an art of getting things done through and with the people in formally organized group."

According to Henry Fayol,

"To manage is to forecast and to plan, to organize, to command, to co-ordinate and to control."

The definitions above show that it is a continuous process of getting things done by proper use
of manpower and other resources. It also helps to control, organize and co-ordinate the function of an

Characteristics of Management:

As blood, soul & mind are important for the life, same as management is for business. Someone
has written, "Management is the soul of Industrial development." The progress and prosperity of
business organization is based on management. It is the brain of an organization, without management
nothing can be done in the business. So, it has some characteristics which are as follows.

1. Management is universal
2. Management, social process
3. Goal oriented
4. Science & Art
5. Group Effort
6. Intangible
7. Required at all level
8. Separate from ownership
9. Purposeful activity

1. Management is universal:
Management is taken as universal activity whether an organization is big or small,
government, hospitals, schools, colleges, etc. management is needed. Wherever there is a
human activity there is management. Every step of life requires management because with the
help of management each & every task can be handled easily, properly & effectively.
2. Management, social process:
Management involves dealing with the people, the effort of human beings are
controlled & directed by the management. It has social obligation to make efficient use of scare
material for the benefit of the society.

3. Goal oriented:
Effective management is always management by objectives and also it has no
justification to exist without goals. An efficient and good management tries to achieve the
predetermined goals by the minimum resources. Management is established only to achieve the
goal. Hence, it is goal oriented.

4. Science & Art:

Management is both science and art. It is based on some skills; knowledge is also
required to achieve the goals effectively. So, it is concerned with art tough it is not exactly like
music or dance.

5. Group Effort:
It deals with group of activities because no individual can do all the activities at the
same time. So, it is based on group efforts. It is also used to achieve the common goals with
group efforts. A group also can achieve the predetermined goals easily and effectively.

6. Intangible:
It is important but unseen process of the organization. We can only feel it. It cannot be
seen functioning with eyes but can feel by observing the result.

7. Required at all level:

It is one of such process which requires all level, top level, middle level & low level of an
organization. According to levels the process of management is different.

8. Separate from ownership:

Management & ownership are two different things in a company. In a company,
shareholders are the owner and managerial work is in the hand of 'Board of Directors'.

9. Purposeful activity:
The activity of management is connected with planning, direction, controlling, staffing, etc. and
also there is some purpose behind it. Its main aim is to achieve the economic and social
objective. Without any purpose management cannot be formed.

Functions of Management:

In competitive days management become a typical job, a manager have to perform different
types of managerial job to achieve the goals of the organization. It is said that, "management is what
manager does," Management is that type of process which requires different level of the requirement of
the organization. The functions are defined differently by experts. The main branches of function of
management are as follows.

1. Planning
2. Organizing
3. Directing
4. Staffing
5. Controlling

1. Planning:
It involves the fore-casting of future problem and selecting the proper course of action
to solve the problem. It may be either for a short period or longer or both type. The main
element of planning are what should be done? How shall be done? Who will be responsible for
doing? How shall be done? Who will be responsible for doing?, etc. Planning is essential for
every level of the management. With the help of planning function, a manager can perform
organizational activities properly and clearly.

2. Organizing:
Organized efforts are essential for the success of any enterprise. It involves the division
and subdivision of activities into the department, section and job as well as the integration of
activities of an organization. It is a collection of various factors like man, machinery, material,
money, etc.

3. Directing:
It is concerned with guiding the people at work for securing their cooperation in the
execution of work. It helps in influencing, motivating human resources towards the achievement
of organizational goals. The directing function actually starts the work. It guide the human
resources how the work be done? With the help of good directing, people can easily obtain their

4. Staffing:
Men are the biggest asset of an organization. This function of management is also related with
human resources. Human resources are very important for proper and regular functioning of an
organization. No organization can run without human factor. No enterprise can succeed unless
right men are put on the right job. The staffing process concerned with appointment of
personnel for individual job. It involves the following steps.

i. Determine the effective man power.

ii. Set their qualification according to work and remuneration.
iii. Training & recruitment of the employees.
5. Controlling:
It is the important function in all types of enterprises. It is concerned with measuring
and comparing the operating results with plan and take corrective action if any deviation occur.
So that similar problem may not occur in future. It involves the following steps.
i. Laying down norms and standard of desired performance.
ii. Measuring the actual performance.
iii. Interpreting and comparing the actual performance.
iv. Taking Corrective action.

Level of Management:

The organization may have various levels of management. The simple meaning of the term
'level' is the arrangement of managerial position. So, the level of management means dividing the
authority and responsibility among the managerial person. The level of management will depend upon
the size, technology process, quantity of production, nature of organization, etc. Generally, levels of
management are categorized in three types.

1. Top Level Management

i. Share Holders
ii. Board of Directors
iii. Chief Executive
iv. Managing Director
2. Middle Level Management
i. Department Head
ii. Production Manager
iii. Finance Manager
iv. Branch Manager
3. Lower Level Management
i. Supervision
ii. Foreman
iii. Sales Officer
iv. Accountant
v. Laborer

1. Top Level Management:

It is the highest level in managerial process. It is responsible for all over success or failure of
organization. It consists of share holders, Board of Directors, Chief Executive, Managing Director,
etc. It establishes overall organizational goals & strategies for their achievements. These persons
are also responsible for deciding objectives, policies and take final decision. It includes.

i. Determination of objective of the organization.

ii. Formulate plans & policies
iii. Setup organizational structure.
iv. To attain resources 4M-Men, Material, Machine & money.
v. It provides overall direction and control the operation.
2. Middle Level Management

It consist middle order rank of management, such as branch manager, production

manager, finance manager, departmental head, superintendent or other persons of some rank.
It is also known as functional management. The personnel of middle level management are
answerable to top level management and control & order the low level management. They
assist the planning, coordinating, motivating, controlling the activities of various department.

The functions of middle level management are as follows.

i. Select required no. of employees.

ii. To provide training the new employees.
iii. To report and make suitable recommendation to the top level management.
iv. To motivate the personnel for attaining the goals.
v. To maintain co-operation and coordination.
vi. To issue instructions for the staff.

3. Lower Level Management:

It is also known as first line management, First level management and supervisory
management. It includes personnel like fore-man, supervisor, sales officer, finance officer, etc.
Their main job is to get work done from other workers and employees who are working directly
under them. They receive instructions from middle level management and act in accordance
with policies & program laid down by top level management.

The main functions of Low Level Management are as follows;

i. To issue the instruction to the workers and supervise and control the work.
ii. Classify and assign the worker's job.
iii. To solve the problem of workers.
iv. To arrange necessary tools machinery & equipment.
v. To maintain good relation & discipline among the workers.
Difference between management & administration:

Basis Administration Management

Meaning Used to determine the objectives, plans Art of getting work done through others.
& policies

Nature Decision making function, it frames Functional activity, which execute the
policy. policy.

Aim Used for deciding plans & policies of an Used for achieving predetermined
enterprises. objectives.

Level Concerned with top level management Concerned with middle & low level
only. management.

Scope Its scope is wider than management. Its scope is limited, it is subordinate of

Usage It is used with reference to non-business It is used in reference to business

organization like: Government, Institute, enterprises, which have economic motive.
Schools, etc.

Relation Only related to owners and top level Only related to employees of any
management. enterprise.

Ability It requires administrative ability rather It requires technical ability rather than
than technical ability. administrative ability.

Functions Main functions are planning & Main functions are directing & controlling.

[All the best by your GK buddy Suryansh]