BUSINESS FUNCTIONS

HUMAN RESOURCE MANAGEMENT

Human resource management (HRM or HR) is the strategic approach to the effective
management of people in a company or organization . They help their business gain a
competitive advantage.

It’s a strategic and coherent approach to the management of an organizations most valued asset –
who are the people working there.

It’s a function within an organization which focuses on recruitment and management as well as
providing direction for people who work in an organization.

Human resource management is the management of an organization’s employees

Human resource management is also the strategic and comprehensive approach to managing
people and the workplace culture.

human resource is a term used to describe the individuals who make up the workforce of an
organization

In human resource management approach,

1. Employees are seen as assets

2. Employee relationship is seen in terms of team not an individual
3. Employees share same interest with employers and their interest does not coincide.
4. Performance and delivery is the end result in human resource management
5. Commitment to organizations vision, mission and values are stressed. ( commitment
oriented)
6. Training and development of the human capital is emphasized (learning Organization)

HR also concerns itself with organizational change and industrial relations, or the balancing of
organizational practices with requirements arising from collective bargaining and governmental
laws.

The overall purpose of human resources (HR) is to ensure that the organization is able to achieve
success through people.

HR is a product of the human relations movement of the early 20th Century, when researchers
began documenting ways of creating value through the strategic management of the workforce.

It was initially dominated by transactional work, such as payroll and benefits administration, but
changed due to globalization, companys started consolidation of technological advances, and
further research.

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 HR as of 2015 focuses on strategic initiatives like mergers and acquisitions, talent management,
succession planning, industrial and labor relations, and diversity and inclusion.

In the current global work environment, most companies focus on lowering employee turnover
and on retaining the talent and knowledge held by their workforce

New hiring not only entails a high cost but also increases the risk of a new employee not being
able to adequately replace the position of the previous employee.

HR departments strives to offer benefits that will appeal to workers, thus reducing the risk of
losing employee commitment and psychological ownership.

FUNCTIONS OF HUMAN RESOURCE MANAGEMENT

The functions can be classified into two categories

1. management

2. operational function

MANAGEMENT FUNCTIONS

Planning

Organizing:

Directing

Controlling

Operative Function

Operative or service function are the tasks which are entrusted to the personnel department.
These are concerned with specific activities of procuring, development, compensation and
maintaining efficient workforce.

PROCUREMENT FUNCTION

Its concerned with securing and employing right kind of people and proper number of people
required to accomplish the organizational objective. It consists of the following activities

DEVELOPMENT FUNCTION
human resource development is the process of improving the knowledge skills and values
of employees so that they can perform the present and future jobs so effectively.HRD
comprises of the following activities

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 a). Performance appraisal—This is a systematic evaluation of employees with respect to
their performance on the job
b). Training—It’s the process by which employees learn knowledge skills and attitutdes
to further personal and organizational goals
c). executive development—process of developing managerial talents through
appropriate programmes

COMPENSATION FUNCTION:
it refers to providing equitable and fair renumeration to employees for their work.it
consists of
1. Job evaluation—it’s the process of determining the relative worth of a job.
2. Wage and salary administration—surveys are conducted to determine salary structure
for various jobs
3. Bonus payments

INTERGRATION FUNCTION
It’s a process of reconciling the goals of an organization with those of its members. It
involves motivating employees through various financial and non financial incentives,
providing job satisfaction, handling employee grievances, collective bargaining, conflict
resolution and employee counselling.
MAINTANANCE FUNCTION
Its concerned with promoting and protecting the physical and mental health of the
employees. Fringe benefits such as housing, medical aid, educational facilities are
provided to the employees.
Social security measures like provident fund, pension, gratuity. maternity benefits,Injury
allowance, disablement allowance etc are arranged.

BUSINESS PLANNING

What Is a Business Plan?

A business plan is a document that defines in detail a company's objectives and how it plans to
achieve its goals. A business plan lays out a written road map for the firm from marketing,
financial, and operational standpoints. Both startups and established companies use business
plans.

A business plan is an important document aimed at a company's external and internal audiences.
For instance, a business plan is used to attract investment before a company has established a
proven track record. It can also help to secure lending from financial institutions.

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Elements of a Business Plan

The length of a business plan varies greatly from business to business. Consider fitting the basic
information into a 15- to 25-page document. Then, other crucial elements that take up a lot of
space—such as applications for patents—can be referenced in the main document and included
as appendices.

As mentioned above, no two business plans are the same. Nonetheless, they tend to have the
same elements. Below are some of the common and key parts of a business plan.

 Executive summary: This section outlines the company and includes the mission

statement along with any information about the company's leadership, employees,
operations, and location.
 Products and services: Here, the company can outline the products and services it will
offer, and may also include pricing, product lifespan, and benefits to the consumer. Other
factors that may go into this section include production and manufacturing processes,
any patents the company may have, as well as proprietary technology. Information about
research and development (R&D) can also be included here.
 Market analysis: A firm needs a good handle on its industry as well as its target market.
This section of the plan will detail a company's competition and how the company fits in
the industry, along with its relative strengths and weaknesses. It will also describe the
expected consumer demand for a company's products or services and how easy or
difficult it may be to grab market share from incumbents.
 Marketing strategy: This section describes how the company will attract and keep its
customer base and how it intends to reach the consumer. A clear distribution channel
must be outlined. The section also spells out advertising and marketing campaign plans
and the types of media those campaigns will use.
 Financial planning: This section should include a company's financial planning and
projections. Financial statements, balance sheets, and other financial information may be
included for established businesses. New businesses will include targets and estimates for
the first few years plus a description of potential investors.
 Budget: Every company needs to have a budget in place. This section should include
costs related to staffing, development, manufacturing, marketing, and any other expenses
related to the business.

PRODUCTION MANNAGEMENT

Production management is the process of managing the conversion of production inputs (raw
materials, human resources, and capital) into production outputs (the goods that a company
produces). It is an integral part of overall business management and encompasses overseeing
both the planning as well as the execution of the manufacturing process. As such, production
management involves managing physical materials and inventories, as well as adherence to

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design specifications, equipment utilization, performance, and labor in order to implement the
company’s production strategy.

The role of production management is to harmonize all key aspects related to production.
Sometimes also referred to as the 5 Ms of production, these include:

1) Men (workforce and labor)

2) Machines (equipment),

3) Methods (production processes, workstations and routings)

4) Materials (raw materials, components and/or sub-assemblies)

5) Money (financing and asset utilization).

Effectively and continuously managing production is key in realizing efficiency gains and
keeping the production process up to date. A well-designed and executed manufacturing
operation translates directly into increased profits, controlled costs, and an improved bottom line.

As production management requires the coordination and supervision of both people, materials,
and equipment, managers need to continually make decisions in four key areas:

Production Planning

Production planning is the stage where the master schedule is produced.  It requires managers to
decide where production will begin. For example which machines or which facility.

It also requires deciding upon when production will start.  Different products run at different
speeds and require numerous inputs to complete, so the decision of when is based on the overall
product mix.

Production Control

Production control is the floor level application of design specifications.  Here, much like a
traffic officer in a busy intersection, managers direct staff and equipment to conduct the steps to
complete their part of a finished good.  This also involves active management against quality
standards as well as close monitoring of production speeds against established measured run
times.

Process Improvement

All production managers are responsible for monitoring and driving continuous improvement. 
Many companies may use methodologies such as Lean or Six Sigma to formalize the efforts, but

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even without such methodologies, no process is static and production management requires
reliance on honing and approving floor level process activities of equipment and labor.

Equipment Maintenance

Just as production managers need to monitor and coach staff to perform tasks using efficient
steps, so too does the equipment need to be managed to keep it in optimal running condition. 
Maintenance costs are usually rolled into the fully costed finished goods, especially for
manufacturers using a cost-plus system to determine costs and set prices.  Because of
this, overall equipment effectiveness (OEE) is vital.

IMPORTANCE OF PRODUCTION MANNAGEMENT

1. Reduces Manufacturing Cost – By maximizing outputs while minimizing inputs,

production management lowers the cost required to produce finished products.  This can
be used to improve profit margin, or it may be passed onto the customer to ensure a
competitive advantage.
2. Improves Competitiveness – Knowing that the right products are available on time and
will be delivered on schedule means that a company is always in the game in any market.
3. Accomplishes Business Objectives – Production management helps companies produce
finished goods efficiently.  Because these finished products are always made with high
quality and delivered when needed, businesses can leverage those things to grow the
business, secure capital for improvement, and increase customer satisfaction.
4. Improves Brand Image – Many manufacturing companies today operate some or all their
production on a Direct to Consumer (D2C) basis. As a result, branding and brand image
have become important.  Sound production management means that customers rely on
products and can have confidence in their quality and availability thus improving brand
image. Overall, a good brand image is important whether your products are Engineer-to-
Order (ETO), Make-to-Order (MTO), or Make-to-Stock (MTS).
5. Optimizes Use of Resources – Production management means that labor, equipment, and
resources are optimized in the production effort.  This can lower waste levels and create
an environment for employees that is positive and well balanced.  With the emphasis on
today’s work/life balance and green initiatives to reduce carbon footprints, effective
production management that optimizes the use of resources can help deliver on both of
those trends.

MARKETING MANAGEMENT

Marketing management is a process of controlling the marketing aspects, setting the goals of a
company, organizing the plans step by step, taking decisions for the firm, and executing them to
get the maximum turn over by meeting the consumers' demands.

The activities of marketing management fall into the following categories: 

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  Price: Price is the monetary value placed on a product. It depends on production costs,
the segment of customers targeted, and their ability to pay for the product, as well as
demand for the product. 
 Product: The product on the market needs to be optimized with target customers in mind
for the remainder of the marketing mix to achieve the overall goal. 
 Place: In marketing management, place refers to both the general and exact locations
customers are able to purchase a product. This involves making choices about online or
brick-and-mortar availability, as well as the specific locations therein. 
 Promotion: Finally, activities such as various advertising channels, direct marketing,
press releases, and even incentives can all be utilized to promote the product once it has
been optimized and produced. 

Managers can use these processes to optimize marketing efforts from all angles. Some common
marketing management processes include: 

 Market and customer analysis: This marketing management process is all about

understanding your organization’s current market position and analyzing consumer

behavior.

 Development of strategy, goals, and objectives: Where does a business want to go?

How does it plan to get there? After market and customer analysis, strategy will map the

way forward.

 Product development: Marketing managers play a crucial role in product development.

When it comes to articulating the benefits of a product, these professionals help craft

poignant, on-brand messaging.

 Marketing program implementation: Once promising programs and campaigns have

been identified, it’s time to deploy the right resources to launch them.

 Monitoring and control: Analyzing the success of marketing programs and activities is

a crucial process. It informs how future activities will be planned and implemented.

DECISION MAKING

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Decision making is the process of making choices by identifying a decision, gathering

information, and assessing alternative resolutions.

PROCESS OF DECISION MAKING

Step 1: Identify the decision

You realize that you need to make a decision. Try to clearly define the nature of the decision you

must make. This first step is very important.

Step 2: Gather relevant information

Collect some pertinent information before you make your decision: what information is needed,

the best sources of information, and how to get it. This step involves both internal and external

“work.” Some information is internal: you’ll seek it through a process of self-assessment. Other

information is external: you’ll find it online, in books, from other people, and from other sources.

Step 3: Identify the alternatives

As you collect information, you will probably identify several possible paths of action, or

alternatives. You can also use your imagination and additional information to construct new

alternatives. In this step, you will list all possible and desirable alternatives.

Step 4: Weigh the evidence

Draw on your information and emotions to imagine what it would be like if you carried out each

of the alternatives to the end. Evaluate whether the need identified in Step 1 would be met or

resolved through the use of each alternative. As you go through this difficult internal process,

you’ll begin to favor certain alternatives: those that seem to have a higher potential for reaching

your goal. Finally, place the alternatives in a priority order, based upon your own value system.

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Step 5: Choose among alternatives

Once you have weighed all the evidence, you are ready to select the alternative that seems to be

best one for you. You may even choose a combination of alternatives. Your choice in Step 5 may

very likely be the same or similar to the alternative you placed at the top of your list at the end of

Step 4.

Step 6: Take action

You’re now ready to take some positive action by beginning to implement the alternative you

chose in Step 5.

Step 7: Review your decision & its consequences

In this final step, consider the results of your decision and evaluate whether or not it has resolved

the need you identified in Step 1. If the decision has not met the identified need, you may want to

repeat certain steps of the process to make a new decision. For example, you might want to

gather more detailed or somewhat different information or explore additional alternatives.

Risk Management

The identification, analysis and response to risk factors affecting a business

Response to risks usually takes one of the following forms:

 Avoidance: A business strives to eliminate a particular risk by getting rid of its cause.

 Mitigation: Decreasing the projected financial value associated with a risk by lowering

the possibility of the occurrence of the risk.

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  Acceptance: In some cases, a business may be forced to accept a risk. This option is

possible if a business entity develops contingencies to mitigate the impact of the risk,

should it occur.

Risk Analysis Process

Risk analysis is a qualitative problem-solving approach that uses various tools of assessment to
work out and rank risks for the purpose of assessing and resolving them. Here is the risk analysis
process:

1. Identify existing risks

Risk identification mainly involves brainstorming. A business gathers its employees together so
that they can review all the various sources of risk. The next step is to arrange all the identified
risks in order of priority. Because it is not possible to mitigate all existing risks, prioritization
ensures that those risks that can affect a business significantly are dealt with more urgently.

2. Assess the risks

In many cases, problem resolution involves identifying the problem and then finding an
appropriate solution. However, prior to figuring out how best to handle risks, a business should
locate the cause of the risks by asking the question, “What caused such a risk and how could it
influence the business?”

3. Develop an appropriate response

Once a business entity is set on assessing likely remedies to mitigate identified risks and prevent
their recurrence, it needs to ask the following questions: What measures can be taken to prevent
the identified risk from recurring? In addition, what is the best thing to do if it does recur?

4. Develop preventive mechanisms for identified risks

Here, the ideas that were found to be useful in mitigating risks are developed into a number of
tasks and then into contingency plans that can be deployed in the future. If risks occur, the plans
can be put to action.

FINANCIAL MANNAGEMENT

Scope/Elements of Financial Management

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 1. Investment decisions includes investment in fixed assets (called as capital budgeting).

Investment in current assets are also a part of investment decisions called as working

capital decisions.

2. Financial decisions- They relate to the raising of finance from various resources which

will depend upon decision on type of source, period of financing, cost of financing and

the returns thereby.

3. Dividend decision- The finance manager has to take decision with regards to the net

profit distribution
Objectives of Financial Management

The financial management is generally concerned with procurement, allocation and control of
financial resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to the concern.

2. To ensure adequate returns to the shareholders which will depend upon the earning
capacity, market price of the share, expectations of the shareholders.
3. To ensure optimum funds utilization. Once the funds are procured, they should be
utilized in maximum possible way at least cost.
4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that
adequate rate of return can be achieved.
5. To plan a sound capital structure-There should be sound and fair composition of capital
so that a balance is maintained between debt and equity capital.

Functions of Financial Management

1. Estimation of capital requirements: A finance manager has to make estimation with

regards to capital requirements of the company. This will depend upon expected costs
and profits and future programmes and policies of a concern. Estimations have to be
made in an adequate manner which increases earning capacity of enterprise.
2. Determination of capital composition: Once the estimation have been made, the capital
structure have to be decided. This involves short- term and long- term debt equity
analysis. This will depend upon the proportion of equity capital a company is possessing
and additional funds which have to be raised from outside parties.

3. Choice of sources of funds: For additional funds to be procured, a company has many

choices like-
a. Issue of shares and debentures

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 b. Loans to be taken from banks and financial institutions
c. Public deposits to be drawn like in form of bonds.

Choice of factor will depend on relative merits and demerits of each source and period of
financing.

4. Investment of funds: The finance manager has to decide to allocate funds into profitable
ventures so that there is safety on investment and regular returns is possible.
5. Disposal of surplus: The net profits decision have to be made by the finance manager.
This can be done in two ways:
a. Dividend declaration - It includes identifying the rate of dividends and other
benefits like bonus.
b. Retained profits - The volume has to be decided which will depend upon
expansional, innovational, diversification plans of the company.
6. Management of cash: Finance manager has to make decisions with regards to cash
management. Cash is required for many purposes like payment of wages and salaries,
payment of electricity and water bills, payment to creditors, meeting current liabilities,
maintainance of enough stock, purchase of raw materials, etc.
7. Financial controls: The finance manager has not only to plan, procure and utilize the
funds but he also has to exercise control over finances. This can be done through many
techniques like ratio analysis, financial forecasting, cost and profit control, etc.

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