Tag: Definition

Definition!

What is a Definition? It is a statement of the meaning of a term (a word, phrase, or other set of symbols). As well as, Descriptions can classify into two large categories, intentional purposes (which try to give the essence of a term) and extensional purposes (which proceed by listing the objects that a term describes).

Another important category of definitions is the class of ostensive illustrations, which convey the meaning of a term by pointing out examples. Also, A term may have many different senses and multiple meanings and thus require multiple reports.

A statement of the meaning of a word or word group or a sign or symbol dictionary definitions. The statement expresses the essential nature of something, a product of defining.
The action or process of stating the meaning of a word or word group.

Do you Know What are Employee Relations?

Learn and Understand, Do you Know What are Employee Relations?

Employee Relations, An organization can’t perform only with the help of chairs, tables, fans or other non-living entities. It needs human beings who work together and perform to achieve the goals and objectives of the organization. The human beings working together towards a common goal at a commonplace (organization) are called employees. In fact, the employees are the major assets of an organization. Also learn, Employee and Industrial Relations, Do you Know What are Employee Relations?

“The success and failure of any organization are directly proportional to the labor put by each and every employee.” The employees must share a good rapport with each other and strive hard to realize the goal of the organization. They should complement each other and work together as a single unit. For the employees, the organization must come first and all their personal interests should take a back seat.

Definition of Employee Relations:

“Communications between management and employees concerning workplace decisions, grievances, conflicts, problem resolutions, unions, and issues of collective bargaining.”

According to the Chartered Institute of Personnel Development, the use of industrial relations to describe workplace relations is no longer as prevalent, due to the widespread deindustrialization of developed economies and declining union membership. Instead, employers now use the term “employee relations,” which refers to relationships that exist in both unionized and nonunionized workplaces. Employers hope to manage employee relations successfully with each respective individual, as a means to raise morale and productivity.

Employee relations is your company’s structure of managing the rapport between the bosses and the staff. “Well in that case, what is the difference between HR and employee relations?”

That’s an easy one, employee relations are just one facet of the role of HR. HR is an umbrella term which includes tasks such as payroll, updating employee databases and many more responsibilities – one of these being managing ER.

Our knowledge of how important ER is has helped us shape how we make our HR software. Features such as letting an employee clearly keep track of their staff benefits and tools to let their workers get to know more about them are all in place to create a happier workplace.

Better Understand, What are Employee Relations?

Every individual shares a certain relationship with his colleagues at the workplace. The relationship is either warm, so-so or bad. The relationship can be between anyone in the organization – between co-workers, between an employee and his superior, between two members in the management and so on. It is important that the employees share a healthy relationship with each other to deliver their best performances.

An individual spends his maximum time at the workplace and his fellow workers are the ones with whom he spends the maximum hours in a day. No way can he afford to fight with his colleagues. Conflicts and misunderstandings only add to tensions and in turn, decrease the productivity of the individual. One needs to discuss so many things at work and needs the advice and suggestions of all to reach a solution which would benefit the individual as well as the organization.

No individual can work alone. He needs the support and guidance of his fellow workers to come out with a brilliant idea and deliver his level best.

Employee relations refer to the relationship shared among the employees in an organization.

The employees must be comfortable with each other for a healthy environment at work. It is the prime duty of the superiors and team leaders to discourage conflicts in the team and encourage a healthy relationship among employees.

Life is really short and it is important that one enjoys each and every moment of it. Remember in an organization you are paid for your hard work and not for cribbing or fighting with each other. Don’t assume that the person sitting next to you is your enemy or will do any harm to you. Who says you can’t make friends at work, in fact, one can make the best of friends in the office. There is so much more to life than fighting with each other.

Observation says that a healthy relationship among the employees goes a long way in motivating the employees and increasing their confidence and morale. One starts enjoying his office and does not take his work as a burden. He feels charged and fresh the whole day and takes each day at work as a new challenge. If you have a good relationship with your team members you feel going to office daily. Go out with your team members for a get together once in a while or have your lunch together. These activities help in strengthening the bond among the employees and improve the relations among them.

An employee must try his level best to adjust to each other and compromise to his best extent possible.

If you do not agree with any of your fellow worker’s ideas, there are several other ways to convince him. Sit with him and probably discuss with him where he is going wrong and needs a correction. This way he would definitely look up to you for your advice and guidance in future. He would trust you and would definitely come to your help whenever you need him. One should never spoil his relations with his colleagues because you never know when you need the other person.

Avoid using foul words or derogatory sentences against anyone. Don’t depend on lose talk in office as it spoils the ambiance of the place and also the relationships among the employees. Blame games are a strict no-in office.

One needs to enter his office with a positive frame of mind and should not unnecessarily make issues out of small things.

It is natural that every human being cannot think the way you think, or behave the way you behave. If you also behave in the similar way the other person is behaving, there is hardly any difference between you and him. Counsel the other person and correct him wherever he is wrong.

It is of utmost importance that employees behave with each other in a cultured way, respect each other and learn to trust each other. An individual however hardworking he is, cannot do wonders alone. It is essential that all the employees share a cordial relation with each other, understand each other’s needs and expectations and work together to accomplish the goals and targets of the organization.

May 10, 2018
Factors Affecting the Major Types of Financial Decisions!
Learn and Understand, Factors Affecting the Major Types of Financial Decisions!

Definition: The Financing Decision is yet another crucial decision made by the financial manager relating to the financing-mix of an organization. It is concerning the borrowing and allocation of funds required for the investment decisions. Types of Decisions: i. Investment decision ii. Financing decision iii. Dividend decision iv. Liquidity Decision. Also learn, Simple Types of Financial Decisions, Factors Affecting the Major Types of Financial Decisions!

Some of the important functions which every finance manager has to take are as follows:

A. Investment decision.

B. Financing decision.

C. Dividend decision, and.

D. Liquidity Decision.

The following decision is explained below:

A. Investment Decision (Also Know, Capital Budgeting Decision):

This decision relates to the careful selection of assets in which funds will be invested by the firms. A firm has many options to invest their funds but the firm has to select the most appropriate investment which will bring maximum benefit to the firm and decide or selecting most appropriate proposal is investment decision.

The firm invests its funds in acquiring fixed assets as well as current assets. When decision regarding fixed assets is taken it is also called capital budgeting decision.

Factors Affecting Investment/Capital Budgeting Decisions:

1. Cash Flow of the Project:

Whenever a company is investing huge funds in an investment proposal it expects some regular amount of cash flow to meet day to day requirement. The amount of cash flow an investment proposal will be able to generate must assess properly before investing in the proposal.

2. Return on Investment:

The most important criteria to decide the investment proposal is the rate of return it will be able to bring back for the company in the form of income for, e.g., if project A is bringing 10% return and project В is bringing 15% return then we should prefer project B.

3. Risk Involved:

With every investment proposal, there is some degree of risk is also involved. The company must try to calculate the risk involved in every proposal and should prefer the investment proposal with the moderate degree of risk only.

4. Investment Criteria:

Along with return, risk, cash flow there are various other criteria which help in selecting an investment proposal such as availability of labor, technologies, input, machinery, etc.

The finance manager must compare all the available alternatives very carefully and then only decide where to invest the most scarce resources of the firm, i.e., finance.

Investment decisions are considered very important decisions because of following reasons:

(i) They are long-term decisions and therefore are irreversible; means once taken cannot change.

(ii) Involve huge amount of funds.

(iii) Affect the future earning capacity of the company.

Importance or Scope of Capital Budgeting Decision:

Capital budgeting decisions can turn the fortune of a company. The capital budgeting decisions are considered very important because of the following reasons:

1. Long-Term Growth:

The capital budgeting decisions affect the long-term growth of the company. As funds invested in long-term assets bring the return in future and future prospects and growth of the company depend upon these decisions only.

2. Large Amount of Funds Involved:

Investment in long-term projects or buying of fixed assets involves the huge amount of funds and if the wrong proposal is selected it may result in wastage of huge amount of funds that is why capital budgeting decisions are taken after considering various factors and planning.

3. Risk Involved:

The fixed capital decisions involve huge funds and also the big risk because the return comes in long run and company has to bear the risk for a long period of time till the returns start coming.

4. Irreversible Decision:

Capital budgeting decisions cannot reverse or change overnight. As these decisions involve huge funds and heavy cost and going back or reversing the decision may result in heavy loss and wastage of funds. So these decisions must take after careful planning and evaluation of all the effects of that decision because adverse consequences may be very heavy.

B. Financing Decision:

The second important decision which finance manager has to take is deciding source of finance. A company can raise finance from various sources such as by issue of shares, debentures or by taking loan and advances. Deciding how much to raise from which source is the concern of financing decision.

Mainly sources of finance can divide into two categories:
1. Owners fund.
2. Borrowed fund.
Share capital and retained earnings constitute owners’ fund and debentures, loans, bonds, etc. constitute borrowed fund.

The main concern of finance manager is to decide how much to raise from owners’ fund and how much to raise from a borrowed fund.

While taking this decision the finance manager compares the advantages and disadvantages of different sources of finance. The borrowed funds have to pay back and involve some degree of risk whereas in owners’ fund there is no fixing commitment of repayment and there is no risk involved. But finance manager prefers a mix of both types. Under financing, decision finance manager fixes a ratio of owner fund and borrowed fund in the capital structure of the company.

Factors Affecting Financing Decisions:

While taking financing decisions the finance manager keeps in mind the following factors:

1. Cost:

The cost of raising finance from various sources is different and finance managers always prefer the source with minimum cost.

2. Risk:

More risk is associated with the borrowed fund as compared to owner’s fund securities. Finance manager compares the risk with the cost involved and prefers securities with the moderate risk factor.

3. Cash Flow Position:

The cash flow position of the company also helps in selecting the securities. With smooth and steady cash flow companies can easily afford borrowed fund securities but when companies have a shortage of cash flow, then they must go for owner’s fund securities only.

4. Control Considerations:

If existing shareholders want to retain the complete control of business then they prefer borrowed fund securities to raise further fund. On the other hand, if they do not mind to lose the control then they may go for owner’s fund securities.

5. Floatation Cost:

It refers to the cost involved in the issue of securities such as broker’s commission, underwriters fees, expenses on the prospectus, etc. The firm prefers securities which involve least floatation cost.

6. Fixed Operating Cost:

If a company is having high fixed operating cost then they must prefer owner’s fund because due to high fixed operational cost, the company may not be able to pay interest on debt securities which can cause serious troubles for the company.

7. State of Capital Market:

The conditions in capital market also help in deciding the type of securities to raise. During boom period it is easy to sell equity shares as people are ready to take risk whereas during depression period there is more demand for debt securities in the capital market.

C. Dividend Decision:

This decision is concerned with the distribution of surplus funds. The profit of the firm is distributed among various parties such as creditors, employees, debenture holders, shareholders, etc.

Payment of interest to creditors, debenture holders, etc. is a fixed liability of the company, so what company or finance manager has to decide is what to do with the residual or left over the profit of the company.

The surplus profit is either distributed to equity shareholders in the form of the dividend or kept aside in the form of retained earnings. Under dividend decision, the finance manager decides how much to distribute in the form of dividend and how much to keep aside as retained earnings.

To take this decision finance manager keeps in mind the growth plans and investment opportunities.

If more investment opportunities are available and company has growth plans then more is kept aside as retained earnings and less is given in the form of dividend, but if company wants to satisfy its shareholders and has fewer growth plans, then more is given in the form of dividend and less is kept aside as retained earnings.

This decision is also called residual decision because it is concerned with the distribution of residual or leftover income. Generally new and upcoming companies keep aside more of retain earning and distribute less dividend whereas established companies prefer to give more dividend and keep aside less profit.

Factors Affecting Dividend Decision:

The finance manager analyses following factors before dividing the net earnings between dividend and retained earnings:

1. Earning:

Dividends are paid out of current and previous year’s earnings. If there are more earnings then company declares the high rate of dividend whereas during the low earning period the rate of dividend is also low.

2. Stability of Earnings:

Companies having stable or smooth earnings prefer to give the high rate of dividend whereas companies with unstable earnings prefer to give the low rate of earnings.

3. Cash Flow Position:

Paying dividend means outflow of cash. Companies declare the high rate of dividend only when they have surplus cash. In the situation of shortage of cash, companies declare no or very low dividend.

4. Growth Opportunities:

If a company has a number of investment plans then it should reinvest the earnings of the company. As to invest in investment projects, the company has two options: one to raise additional capital or invest its retained earnings. The retained earnings are the cheaper source as they do not involve floatation cost and any legal formalities.

If companies have no investment or growth plans then it would be better to distribute more in the form of the dividend. Generally, mature companies declare more dividends whereas growing companies keep aside more retained earnings.

5. Stability of Dividend:

Some companies follow a stable dividend policy as it has the better impact on shareholder and improves the reputation of the company in the share market. The stable dividend policy satisfies the investor. Even big companies and financial institutions prefer to invest in a company with regular and stable dividend policy.

There are three types of stable dividend policies which a company may follow:

(i) Constant dividend per share:

In this case, the company decides a fixed rate of dividend and declares the same rate every year, e.g., 10% dividend on investment.

(ii) Constant payout ratio:

Under this system, the company fixes up a fixed percentage of dividends on profit and not on investment, e.g., 10% on profit so dividend keeps on changing with the change in profit rate.

(iii) Constant dividend per share and extra dividend:

Under this scheme, a fixed rate of dividend on investment is given and if profit or earnings increase then some extra dividend in the form of bonus or interim dividend is also given.

6. Preference of Shareholders:

Another important factor affecting dividend policy is expectation and preference of shareholders as their expectations cannot ignore the company. Generally, it is observed that retired shareholders expect the regular and stable amount of dividend whereas young shareholders prefer capital gain by reinvesting the income of the company.

They are ready to sacrifice present-day income dividend for future gain which they will get with growth and expansion of the company.

Secondly poor and middle-class investors also prefer the regular and stable amount of dividend whereas wealthy and rich class prefers capital gains.

So if a company is having a large number of retired and middle-class shareholders then it will declare more dividend and keep aside less in the form of retained earnings whereas if company is having a large number of young and wealthy shareholders then it will prefer to keep aside more in the form of retained earnings and declare low rate of dividend.

7. Taxation Policy:

The rate of dividend also depends upon the taxation policy of the government. Under present taxation system dividend income is tax-free income for shareholders whereas. The company has to pay tax on dividend given to shareholders. If the tax rate is higher, the company prefers to pay less in the form of dividend whereas. If the tax rate is low then the company may declare the higher dividend.

8. Access to Capital Market Consideration:

Whenever company requires more capital it can either arrange it by the issue of shares or debentures in the stock market or by using its retained earnings. Rising of funds from the capital market depends upon the reputation of the company.

If capital market can easily access or approach and there is enough demand for securities of the company then company can give more dividend and raise capital by approaching capital market, but if it is difficult for company to approach and access capital market then companies declare low rate of dividend and use reserves or retained earnings for reinvestment.

9. Legal Restrictions:

Companies’ Act has given certain provisions regarding the payment of dividends that can pay only out of current year profit or past year profit after providing depreciation fund. In case the company is not earning the profit then it cannot declare the dividend.

Apart from the Companies’ Act, there are certain internal provisions of the company that is whether the company has enough flow of cash to pay the dividend. The payment of dividend should not affect the liquidity of the company.

10. Contractual Constraints:

When companies take a long-term loan then financier may put some restrictions or constraints on the distribution of dividend and companies have to abide by these constraints.

11. Stock Market Reaction:

The declaration of the dividend has an impact on the stock market as an increase in dividend is taken as a good news in the stock market and prices of security rise. Whereas a decrease in dividend may have the negative impact on the share price in the stock market. So possible impact of dividend policy on the equity share price also affects dividend decision.

D. Liquidity Decision:

It is very important to maintain a liquidity position of a firm to avoid insolvency. Firm’s profitability, liquidity, and risk all are associated with the investment in current assets. In order to maintain a tradeoff between profitability and liquidity. It is important to invest sufficient funds in current assets. But since current assets do not earn anything for business, therefore, a proper calculation must do before investing in current assets.

Current assets should properly value and dispose of from time to time once they become non-profitable. Currents assets must use in times of liquidity problems and times of insolvency.
April 23, 2018
What is the Concept of Financial Decisions?
Learn, What is the Concept of Financial Decisions?

Decisions concerning the liabilities and stockholders’ equity side of the firm’s balance sheet, such as a decision to issue bonds. Decisions that involve: (1) determining the proper amount of funds to employ in a firm. (2) selecting projects and capital expenditure analysis. (3) raising funds on the most favorable terms possible, and. (4) managing working capital such as inventory and accounts receivable. Also learn, Financial Management, What is the Concept of Financial Decisions?

Definition of Financing Decision:

The Financing Decision is yet another crucial decision made by the financial manager relating to the financing-mix of an organization. It is concerned with the borrowing and allocation of funds required for the investment decisions.

The financing decision involves two sources from where the funds can raise: using a company’s own money. Such as share capital, retained earnings or borrowing funds from the outside in the form debenture, loan, bond, etc. The objective of financial decision is to maintain an optimum capital structure, i.e. a proper mix of debt and equity, to ensure the trade-off between the risk and return to the shareholders.

The Debt-Equity Ratio helps in determining the effectiveness of the financing decision made by the company. While taking the financial decisions, the finance manager has to take the following points into consideration:
- The Risk involved in raising the funds. The risk is higher in the case of debt as compared to the equity.
- The Cost involved in raising the funds. The manager chose the source with minimum cost.
- The Level of Control, the shareholders, want in the organization also determines the composition of capital structure. They usually prefer the borrowed funds since it does not dilute the ownership.
- The Cash Flow from the operations of the business also determines the source from where the funds shall raise. High cash flow enables to borrow debt as interest can easily pay.
- The Floatation Cost such as broker’s commission, underwriters fee, involved in raising the securities also determines the source of fund. Thus, securities with minimum cost must choose.
Thus, a company should make a judicious decision regarding from where, when, how the funds shall raise. Since, more use of equity will result in the dilution of ownership and whereas, higher debt results in higher risk. As the fixed cost in the form of interest is to pay on the borrowed funds.

The Concept of Financial Decisions:

Financial decisions refer to decisions concerning financial matters to a business concern. Decisions regarding the magnitude of funds to invest to enable a firm to accomplish its ultimate goal, kind of assets to acquire. The pattern of capitalization, the pattern of distribution of firm’s income and similar other matters are including in financial decisions.

These decisions are crucial for the well-being of a firm because they determine the firm’s ability to obtain plant and equipment. When needed to carry the required amount of inventories and receivables, to avoid burdensome fixed charges when profits and sales decline and to avoid losing control of the company.

Financial decisions are taking by a finance manager alone or in conjunction with his other executive colleagues of the enterprise. In principle, finance manager is held responsible to handle all such problems as involve money matters.

But in actual practice, he has to call on the expertise of those in other functional areas: marketing, production, accounting, and personnel to carry out his responsibilities wisely. For instance, the decision to acquire a capital asset is based on the expected net return from its use and on the associated risk.

These cannot give values to finance manager alone. Instead, he must call on the expertise of those in charge of production and marketing. Similarly, the decision regarding allocation of funds as between different types of current assets cannot take by a finance manager in the vacuum.

The policy decision in respect of receivables—whether to sell for credit, to what extent and on what terms is essentially financial matter and has to hand by a finance manager. But at the operating level of carrying out the policies. Sales may also involve in decisions to tighten up or relax collection procedures may have repercussion on sales.

Similarly, in respect of inventory, while determining, types of goods to carry in stock and their size are a basic part of the sales function. The decision regarding the quantum of funds to invest in inventory is the primary responsibility of the finance manager since funds must supply to finance inventory.

As against the above, the decision relating to the acquisition of funds for financing business activities is primarily a finance function. Likewise, finance manager has to take the decision regarding the disposition of business income without consulting. Other executives since various factors involving in the decision affect ability of a firm to raise funds.
April 21, 2018
Discussion of the main Nature of Planning!
Learn and Understand, Discussion in the Nature of Planning!

A plan is a predetermined course of action to achieve a specified goal. It is an intellectual process characterized by thinking before doing. It is an attempt on the part of the manager to anticipate the future in order to achieve better performance. Also learn, Planning is the primary function of management, now get Discussion of the main Nature of Planning!

First, Discussing Definitions of Planning: Different authors have given different definitions of planning from time to time.

The main definitions of planning are as follows:
- According to Alford and Beatt, “Planning is the thinking process, the organized foresight, the vision based on fact and experience that is required for intelligent action.”
- According to Theo Haimann, “Planning is deciding in advance what is to do. When a manager plans, he projects a course of action for further attempting to achieve a consistent co-ordinate structure of operations aimed at the desired results.
- According to Billy E. Goetz, “Planning is fundamentally choosing and a planning problem arises when an alternative course of action is discovered.”
- According to Koontz and O’ Donnell, “Planning is an intellectual process, conscious determination of course of action, the basing of the decision on purpose, facts and considered estimates.”
- According to Allen, “A plan is a trap laid to capture the future.”
The following are the essential characteristics of planning which describe the main nature of planning:

1. Planning is the primary function of management:

The functions of management are broadly classified as planning, organization, direction, and control. It is thus the first function of management at all levels. Since planning is involving in all managerial functions, it is rightly called as an essence of management.

2. Planning focuses on objectives:

Planning is a process to determine the objectives or goals of an enterprise. It lays down the means to achieve these objectives. The purpose of every plan is to contribute to the achievement of objectives of an enterprise.

3. Planning is a function of all managers:

Every manager must plan. A manager at a higher level has to devote more time to planning as compared to persons at the lower level. So the President or Managing director of a company devote more time to planning than the supervisor.

4. Planning as an intellectual process:

Planning is a mental work basically concerning with thinking before doing. It is an intellectual process and involves creative thinking and imagination. Wherever planning is done, all activities are orderly undertaken as per plans rather than on the basis of guesswork. Planning lays down a course of action to follow on the basis of facts and consider estimates, keeping in view the objectives, goals, and purpose of an enterprise.

5. Planning as a continuous process:

Planning is a continuous and permanent process and has no end. A manager makes new plans and also modifies the old plans in the light of information received from the persons who are concerning with the execution of plans. It is a never-ending process. Explain are What is the Importance of Planning in Management?

6. Planning is dynamic (flexible):

Planning is a dynamic function in the sense that the changes and modifications are continuously done in the planning course of action on account of changes in business environment.

As factors affecting the business are not within the control of management, necessary changes are made as and when they take place. If modifications cannot include in plans it is said to be bad planning.

7. Planning secures efficiency, economy, and accuracy:

A prerequisite planning is that it should lead to the attainment of objectives at the least cost. It should also help in the optimum utilization of available human and physical resources by securing efficiency, economy, and accuracy in the business enterprises. Planning is also economical because it brings down the cost to the minimum.

8. Planning involves forecasting:

Planning largely depends upon accurate business forecasting. The scientific techniques of forecasting help in projecting the present trends into future. “It is a kind of future picture wherein proximate events are out-line with some distinctness while remote events appear progressively less distinct”.

9. Planning and linking factors:

A plan should formulate in the light of limiting factors which may be any one of five M’s viz., men, money, machines, materials, and management.

10. Planning is realistic:

A plan always outlines the results to attain and as such, it is realistic in nature. Also read, Definition, Importance, and Affected Factors of Manpower Planning!

Another, main Nature of Planning also helps fully!

Planning is an Intellectual Process!

Planning is an intellectual process of thinking in advance. It is a process of deciding the future on the series of events to follow. Planning is a process where a number of steps are to take to decide the future course of action. Managers or executives have to consider various courses of action, achieve the desired goals, go in details of the pros and cons of every course of action and then finally decide what course of action may suit them best.

Planning Contributes to the Objectives!

Planning contributes positively to attaining the objectives of the business enterprise. Since plans are there from the very first stage of operation, the management is able to handle every problem successfully. Plan try to set everything right. A purposeful, sound and effective planning process knows how and when to tackle a problem. This leads to success. Objectives thus are easily achieving. Don’t forget to read, the Features, Nature, Characteristics of Planning!

Planning is a Primary Function of Management!

Planning precedes other functions in the management process. Certainly, the setting of goals to achieve and lines of action to follow precedes the organization, direction, supervision, and control. No doubt, planning precedes other functions of management. It is primary requisite before other managerial functions step in. But all functions are inter-connect. It is mixing in all managerial functions but there too it gets precedence. It thus gets primary everywhere.

A continuous Process!

Planning is a continuous process and a never ending activity of a manager in an enterprise based upon some assumptions which may or may not come true in the future. Therefore, the manager has to go on modifying revising and adjusting plans in the light of changing circumstances. According to George R. Terry, “Planning is a continuous process and there is no end to it. It involves the continuous collection, evaluation and selection of data, and scientific investigation and analysis of the possible alternative courses of action and the selection of the best alternative”.

Planning Pervades Managerial Activities!

From primary of planning follows pervasiveness of planning. It is the function of every managerial personnel. The character, nature, and scope of planning may change from personnel to personnel but the planning as an action remains intact. According to Billy E. Goetz, “Plans cannot make an enterprise successful. The action is requiring, the enterprise must operate managerial planning seeks to achieve a consistent, coordinated structure of operations focus on desire trends. Without plans, action must become merely activity producing nothing but chaos”.

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April 12, 2018
Explain are the Features, Nature, Characteristics of Planning!

Learn and Understand, Explain are the Features, Natures, Characteristics of Planning!

Planning is a particular type of decision making that addresses the specific future that managers desire for their organizations. It is the process of fixing goals of the business and finding the ways to attain these goals. The plan will help the managers to organize people and resources effectively. Plans develop confidence in managers. Also, the importance of planning in management, Explain are the Features, Nature, Characteristics of Planning!

Planning is the first managerial function to perform in the process of management. It is concerning with deciding in advance what is to do, when, where, how and by whom it is to do. Thus, it is a predetermined course of action to achieve a specified aim or goal.

All organizations whether it is the government, a private business or small businessman require planning. To turn their dreams of increase in sale, earning the high profit and getting success in business all businessmen have to think about future; make predictions and achieve the target. To decide what to do, how to do and when to do they do planning.

Meaning of Planning!

Planning can define as “thinking in advance what is to do when it is to do, how it is to do and by whom it should do”. In simple words we can say, planning bridges the gap between where we are standing today and where we want to reach.

Planning involves setting objectives and deciding in advance the appropriate course of action to achieve these objectives. So, we can also define planning as setting up of objectives and targets and formulating an action plan to achieve them.

Another important ingredient of planning is time. Plans are always developing for a fix time period as no business can go on planning endlessly.

Keeping in mind the time dimension we can define planning as “Setting objectives for a given time period, formulating various courses of action to achieve them and then selecting the best possible alternative from the different courses of actions”.

The definitions of planning given by the different writers are listing here.

In the words of Alfred and Beatty, “Planning is thinking process, the organizing foresight, the vision based on facts and experience that is requiring intelligent action.”

According to Koontz and O’Donnell, “Planning is essentially decision-making since it involves choosing from among alternatives.” According to George Terry, “Planning is the selecting and relating of facts and making and using of assumptions regarding. The future in the visualization and formulation of proposing activities believes necessary to achieve the desired results.”

The following Features, Nature, Characteristics of Planning are!

1. Planning contributes to Objectives:

Planning starts with the determination of objectives. We cannot think of planning in absence of objective. After setting up of the objectives, planning decides the methods, procedures, and steps to take for the achievement of set objectives. Planners also help and bring changes in the plan if things are not moving in the direction of objectives.

For example, if an organization has the objective of manufacturing 1500 washing machines and in one month only 80 washing machines are manufacturing. Then changes are making the plan to achieve the final objective.

2. Planning is the Primary function of management:

Planning is the primary or first function performing by every manager. No other function can execute by the manager without performing planning function because objectives are set up in planning and other functions depend on the objectives only.

For example, in organizing function, managers assign authority and responsibility to the employees and level of authority and responsibility depends upon objectives of the company. Similarly, in staffing, the employees are appointed. The number and type of employees again depend on the objectives of the company. So planning always proceeds and remains at no. 1 as compared to other functions.

3. Pervasive:

Planning is requiring at all levels of the management. It is not a function restricted to top-level managers only but planning is done by managers at every level. Formation of major plan and framing of overall policies is the task of top-level managers whereas departmental managers form the plan for their respective departments. And lower level managers make plans to support the overall objectives and to carry on the day to day activities.

4. Planning is futuristic/Forward-looking:

The Planning always means looking ahead or planning is a futuristic function. A Planning is never done in the past. All the managers try to make predictions and assumptions for future and these predictions are creating on the basis of past experiences of the manager and with the regular and intelligent scanning of the general environment.

5. Planning is continuous:

Planning is a never-ending or continuous process because after making plans also one has to be in touch with the changes in changing the environment and in the selection of one best way.

So, after making plans also planners keep making changes in the plans according to the requirement of the company. For example, if the plan is made during the boom period and during its execution. There is depression period then planners have to make changes according to the conditions prevailing.

6. Planning involves decision making:

The planning function is needed only when different alternatives are available and we have to select the most suitable alternative. We cannot imagine planning in absence of choice because in planning function managers evaluate various alternatives and select the most appropriate. But if there is one alternative available then there is no requirement of planning.

For example, to import the technology if the license is only with STC (State Trading Co-operation) then companies have no choice but to import the technology through STC only. But if there are 4-5 import agencies including in this task then the planners have to evaluate terms and conditions of all the agencies and select the most suitable from the company’s point of view.

7. Planning is a mental exercise:

It is the mental exercise. Planning is a mental process which requires higher thinking that is why it is kept separate from operational activities by Taylor. In planning assumptions and predictions regarding future are made by scanning the environment properly. This activity requires the higher level of intelligence. Secondly, in planning various alternatives are evaluated and the most suitable is selected which again requires the higher level of intelligence. So, it is right to call planning an intellectual process.

Main Nature or Characteristics of Planning!

The following are the important characteristics of planning:

1. Focus on objectives.

A plan starts with the setting of objectives and then makes efforts to realize them by developing policies, procedures, strategies, etc.

2. It is an intellectual process.

According to Koontz and O’Donnell, planning is an intellectual process involving mental exercise, foreseeing future developments, making forecasts and the determination of the best course of action.

3. Planning is a selective process.

It involves the selection of the best one after making a careful analysis of various alternative courses of action. It is concerning with decision-making relating to (a) what is to do, (b) how it is to do, (c) when it is to do, and (d) by whom it is to do.

4. Planning is pervasive.

Planning is a pervasive activity covering all the levels of an enterprise. While top management is concerning with strategical planning, the middle management and the lower management are concerning with administrative planning and operational planning respectively.

5. Planning is an integrated process.

Planning involves not only the determination of objectives but also the formulation of sound policies, programmes, procedures and strategies for the accomplishment of these objectives. It is the first of the managerial functions and facilitates other managerial functions like organizing, staffing, directing and controlling.

6. Planning is directed towards efficiency.

To increase the efficiency of the enterprise is the main purpose of planning. The guiding principles of a good plan are the maximum output and profit at the minimum cost. Terry has aptly stated that “planning is the foundation of the most successful action of an enterprise.”

7. Planning is flexible.

The process of planning should be adaptable to the changes take place in the environment. Koontz and O’Donnell emphasize that “effective planning requires continual checking on events and forecasts and the redrawing of plans to maintain a course towards a designed goal.”

8. The first function in the process of management.

Planning is the beginning of the process of management. A manager must plan before he can possibly organize, staff, direct/control. Because planning sets all other functions into action, it can see as the most basic function of the management. Without planning, other functions become the meaningless activity, producing nothing, but chaos.

9. It is a decision-making process.

Decision-making is an integral part of planning. It is defined as the process of choosing among alternatives. Obviously, decision-making will occur at many points in the planning process. For example, in planning for their organization, the managers first decide which goals to pursue: shall we manufacture all parts internally or buy some parts from outside?

10. It is a continuous process.

Planning is a continuous process. Koontz and Donnell rightly observe that like a navigator constantly checking where his ship is going in the vast ocean, a manager should constantly watch the progress of his plans. He must constantly monitor the conditions, both within and outside the organization, to determine if changes are requiring in his plans.

April 11, 2018
What is the Definition of Production Management?
Production Management; means planning, organizing, directing and controlling of production activities. Also, in other words, P.M. involves an application of planning, organizing, directing and controlling the production process. P.M. deals with converting raw materials into finished goods or products. It brings together the 6M’s i.e. men, money, machines, materials, methods, and markets to satisfy the wants of the people. Also learn, the Financial Management, What is Definition of Production Management?

Learn, Explain, Definition of Production Management.

Production and operation management is the science-combination of techniques and systems. That guarantees the production of goods and services of the right quality, in the right quantities and at the right time with the minimum cost within the shortest possible time. The essential features of a production and operation function are to bring together people, machines, and materials to provide goods and services for satisfying customer needs.

Production management also deals with decision-making regarding the quality, quantity, cost, etc., of production. It applies management principles to production. Production management’s a part of business management. It is also called “Production Function.” Production management is slowly being replaced by operations management. The main objective of production management is to produce goods and services of the right quality, right quantity, at the right time and at minimum cost. It is also trying to improve efficiency. An efficient organization can face competition effectively. P.M. ensures full or optimum utilization of available production capacity.

Meaning of Production Management:

Production is the creation of goods and services. It is concerned with transforming the inputs in the form of raw materials, labor, machines, men and money into output i.e. goods and services with the help of certain production processes.

The production function is the most important function in an organization around. Which other activities of an enterprise (viz., marketing, financing, purchasing, and personnel, etc.) revolve. It is pertinent to note that production function should manage in an efficient and effective manner for the achievement of the organizational goals.

In a departmental type of organization, production management is concerned with carrying out the production function. Production management becomes the process of effectively planning and regulating the operations of that part of an enterprise. Which is responsible for the actual transformation of raw materials into finished products. Also, Production managing department more helps in the Business.

Simply stated, production management is concerned with decision making relating to processes for producing goods and services in accordance with the predetermined specifications and standards by incurring minimum costs.

The result of at least three developments:
1. First is the development of the factory system of production. Until the creation of the concept of manufacturing, there was no such thing as management, as we know. It is true that people operated one type or another business, but for the most part, these people were business owners and did not consider themselves as managers.
2. Essentially stems from the first, namely, the development of the large corporation with many owners and the necessity to hire people to operate the business.
3. Stems from the work of many of the pioneers of scientific management. Who was able to demonstrate the value, from a performance and profit point of view, of some of the techniques they were developing.
Definition of Production Management:

It is observed that one cannot demarcate the beginning and end points of Production Management in an establishment. The reason is that it is interrelated with many other functional areas of business, viz., marketing, finance, industrial relation policies, etc.

Alternately, Production and Operation Management is not independent of marketing, financial, and personnel management due to which it is difficult to formulate some single appropriate definition of Production and Operation Management.

The following definitions, also explain main characteristics:

By the words of Mr, E.L. Brech:

“Production Management is the process of effective planning and regulating the operations of that section of an enterprise. Which is responsible for the actual transformation of materials into finished products.”

This definition limits the scope of production management to those activities of an enterprise which are associated with the transformation process of inputs into outputs. & the definition does not include the human factors involved in a production process. It lays stress on materialistic features only.

Production Management deals with decision-making related to the production process. So, the resulting goods and services are producing in accordance with the quantitative specifications and demand schedule with minimum cost.

Main functions of production management:

According to this definition design and control of the production system are two main functions of production management.

Production Management is a set of general principles for production economies, facility design, job design, schedule design, quality control, inventory control, work study and cost, and budgetary control. This definition explains the main areas of an enterprise where the principles of production management can apply. This definition clearly points out that production management is not a set of techniques.

It is evident from the above definitions that production planning and its control are the main characteristics of production management. In the case of poor planning and control of production activities, the organization may not be able to attain. Its objectives and may result in loss of customer’s confidence and retardation in the progress of the establishment.

The main activities of production management can list as:
1. Specification and procurement of input resources namely management, material, and land, labor, equipment, and capital.
2. Product design and development to determine the production process for transforming. The input factors into the output of goods and services.
3. Supervision and control of the transformation process for the efficient production of goods and services.
What is the Definition of Production Management? #Pixabay.
April 9, 2018
What is Definition of Financial Management?

Learn, Explain, Meaning, Definition of Financial Management!

Financial management refers to the efficient and effective management of wealth (money) in order to fulfill the objectives of the organization. This is the special task associating directly with top management. The significance of this function is not seen in the ‘line’, but in the overall capacity of the company ‘staff’ is also in capacity. It is defined differently by various experts in the field. Also learn, Meaning, FM in Hindi (वित्तीय प्रबंधन की परिभाषा), What is Definition of Financial Management?

Financial management is an integral part of overall management. It is concerned with the duties of the financial managers in the business firm. The term financial management has been defined by Solomon, “It is concerning with the efficient use of an important economic resource namely, capital funds”. The most popular and acceptable definition of financial management as given by S.C. Kuchal is that “Financial Management deals with the procurement of funds and their effective utilization in the business”.

Howard and Upton: Financial management “as an application of general managerial principles to the area of financial decision-making.

Weston and Brigham: Financial management “is an area of financial decision-making, harmonizing individual motives and enterprise goals”.

Joshep and Massie: Financial management “is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations.

Thus, Financial Management is mainly concerned with the effective fund’s management in the business. In simple words, Financial Management as practiced by business firms can call as Corporation Finance or Business Finance. Also read, How to Explain Nature and Scope of Financial Management?

Definition of Financial Management:

Financial management could define as follows:

Financial management is that branch of general management, which has grown to provide specializing and efficient financial services to the whole enterprise; involving, in particular, the timely supplies of requisite finances and ensuring their most effective utilization-contributing to the most effective and efficient attainment of the common objectives of the enterprise.

Some prominent definitions of financial management are citing below:

“Financial management is concerned with managerial decisions that result in acquisition and financing of long-term and short-term credits for the firm. As such, it deals with situations that require selection of specific assets and liabilities as well as problems of size and growth of an enterprise. Analysis of these decisions is based on expected inflows and outflow of funds and their effects on managerial objectives.” —Philppatus

Analysis of the above Definitions:

The above definitions of financial management could analyze, in terms of the following points:

(i) Financial management is a specialized branch of general management.

(ii) The basic operational aim of financial management is to provide financial services to the whole enterprise.

(iii) One most important financial service by financial management to the enterprise is to make available requisite (i.e. required) finances at the needed time. If requisite funds are not made available at the needed time; significance of finance is lost.

(iv) Another equally important financial service by financial management to the enterprise is to ensure the most effective utilization of finances; but for which finance would become a liability rather than being an asset.

(v) Through providing financial services to the enterprise, financial management helps in the most effective and efficient attainment of the common objectives of the enterprise.

Points of Comment:

(i) In big business enterprises, a separate cell, calls the Finance Department is creating to take care of financial management, for the enterprise. This department is heading by a specialist in Financial Management-calls the Finance Manager.

However, the scope of authority of the finance manager very much depends on the policies of the top management; finance being a crucial management function.

(ii) In the present-day times, at least, financial management represents a research area; in that, the finance manager is always expecting to research into new and better sources of finances and into best schemes for the most efficient and profitable utilization of the limited finances at the disposal of the enterprise.

(iii) There are three major areas of decision making, in financial management, viz:

(1) Investment decisions i.e. the channels into which finances will invest-base on ‘risk and return’ analysis, of investment alternatives.

(2) Financing decisions i.e. the sources from which finances will raise-base on ‘cost-benefit analyses’ of different sources of finance.

(3) Dividend decisions i.e. how much of corporate profits will distribute, by way of dividends; and how much of these will retain in the company-requiring an intelligent solution to the controversy ‘Retention vs. Distribution’.

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April 6, 2018
What is the Conflict in Organizations or Organizational?

Learn, What is the Conflict in Organizations or Organizational Conflict? Meaning and Definition!

Meaning of Conflict in Organizations: Organizational conflict, A Conflict occurs at various levels within the individuals, between the individuals in a group and between the groups in an organization. An issue between two or more parties who have (or think they have) incompatible goals or ideas. A Conflicts may involve deep-rooted moral or value differences, high stakes distributional questions, or can be about who dominates whom. Also learn, The Theory of Human Relationship Management, What is the Conflict in Organizations or Organizational Conflict?

The Conflict is the perpetual giver of life, although varying views of it may hold. Some may view conflict as being a negative situation which must avoid at any cost. Others may see conflict as being a phenomenon which necessitates management. The Still, others may consider conflict as being. An exciting opportunity for personal growth and so try to use it to his or her best advantage.

Conflict in Organizations or Organizational Conflict: Organizational conflict, or workplace conflict, is a state of discord caused by the actual or perceived. An opposition of needs, values, and interests between people working together. Conflict takes many forms in organizations. There is the inevitable clash between formal authority and power and those individuals and groups affecting. Also, disputes over how revenues should be divided, how the work should do, and how long and hard people should work.

There are jurisdictional disagreements among individuals, departments, and between unions and management. There are subtler forms of conflict involving rivalries, jealousies, personality clashes, role definitions, and struggles for power and favor. Also, conflict within individuals – between competing needs and demands – to which individuals respond in different ways.

Definitions of Organizational Conflict!

“Working together is not always easy”, it is because of conflict. Conflict is a part of everyday life of an individual and of an organization. It has a considerable impact on employee’s performance, satisfaction, and behavior. It’s not possible to compress the essential ingredients of conflict in a precise definition because it may take several forms.In simple words. It can explain as a collision and disagreement. The conflict may be within an individual, between two or more individuals or between two or more groups within an organization. Also learn, What is an Organization?

Some important definitions of conflicts in organizations (organizational conflicts) are:

1. According to J.W.Thomas, “Conflict is a process that begins when one party perceives that another party has negatively affected, or about to negatively affect, something that the first party cares about”.

2. According to Hocker, and Wilmot Conflict, “An expressed struggle between at least two interdependent parties who perceive incompatible goals, scarce rewards, and interference from the other party in achieving their goals”.

3. According to Follett, “Conflict is the appearance of difference- the difference of opinions of interests”.

April 2, 2018
What is Recruitment?

Learned, What is Recruitment? Meaning and Definition!

People are an integral part of any organization today. No organization can run without its human resources. In today’s highly complex and competitive situation, choice of the right person at the right place has far-reaching implications for an organization’s functioning. Employee well selected and well placed would not only contribute to the efficient running of the organization but offer significant potential for future replacement. A Recruitment comes at this point in time in the picture. The Recruitment is a strategic function for HR department. Also learn, The Theory of Human Relationship Management, What is Recruitment?

Recruitment: means to estimate the available vacancies and to make suitable arrangements for their selection and appointment. Recruitment is understanding the process of searching for and obtaining applicants for the jobs, from among whom the right people can select. Also read, Partnership: How Does it work in Business?

Meaning of Recruitment!

Recruitment (hiring) is a core function of human resource management. It is the first step of appointment. Recruitment refers to the overall process of attracting, shortlisting, selecting and appointing suitable candidates for jobs within an organization. Recruitment can also refer to processes involved in choosing individuals for unpaid positions. Such as voluntary roles or unpaid trainee roles. Managers, human resource generalists, and recruitment specialists may task with carrying out recruitment. But, in some cases, public-sector employment agencies, commercial recruitment agencies, or specialist search consultancies are using to undertake parts of the process. Internet-based technologies to support all aspects of recruitment have become widespread.

A formal definition states, “It is the process of finding and attracting capable applicants for the employment. The process begins when new recruits are sought and ends when their applicants are submitted. The result is a pool of applicants from which new employees are selecting”.

In this, the available vacancies are given wide publicity and suitable candidates are encouraged to submit. The applications so as to have a pool of eligible candidates for scientific selection. Also, in recruitment, information is collecting from interest candidates. For this different source such as newspaper advertisement, employment exchanges, internal promotion, etc. are using. Also learn, What is the Deductive Method of Economics?

Definitions of Recruitment by Different Authors!

The process of finding and hiring the best-qualified candidate for a job opening, in a timely and cost-effective manner. The recruitment process includes analyzing the requirements of a job, attracting employees to that job, screening and selecting applicants, hiring, and integrating the new employee into the organization.

According to Yoder “ Recruitment is a process to discover the sources of manpower to meet the requirements of the staffing schedule and to employ effective measures for attracting that manpower in adequate numbers to facilitate effective selection of an efficient working force.”

According to Edwin Flippo, “Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organization.”

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March 31, 2018
Risk Management Definition!

Learned, Risk Management Definition!

Identifying, analyzing, evaluating, controlling, and eliminating, minimizing, or unacceptable risks. An organization could use risk management, risk retention, risk retention, risk transfer, or any other strategy (or combination of strategies) in proper management of future events. Also learn, Property Management, Risk Management Definition!

Risk–management is to identify, evaluate and prioritize risks, coordinate resources and follow through economical applications, minimize. The possibility or impact of unfortunate incidents, monitor, and control, or to maximize the realization of opportunities. The purpose of risk–management is to ensure uncertainty, not to remove the effort from business goals. Also learn, Project Management.

According to the definition of risk, the risk is likely to occur that an event will occur and adverse effects on the achievement of an object. Therefore, there is uncertainty in risk. Risk–management like COSO ERM, managers can better control their risk. Each company can have different internal control components. Which leads to different results. For example, the internal environment in the framework for ERM components, objective assessment, event identification, risk assessment, risk response, control actions, Information and communication, and surveillance.

Meaning of Risk Management!

In ideal risk–management, a prioritization process is as follows. The biggest disadvantage of which, and the greatest probability of being handles first, and with less chance of occurrence, risk, and less loss are in descending order. Also, in practice, the process of assessing overall risk can be difficult and balance resources. Which can be used to reduce risks with the high probability of events, but with a high risk of a risk vs low loss but the event The less likely can often misdirect

Risk management is also to face in allocating resources. It is the idea of the cost of the opportunity. Resources spent on risk–management can spend on more beneficial activities. Then, the ideal risk reduces management expenses and also reduces the negative effects of the risk.

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March 21, 2018