Tag: Learned

Learned!

To learn new things is beneficial at any age, and any kind of learning can benefit other aspects of your life. For instance, taking music lessons can increase your language skills. If you’re interested in a topic, study it. If you’d like a new skill, practice it. Your life is ever-changing and infinitely complex, and your ability to experience it depends on your willingness the learn. The more you learned, the more you live.

Embrace failure and confusion. When you are learning a new thing, you are entering into unknown territory. Allow yourself to experience the confusion of unanswered questions and unfamiliar parameters. When you study a new topic, don’t look up answers to your questions right away. Instead, spend some time trying to figure the answers out on your own. This kind of trying (and failing) helps you better understand what you are learning.

What are the Strategies of Conflict Management?

Learn, What are the Strategies of Conflict Management? Explaining!

Conflict Management is the practice of being able to identify and handle struggles with a fair, efficient and efficient way. Since collision in a business is a natural part of the workplace, it is important that there are people who understand the struggles and know how to solve them. It is more important than ever before in today’s market. Everyone is trying to show how much they work for a valuable company, and occasionally, this may lead to a dispute with other members of the team. Also learn, the Conflict in Organizations or Organizational, What are the Strategies of Conflict Management?

What is conflict management? Conflict Management is the process of limiting the negative aspects of the conflict while increasing the positive aspects of the conflict. The purpose of conflict management is to learn, including the effectiveness or performance in an organizational setting and to increase the results of the group. Properly managed conflict groups can improve the results. What is the Deductive Method of Economics?

The Strategies of Conflict Management!

In any situation involving more than one person, conflict can arise. The causes of conflict range from philosophical differences and divergent goals to power imbalances. Unmanaged or poorly managed conflicts generate a breakdown in trust and lost productivity. For small businesses, where success often hinges on the cohesion of a few people, loss of trust and productivity can signal the death of the business. Conflicts happen. How an employee responds and resolves conflict will limit or enable that employee’s success. With a basic understanding of the five conflict management strategies, small business owners can better deal with conflicts before they escalate beyond repair.

Here are five conflict styles or strategies that a manager will follow according to Kenneth W. Thomas and Ralph H. Kilmann:

Accommodating!

The accommodating strategy essentially entails giving the opposing side what it wants. The use of accommodation often occurs when one of the parties wishes to keep the peace or perceives the issue as minor. For example, a business that requires formal dress may institute a “casual Friday” policy as a low-stakes means of keeping the peace with the rank and file. An accommodating manager is one who cooperates to a high degree. This may be at the manager’s own expense and actually work against that manager’s own goals, objectives, and desired outcomes. This approach is effective when the other person is the expert or has a better solution. Employees who use accommodation as a primary conflict management strategy, however, may keep track and develop resentment.

Avoiding!

The avoidance strategy seeks to put off conflict indefinitely. By delaying or ignoring the conflict, the avoider hopes the problem resolves itself without a confrontation. Those who actively avoid conflict frequently have low esteem or hold a position of low power. Avoiding an issue is one way a manager might attempt to resolve the conflict. This type of conflict style does not help the other staff members reach their goals and does not help the manager who is avoiding the issue and cannot assertively pursue his or her own goals. However, this works well when the issue is trivial or when the manager has no chance of winning. In some circumstances, avoiding can serve as a profitable conflict management strategy, such as after the dismissal of a popular but unproductive employee. The hiring of a more productive replacement for the position soothes much of the conflict.

Collaborating!

Collaboration works by integrating ideas set out by multiple people. The object is to find a creative solution acceptable to everyone. Collaboration, though useful, calls for a significant time commitment not appropriate to all conflicts. Collaborating managers become partners or pair up with each other to achieve both of their goals in this style. This is how managers break free of the win-lose paradigm and seek the win-win. This can be effective in complex scenarios where managers need to find a novel solution. For example, a business owner should work collaboratively with the manager to establish policies, but collaborative decision-making regarding office supplies wastes time better spent on other activities.

Compromising!

The compromising strategy typically calls for both sides of a conflict to give up elements of their position in order to establish an acceptable, if not agreeable, solution. This strategy prevails most often in conflicts where the parties hold approximately equivalent power. This is the lose-lose scenario where neither person nor manager really achieves what they want. This requires a moderate level of assertiveness and cooperation. It may be appropriate for scenarios where you need a temporary solution or where both sides have equally important goals. Business owners frequently employ compromise during contract negotiations with other businesses when each party stands to lose something valuable, such as a customer or necessary service. What are the Strategies for Management Conflict in Organizations?

Competing!

Competition operates as a zero-sum game, in which one side wins and other loses. Highly assertive personalities often fall back on competition as a conflict management strategy. The competitive strategy works best in a limited number of conflicts, such as emergency situations. This is the win-lose approach. A manager is acting in a very assertive way to achieve his or her own goals without seeking to cooperate with other employees, and it may be at the expense of those other employees. This approach may be appropriate for emergencies when the time is of the essence. In general, business owners benefit from holding the competitive strategy in reserve for crisis situations and decisions that generate ill-will, such as pay cuts or layoffs.

April 15, 2018
Explain are the Nature and Features of Planning in Business!
Learn and Understand, Explain are the Nature and Features of Planning in Business!

Modern managers are facing the challenge of designing a sound action plan for their organizations to achieve their organizational goals. Planning gives a scientific direction to managers as to where the firm has to move to attain its objectives. A good organizational plan minimizes risk, reduces uncertainties surrounding business conditions, and it classifies the consequences of related action. Also learn, Concepts of Management, Explain are the Nature and Features of Planning in Business!

Planning increases the degree of success and establishes co-ordinated effort in the organization. It makes the managers future-oriented and their decisions co-ordinated. Good planning makes the organizations reach their objectives. In this backdrop, various issues of planning are narrated in the following paragraphs.

A careful analysis of the above definitions of planning reveals that:
- Planning is concerning with future and its essence is looking ahead.
- It involves thinking and analysis of information.
- It involves a predetermined course of action.
- It’s concerning with the establishment of objectives to attain in the future.
- It’s fundamentally a problem of choosing after a careful study of alternative courses.
- It involves decision-making.
- Its objectives are to achieve better results, and.
- It is a continuous and integrated process.
For instance, we find that the head of the family plans his expenditure, the housewife plans her daily chores, the teacher plans his teaching work, the student plans his studies and the farmer plans his agricultural activities. In the business field, the need for planning is all the more because of various factors such as fluctuations in demand, growing competition, the introduction of new products, scarcity of resources, changing technology, change in prices, government policy, etc. Organisational activity without a plan is likely to be ineffective and will drift without achieving success. Hence, planning is a must for business organizations.

Few Main Nature and Features of Planning in Business!

The following facts come to light about its nature and features:

(1) It is Focuses on Achieving Objectives:

Management begins with planning and planning begins with the determining of objectives. In the absence of objectives, no organization can ever think about. With the determining of objective, the way to achieve the objective is deciding in the planning.

In case, it is necessary to change the previously decided course of action for the attainment of objectives, there is no hesitation to do so. It is thus clear that planning is helpful in the attainment of objectives.

For example, a company decides to achieve annual sales of? 12 crores. After deciding upon this objective, planning to achieve this objective shall immediately come into force. It was thought to achieve this objective by giving advertisement in the newspapers.

After some time it comes to know that the medium of advertisement appeared to be incapable of achieving the target. In such a situation the medium of advertisement can change and it can shift from newspapers to television in this way, every possible change is made through the planning activities for the purpose of achieving the objective.

(2) Planning is Primary Function of Management:

Planning is the first important function of management. The other functions, e.g., organizing, staffing, directing and controlling come later. In the absence of planning, no other function of management can perform.

This is the base of other functions of management. For example, a company plans to achieve a sales target of 112 crores a year. In order to achieve this target the second function of management, i.e., organizing comes into operation.

Under it, the purchase, sales, production and financial activities are deciding upon. In order to complete these activities, different departments and positions are deciding upon. The authority and responsibility of every position are deciding upon.

After the work of organizing, information about the number of different people at different levels require to achieve the objective shall have to provide. This job will perform understaffing. Similarly, planning is the base of other functions like directing and controlling.

(3) It is Pervasive:

Since the job of planning is performing by the managers at different levels working in the enterprise, it is appropriate to call it all-pervasive. Planning is an important function of every manager; he may be a managing director of the organization or a foreman in a factory.

The time spent by the higher-level managers in the process of planning is comparatively more than the time spent by the middle-level and lower-level managers. It is, therefore, clear that all the managers working in an enterprise have to plan their activities.

For example, the decision to expand the business is taken by the higher-level managers. The decision to sell products is taken by the middle-level and lower-level managers. Also read, The Theory of Human Relationship Management!

(4) It is Continuous:

Planning is a continuous process for the following reasons:

(a) Plans are preparing for a particular period. Hence, there is the need for a new plan after the expiry of that period.

(b) In case of any discrepancy, plans are to revise.

(c) In case of rapid changes in the business, environment plans are to revise.

(5) Planning is Futuristic:

Planning decides the plan of action what is to do, how is it to do, when it to do, by whom is it to do all these questions are related to future. Under planning, answers to these questions are found out.

While an effort is making to find out these answers, the possibility of social, economic, technical and changes in the legal framework is kept in mind. Since planning is concerning with future activities, it is called futuristic.

For example, a company is planning to market a new product. While doing so it shall have to keep in mind the customs and the interests/tastes of the people and also the possibility of any change in them.

(6) Planning Involves Decision Making:

Planning becomes a necessity when there are many alternatives to do a job. A planner chooses the most appropriate alternative. Therefore, it can assert that planning is a process of selecting the best and rejecting the inappropriate. It is, therefore, observed that planning involves decision making.

For example, Mr. Anthony lives in a town where only commerce stream is taught in schools. His daughter has passed matrix and wants to get admission in 10 + 1. It is evident that there is only one option for her, i.e., commerce. Do you know about, What is Financial Management?

She doesn’t have to think or plan anything. On the other hand, if all the three faculties’ art, science & commerce were available in the schools, she would have to definitely think and plan about the subject of study. It would have been nothing but decision making in this case.

(7) It is a Mental Exercise:

Planning is known as a mental exercise as it is related to thinking before doing something. A planner has mainly to think about the following questions:

(i) What to do? (ii) How to do it? (iii) When to do it? (iv) Who is to do it?

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April 12, 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
Description of the Key Characteristics of the Planning!
Learn and Understand, Description of the Key Characteristics of the Planning!

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. After that also, discuss the main steps involved in the planning process in an organization. Also learn, What is the Importance of Planning in Management? Description of the Key Characteristics of the Planning!

Another important ingredient of planning is time. Plans are always developed for a fixed time period as no business can go on planning endlessly. Also, 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 main key Characteristics of Planning!

It is goal-oriented.
- Planning is made to achieve the desired objective of business.
- The goals established should general acceptance otherwise individual efforts & energies will go misguided and misdirected.
- Planning identifies the action that would lead to desired goals quickly & economically.
- It provides a sense of direction to various activities. E.g. Maruti Udhyog is trying to capture once again Indian Car Market by launching diesel models.
It is looking ahead.
- Planning is done for future.
- It requires peeping in future, analyzing it and predicting it.
- Thus planning is based on forecasting.
- A plan is a synthesis of the forecast.
- It is a mental predisposition for things to happen in future.
It is an intellectual process.
- Planning is a mental exercise involving creative thinking, sound judgment, and imagination.
- It is not a mere guesswork but a rotational thinking.
- A manager can prepare sound plans only if he has sound judgment, foresight, and imagination.
- Planning is always based on goals, facts and considered estimates.
It involves choice & decision making.
- Planning essentially involves the choice among various alternatives.
- Therefore, if there is only one possible course of action. As well as, there is no need planning because there is no choice.
- Thus, decision making is an integral part of planning.
- A manager is surrounding by no. of alternatives. Also, he has to pick the best depending on requirements & resources of the enterprises.
It is the primary function of management / Primacy of Planning.
- Planning lays the foundation for other functions of management.
- It serves as a guide for organizing, staffing, directing and controlling.
- All the functions of management are performing within the framework of plans laid out.
- Therefore planning is the basic or fundamental function of management.
It is a Continuous Process.
- Planning is a never ending function due to the dynamic business environment.
- Plans are also preparing for specific period f time and at the end of that period, plans are subjecting to revaluation and review in the light of new requirements and changing conditions.
- Planning never comes into end till the enterprise exists issues, problems may keep cropping up and they have to tackle by planning effectively.
Planning is all Pervasive.
- It is requiring at all levels of management and in all departments of the enterprise.
- Of course, the scope of planning may differ from one level to another.
- The top level may be more concerned about planning the organization as a whole whereas the middle level may be more specific in departmental plans and the lower level plans implementation of the same.
It is designing for efficiency.
- Planning leads to accomplishment of objectives at the minimum possible cost.
- It avoids wastage of resources and ensures adequate and optimum utilization of resources.
- A plan is worthless or useless if it does not value the cost incurred on it.
- Therefore planning must lead to the saving of time, effort, and money.
- Planning leads to proper utilization of men, money, materials, methods, and machines.
It is Flexible.
- Planning is done for the future.
- Since future is unpredictable, planning must provide enough room to cope with the changes in customer’s demand, competition, govt. policies etc.
- Under changed circumstances, the original plan of action must revise and updated to make it more practical.
The Main Steps Involving the Planning Process!

The few main steps involved in the planning process in an organization.

Environment Analysis:

The external environment covers uncontrollable and unpredictable factors such as technology, market (prices, Competition, customers, etc.), socio-economic climate, political conditions and ecological conditions within which our plans will have to operate. Also read, What is the Process of Manpower Planning?

Also, the internal environment covers relatively controllable factors, such as personnel resources, technology, knowledge, finance, facilities, etc., at the disposal of the firm. The study of the environment or situation analysis will reveal the threats to be met and the opportunities to exploit as well as strengths and weaknesses.

Determination of Mission and Objectives:

The situation analysis will serve as a background for the formulation of our mission and objectives.

A mission provides the central or basic purpose answering a few basic questions:

(1) What is our business?

(2) Who are our customers?

(3) What is our economic and social responsibility? and so on.

The mission or creed statement will ensure purposeful life for our enterprise in the Justness world. It will give firm direction and make our activities meaningful and interesting.

On the basis of situation analysis and our balance sheet of assets and liabilities, we can easily take the first step in actual business planning, viz., the setting of the hierarchy of objectives — overall comparable objectives as well as divisional and departmental objectives. Objectives and goals are formulating at each level of management.

“Developing Strategies”:

Objectives give us the precise idea regarding our destination, i.e., where we want to go. The real problem is how to find the best way to achieve the stated objectives.

Finding the best way to go there (where we want to be) is called strategy development, Objectives answer the question:

What business is going to be? Strategy answers the question: How best can the business achieve under intelligent competition? The strategy is the magic wand of action to accomplish our objectives; For each functional area of our business, we will formulate our strategic i.e., desirable means to achieve stated ends or objectives.

Developing Programmes or Action Plans:

On the basis of our objectives and strategies, we will now formulate our detailed programmes or time-bound action plans to achieve specific goals or targets.

An action plan has three elements:

(1) The time limit of performance,

(2) The allocation of tasks to personnel in each department,

(3) The timetable or schedule of work to accomplish targets within the stated period.

Control Mechanism:

Control is the final phase of our planning, process. It is the other half of planning. Control is the extension of the planning process and the two take place together. Also, Control answers the question: How will we know where we are in future? By means of feedback loop, it ensures accomplishment of objectives.

Results or performance will compare with standards. If deviations are noted, corrective actions are taking in time. Thus planning-action-control-re-planning cycle assures the achievement of our goals or objectives.

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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
Explain are What is the Importance of Planning in Management?
Learn and Understand, Explain are What is the Importance of Planning in Management?

While planning does not guarantee success in organizational objectives, there is evidence that companies that engaged in formal planning consistently performed better than those with none or limited formal planning and improved their own performance over a period of time. It is very rare for an organization to succeed solely by luck or circumstances. Also learn, Vision Statement, What is the Importance of Planning in Management?

Some of the reasons as to why planning is considering a vital managerial function are given below:

Planning is essential in modern business:

The growing complexity of the modern business with rapid technological changes, dynamic changes in the consumer preferences and growing tough competition necessities orderly operations, not only in the current environment but also in the future environment. Since planning takes a future outlook, it takes into account the possible future developments.

Planning affects performance:

A number of empirical studies provide evidence of organizational success being a function of formal planning, the success is measuring by such factors as return on investment, sales volume, and growth in earnings per share and so on. An investigation of firms in various industrial products as machinery, steel, oil, chemicals, and drugs revealed that companies that engaged in formal planning consistently performed better than those with no formal planning.

Planning puts focus on objectives:

The effectiveness of formal planning is primarily based on clarity of objectives. Objectives provide a direction and all planning decisions are directing towards the achievement of these objectives. Plans continuously reinforce the importance of these objectives by focusing on them. This ensures maximum utility of managerial time and efforts.

Planning anticipates problems and uncertainties:

A significant aspect of any formal planning process in the collection of relevant information for the purpose of forecasting the future as accurately as possible. This would minimize the chances of haphazard decisions. Since the future needs of the organization are anticipating in advance, the proper acquisition and allocation of resources can plan, thus minimizing wastage and ensuring the optimal utility of these resources.

Planning is necessary to facilitate control:

Controlling involves the continual analysis and measurement of actual operations against the established standards. These standards are set in the light of objectives to by achieve. Periodic reviews of operations can determine whether the plans are being implemented correctly. Well-developed plans can aid the process of control in two ways.

First, the planning process establishes a system of advance warning of possible deviations from the expected performance. The second contribution of planning to the control process is that it provides quantitative data which would make it easier to compare the actual performance in quantitative terms, not only with the expectations of the organization but also with the industry statistics or market forecasts.

Planning helps in the process of decision making:

Since planning specifies the actions and steps to take in order to accomplish organizational objectives, it serves as a basis for decision-making about future activities. It also helps managers to make routine decisions about current activities since the objectives, plans, policies, schedules and so on are clearly laying down.

Importance of planning in management is!

Planning is the first and most important function of management. It is needed at every level of management. In the absence of planning all the business activities of the organization will become meaningless. The importance of planning has increased all the more in view of the increasing size of organizations and their complexities.

Planning has again gained importance because of uncertain and constantly changing business environment. In the absence of planning, it may not be impossible but certainly difficult to guess the uncertain events of future.

The following facts show the advantages of planning and its importance for a business organization:

(1) Planning Provides Direction:

Under the process of planning the objectives of the organization are defining in simple and clear words. The obvious outcome of this is that all the employees get a direction and all their efforts are focusing towards a particular end. In this way, planning has an important role in the attainment of the objectives of the organization.

For example, suppose a company fixes a sales target under the process of planning. Now all the departments, e.g., purchase, personnel, finance, etc., will decide their objectives in view of the sales target.

In this way, the attention of all the managers will get focusing on the attainment of their objectives. This will make the achievement of sales target a certainty. Thus, in the absence of objectives, an organization gets disable and the objectives are laying down under planning.

(2) Planning Reduces Risks of Uncertainty:

Planning is always done for future and future is uncertain. With the help of planning, possible changes in future are anticipating and various activities are planning in the best possible way. In this way, the risk of future uncertainties can minimize.

For example, in order to fix a sales target, a survey can undertake to find out the number of new companies likely to enter the market. By keeping these facts in mind and planning the future activities, the possible difficulties can avoid.

(3) Planning Reduces Overlapping and Wasteful Activities:

Under planning, future activities are planning in order to achieve objectives. Consequently, the problems of when, where, what and why are almost deciding. This puts an end to disorder and suspicion. In such a situation coordination is establishing among different activities and departments. It puts an end to overlapping and wasteful activities.

Consequently, wastages move towards nil, efficiency increases and costs get to the lowest level. For example, if it is deciding that a particular amount of money will require in a particular month, the finance manager will arrange for it in time.

In the absence of this information, the amount of money can be more or less than the requirement in that particular month. Both these situations are undesirable. In case, the money is less than the requirement, the work will not complete and in case it is more than the requirement, the amount will remain unused and thus cause a loss of interest.

(4) Planning Promotes Innovative Ideas:

It is clear that planning selects the best alternative out of the many available. All these alternatives do not come to the manager on their own, but they have to discover. While making such an effort of discovery, many new ideas emerge and they are studying intensively in order to determine the best out of them.

In this way, planning imparts a real power of thinking in the managers. It leads to the birth of innovative and creative ideas. For example, a company wants to expand its business. This idea leads to the beginning of the planning activity in the mind of the manager. He will think like this:
- Should some other varieties of the existing products manufacture?
- ……Retail sales undertake along with the wholesales?
- ……Some branch open somewhere else for the existing or old product?
- ……Some new product launch?
In this way, many new ideas will emerge one after the other. By doing so, he will become habituated to them. He will always be thinking about doing something new and creative. Thus, it is a happy situation for a company which is born through the medium of planning.

(5) Planning Facilitates Decision Making:

Decision making means the process of making decisions. Under it, a variety of alternatives are discovering and the best alternative is chosen. The planning sets the target for decision making. It also lays down the criteria for evaluating courses of action. In this way, planning facilitates decision making.

(6) Planning Establishes Standards for Controlling:

By determining the objectives of the organization through planning all the people working in the organization and all the departments are informing about ‘when’, ‘what’ and ‘how’ to do things.

Standards are laying down in their work, time and cost, etc. Under control, at the time of completing the work, the actual work done is comparing with the standard work and deviations are found out and if the work has not been done as desire the person concern is held responsible.

For example, a laborer is to do 10 units of work in a day (it is a matter of planning), but actually he completes 8 units. Thus there is a negative deviation of 2 units. For this, he is held responsible. (Measurement of actual work, knowledge of deviation and holding the laborer responsible falls under controlling.) Thus, in the absence of planning control is not possible.

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April 11, 2018
What is the Difference Between Money and Capital Market?

Money and Capital Market Difference; What the differences between things are you first need to understand what each of the items is. In this case, before you can understand the difference between the money market and the capital market, you are going to need to understand. What money market is and what capital markets are. Once you understand the two items are it will be easier to see what the difference or differences are between the two markets. Also learn, What is the Difference Between an Intrapreneur and Entrepreneur? the Difference Between Money and Capital Market!

Learn and Understand, the Difference Between Money and Capital Market!

The following Difference below is:

What is the Money Market?

The money market is the global financial market for short-term borrowing and lending and provides short-term liquid funding for the global financial system. The average amount of time that companies borrow money in a money market is about thirteen months or lower. Some of the more common types of things used in the money market are certificates of deposits, bankers’ acceptances, repurchase agreements, and commercial paper to name a few.

What the money market consists of are banks. That borrow and lend to each other, but other types of finance companies are involving in the money market. What usually happens is the finance companies fund themselves by issuing large amounts of asset-backed commercial paper. That is securing by the promise of eligible assets into an asset-backed commercial paper conduit. Your most common examples of these are auto loans, mortgage loans, and credit card receivables.

What is Capital Market?

The capital market is a type of financial market. It includes the stocks and bonds market as well. But in general, the capital market is the market for securities. Where either companies or the government can raise long-term funds. One way that the companies or the government raise these long-term funds is through issuing bonds.

Which is where a person buys the bond for a set price and allows the government or company to borrow. Their money for a certain time but they are promising a higher return for allowing them to borrow the money. The higher return is paying through the interest that accrues on the money that the government or company borrows. The Difference between Revaluation and Realization Account!

Another way that the companies or government can raise money in the capital market is through the stock market. Most of the time you don’t see the government as a part of the stock market. But it can happen so we need to include them. But how the stock market works is that the companies decide to sell shares of their stock. Which is ownership in the company, to ordinary people and other companies, as a way to raise money. The people who buy the stock are usually given dividends each year if the company agrees to pay out dividends. So, that is another possible return on their investment.

The capital market consists of two markets. The first market is the primary market and it is where new issues are distributing to investors and the secondary market where existing securities are trading. Both of these markets are regulating so that fraud does not occur and in India, the Securities and Exchange Board of India (SEBI) is in charge of regulating the capital market.

The Difference Between Money and Capital Market!

The difference between the money market and capital market is that money markets are more of a short-term borrowing or lending market. Where banks borrow and lend between each other. As well as, finance companies and everything that is borrowing, is usually paying back within thirteen months. Whereas capital markets are for long-term investments, companies are selling stocks and bonds to borrow money from.

Their investors to improve their company or to purchase assets. Another difference between the two markets is what is being used to do the borrowing or lending. In the money markets, the most common things used are commercial paper and certificates of deposits. Whereas with the capital markets the most common thing used is stocks and bonds.

The money market is distinguishing from the capital market based on the maturity period, credit instruments, and the institutions, the Difference Between Money and Capital Market:

Basic Role:

The basic role of the money market is that of liquidity adjustment. The basic role of the capital market is that of putting capital to work, preferably to long-term, secure, and productive employment. Learn about the Difference Between Management and Leadership!

Maturity Period:

The money market deals with the lending and borrowing of short-term finance. While the capital market deals in the lending and borrowing of long-term finance.

Credit Instruments:

The main credit instruments of the money market are called money, collateral loans, acceptances, bills of exchange. On the other hand, the main instruments used in the capital market are stocks, shares, debentures, bonds, securities of the government.

Nature of Credit Instruments:

The credit instruments dealt with in the capital market are more heterogeneous than those in the money market. Some homogeneity of credit instruments is needed for the operation of financial markets. Too much diversity creates problems for investors.

Institutions:

Important institutions operating in the money market are central banks, commercial banks, acceptance houses, non-bank financial institutions, bill brokers, etc. Important institutions of the capital market are stock exchanges, commercial banks, and non-bank institutions. Such as insurance companies, mortgage banks, building societies, etc.

Purpose of Loan:

The money market meets the short-term credit needs of the business; it provides working capital to the industrialists. The capital market, on the other hand, caters to the long-term credit needs of the industrialists and provides fixed capital to buy land, machinery, etc.

Risk:

The degree of risk is small in the money market. The risk is much greater in the capital market. The maturity of one year or less gives little time for a default to occur, so the risk is minimizing. Risk varies both in degree and nature throughout the capital market.

Relation with Central Bank:

The money market is closely and directly linked with the central bank of the country. The capital market feels the central bank’s influence, but mainly indirectly and through the money market.

Market Regulation:

In the money market, commercial banks are closely regulating. In the capital market, the institutions are not much regulated.

What is the Difference Between Money and Capital Market?

April 10, 2018
Case Study on the Merger Between US Airways and American Airlines!

Merger Between US Airways and American Airlines; On December 9th, 2013 the two airlines, US Airways, and American Airlines merged to form the American Airlines Group that turn out to be the major airline in the world. Case Study, Merging American Airlines, and US Airways using change management models like Kotter; This merger was structured by the enlarged competition that airlines are countenancing in the business at present. The merger offered a prospect for both airlines to make use of the benefits of an extensive network. That would affect after merging as countered to when each one operates separately. One of the foremost circumstances that encircled the merger was the imminent insolvency of American Airlines.

Learn and Understand, Case Study on the Merger Between US Airways and American Airlines!

The company in 2011 had filed for bankruptcy even though it relapsed to profitability the same year in July. The merger would enhance admission to opportunities of business for both airlines, particularly American Airlines that would decrease its coverage to financial risks. Which were the preliminary rounds for the corporation filing for bankruptcy? The merger would generate enhanced synergies that would be apparent in the course of increased flexibility and financial strength in the market.

Each of the entities merged would have admission to further destinations and bigger clientele. Each of them would admit to a bigger destination network i.e. 300 destinations all around the world. They as well had a codeshare contract where customers would impeccably book. Their flights from any US Airways or American Airlines networks. Such controls are an enhancement to each of the airline’s abilities and results in bigger business and performance.

Explain 01:

There are a variety of positive traits of this merger. One of the major advantages is that both airlines will have an imminent penetration of the market than what they had beforehand. This is since they will be creating daily more than 6,500 flights to above 300 destinations in additional. Then 50 countries all around the globe, affected enlarged revenues and improved governance of the most important routes. The American Airlines Group after the merger is a foremost player in Latin American. The global market for the airline (CAPA center for aviation). The exploitation of these prospects directs to enhanced market performance and superior capability to compact with aggressive pressure. This is since the fresh airline company, after the merger, has additional resources at its disposal that direct to superior performance.

An additional advantage of the merger is the increase and diversification of the products offered by the airline. Alongside the code-sharing contract that permits air travelers to book. Their trip from any of the websites of the company. There is improving access to one world association. This entails the improved opportunities of networking for the airline in the course of business agreements with further players in the industry, for instance, Iberia, British Airways, and Finnair. It lets the customers’ additional choices of air travel and unforgettable experiences of traveling crosswise a superior and more improved network. This develops levels of customer satisfaction and is necessary for developing loyalty to the customer.

Explain 02:

The merger as well generates one of the finest-developed programs of loyalty i.e. Advantage. Customers have superior access to prospect to possess and redeem miles crosswise the joint routes of both airlines. It constructs the customers gain from increased utilization of opportunities and capabilities in the wider market. It as well results in increased expediency for travelers, ensuing in cost savings.

The fresh organizational structure has perceived the Doug Parker retention as the Chief executive officer of the fresh entity. The merger has, consequently, seen the construction of simply one chief executive’s place as opposed to two because of the fact. That each one of these companies had its individual chief executive formerly. There were as well considerable changes in the Board of Directors for the fresh company. The newly appointed Board of Directors incorporated four representatives of US Airways employees and as well five representatives for creditors of American Airlines. The preceding Boards of the separate entities did not have such representatives.

Doug Parker was formerly the chairman and chief executive of US Airways. On the other hand beneath the new position, the chief executive will not be the chairman of the board. The preceding companies in particularly US Airways had a variety of groups that exercised to operate underneath the chief executive. Such groups incorporated corporate affairs, marketing and revenue group, and finance, in addition to the operations groups. However, underneath the new corporation, there are no such groups.

Explain 03:

There were no chief changes in the practices of human resources after the merger. The fresh company, American Airlines Group, adopted the majority of its human resource strategies from US Airways and maintained the majority of its top managers. The foremost reason the corporation made no important changes in their human resource strategies is owing to reasons of business.

They wanted to preserve their combined market share where employees contribute a vital role. They were acquainted with the fact that preserving. Their existing employees to a certain extent than recruiting new ones would simply utilize the more forceful worldwide network they had access to. This was reflecting in the fresh setup where representatives of employee straightforwardly represented concerns of the employee in the board of directors. This was intended for enhancing the satisfaction level of these workers. This is since advanced levels of satisfaction enhance employee retention levels. The majority of these employees had served a lot of years in both airlines and their knowledge was very important for the success of the fresh airline company.

The management at both companies had instituted that the majority of their non-impressive performances formerly. For instance, those in 2011 that made American Airlines file for bankruptcy were primarily owing to callous market conditions. Employees had not added to the under-performance. The merger rendering the new entity to huge resources that might facilitate it to triumph over these market challenges. In actual fact, the merger was seen as a prospect where the company would present. Benefits of using The Theory of Human Relationship Management!

Explain 04:

The employees better compensation and benefits for their services. It was perceiving as an opportunity to close up the boil feuds. That had been relentless among the two companies’ management and labor unions representing workers. This was additional widespread in American airlines than at US Airways. It concludes with union representatives being integrated into. The Board of the fresh entity to make certain employee concerns were not looked down upon. Also read, Market Research Coffee of “Starbucks” Entry into China!

The retention of the majority of the employees and practically. A parallel organizational structure is owing to the effectiveness of training such personnel on leadership qualities. This is since the fresh entity would sustain minimal costs training these employees on facets of leadership because of the fact. That the airline had obtained a bigger global presence, as it turns out to be the biggest in the world. The development of leadership qualities in all its employees is decisive to the utilization of the opportunities offered by the bigger and more composite global market. Such employees are previously familiarized with the internal operations of the airline industry. As opposed to new employees that would need substantial spending on induction and training.

April 10, 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