Meaning of Financial Management
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meaning of Financial Management Financial Management Management of funds is a critical aspect of financial management. Management of funds act as the foremost concern whether it is in a business undertaking or in an educational institution. Financial management, which is simply meant dealing with management of money matters. Meaning of Financial Management By Financial Management we mean efficient use of economic resources namely capital funds. Financial management is concerned with the managerial decisions that result in the acquisition and financing of short term and long term credits for the firm. Here it deals with the situations that require selection of specific assets, or a combination of assets and the selection of specific problem of size and growth of an enterprise. Herein the analysis deals with the expected inflows and outflows of funds and their effect on managerial objectives. In short, Financial Management deals with Procurement of funds and their effective utilization in the business. So the analysis simply states two main aspects of financial management like procurement of funds and an effective use of funds to achieve business objectives. Procurement of funds: As funds can be procured from multiple sources so procurement of funds is considered an important problem of business concerns. Funds obtained from different sources have different characteristics in terms of potential risk, cost and control. Funds issued by the issue of equity shares are the best from risk point of view for the company as there is no question of repayment of equity capital except when the company is liquidated. From the cost point of view equity capital is the most expensive source of funds as dividend expectations of shareholders are normally higher than that of prevailing interest rates. Financial management constitutes risk, cost and control. The cost of funds should be at minimum for a proper balancing of risk and control. In the globalised competitive scenario, mobilization of funds plays a very significant role. Funds can be raised either through the domestic market or from abroad. Foreign Direct Investment (FDI) as well as Foreign Institutional Investors(FII) are two major sources of raising funds. The mechanism of procurement of funds has to be modified in the light of requirements of foreign investors. Utilization of Funds: Effective utilization of funds as an important aspect of financial management avoids the situations where funds are either kept idle or proper uses are not being made. Funds procured involve a certain cost and risk. If the funds are not used properly then running business will be too difficult. In case of dividend decisions we also consider this. So it is crucial to employ the funds properly and profitably. Scope of Financial Management Sound financial management is essential in all types of organizations whether it be profit or non-profit. Financial management is essential in a planned Economy as well as in a capitalist set-up as it involves efficient use of the resources.
From time to time it is observed that many firms have been liquidated not because their technology was obsolete or because their products were not in demand or their labour was not skilled and motivated, but that there was a mismanagement of financial affairs. Even in a boom period, when a company make high profits there is also a fear of liquidation because of bad financial management. Financial management optimizes the output from the given input of funds. In a country like India where resources are scarce and the demand for funds are many, the need of proper financial management is required. In case of newly started companies with a high growth rate it is more important to have sound financial management since finance alone guarantees their survival. Financial management is very important in case of non-profit organizations, which do not pay adequate attentions to financial management. How ever a sound system of financial management has to be cultivated among bureaucrats, administrators, engineers, educationalists and public at a large. Objectives of Financial Management Efficient Financial management requires the existence of some objectives, which are as follows 1) Profit Maximization: The objective of financial management is the same as the objective of a company which is to earn profit. But profit maximization alone cannot be the sole objective of a company. It is a limited objective. If profits are given undue importance then problems may arise as discussed below. The term profit is vague and it involves much more contradictions. Profit maximization must be attempted with a realization of risks involved. A positive relationship exists between risk and profits. So both risk and profit objectives should be balanced. Profit Maximization fails to take into account the time pattern of returns. Profit maximization does not take into account the social considerations. 2) Wealth Maximization: It is commonly understood that the objective of a firm is to maximize value and wealth. The value of a firm is represented by the market price of the company's stock. The market price of a firm's stock represents the assesment of all market participants as to what the value of the particular firm is. It takes in to account present and prospective future earnings per share, the timing and risk of these earning, the dividend policy of the firm and many other factors that bear upon the market price of the stock. Market price acts as the performance index or report card of the firm's progress and potential. Prices in the share markets are affected by many factors like general economic outlook, outlook of the particular company, technical factors and even mass psychology. Normally this value is a function of two factors: The anticipated rate of earnings per share of the company The capitalization rate. The likely rate of earnings per shares depend upon the assessment of how profitable a company may be in the future. The capitalization rate reflects the liking of the investors for the company.
Methods of Financial Management: In the field of financing there are multiple methods to procure funds. Funds may be obtained from long term sources as well as from short term sources. Long term funds may be procured by owners that are shareholders, lenders by issuing debentures, from financial institutions, banks and the general public at large. Short term funds may be availed from commercial banks, public deposits, etc. Financial leverage or trading on equity is an important method by which a finance manager may increase the return to common shareholders. At the time of evaluating capital expenditure projects methods like average rate of return, pay back, internal rate of returns, net present value and profitability index are used. A firm can increase its profitability without adversely affecting its liquidity by an efficient utilization of the current resources at the disposal of the firm. A firm can increase its profitability without negatively affecting its liquidity by efficient management of working capital. Similarly, for the evaluation of a firm's performance there are different methods. Ratio analysis is a common technique to evaluate different aspects of a firm. An investor takes in to account various ratios to know whether investment in a particular company will be profitable or not. These ratios enable him to judge the profitability, solvency, liquidity and growth aspect of the firm. Financial Management Defined What is Financial Management? Financial Management can be defined as: The management of the finances of a business/organization in order to achieve financial objectives Taking a business as the most common structure, the key objectives of financial management would be to: • Create wealth for the business • Generate cash, and • Provide a return on investment keeping in mind the risks that the business is taking and the resources invested There are three primary elements to the process of financial management: (1) Financial Planning Management need to ensure that sufficient funding is available to meet the needs of the business. In the short term, funding may be needed to invest in equipment and stocks, pay employees and fund sales made on credit. In the medium and long term, funding may be needed for significant additions to the productive capacity of the business or to facilitate acquisitions. (2) Financial Control Financial control is a critically important activity to help the business ensure that said business is meeting its goals. Financial control addresses questions such as: • Are assets being used efficiently? • Are the businesses assets secure? • Does management act in the best interest of the shareholders and in accordance with business rules? (3) Financial Decision Making
The primary aspects of financial decision making relate to investment, financing and dividends: • Investments must be financed in some way; however there are always financing alternatives that can be considered. For example it is possible to raise funds from selling new shares, borrowing from banks or taking credit from suppliers. • A key financing decision is whether profits earned by the business should be retained rather than distributed to shareholders via dividends. If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits.
Types of Business Finance We have mentioned above, that funds are required by business firms for different purposes — to acquire fixed assets, to provide for operating expenses, and to improve methods of production. Depending on the nature and purpose to be served, we may distinguish between three types of finance. These are: (i) Long term finance; (ii) Medium term finance; (iii) Short term finance. (i) Long term finance: Funds which are required to be invested in the business for a long period (say more than five years) are known as long term finance. It is also known as long term capital or fixed capital. This type of finance is used for acquiring fixed assets, such as land, building, plant and machinery, etc. The amount of long term funds required naturally depends on the type of business and the investment required for fixed assets. For example, the manufacture of steel, cement, chemicals, etc. involve heavy expenses to be incurred on buildings, machinery and equipments. A small factory or a small workshop repairing electrical goods will require much smaller investment in fixed assets. On the other hand, traders generally, require smaller amounts for long term investment as compared to the requirement of manufacturers. This is because trading concerns do not require expensive long-lived assets to be used for their activities. The size of the business firm also determines the amount to be invested in fixed assets. Large scale manufacturing and trading activities will obviously require more long term capital than small scale enterprises. Long term finance is required for acquisition of assets and modernisation purposes. (ii) Medium term finance: Business firms often need funds for a period exceeding one year and not more than 5 years for particular purposes. This is referred to as medium term finance or medium term capital. They may include expenses on modernisation of plant and machinery, or introduction of a new product, adoption of new methods of production or distribution, or an advertisement campaign. The necessity of this type of finance generally, arises on account of changes in technology or increasing competition. Manufacturing industries are more often in need of such finance. The amount required depends on the nature or purpose. The expenditure incurred is regarded as an investment because higher returns are expected out of it.
(iii) Short term finance: This type of finance is required for a short period upto one year. It refers to funds EXTERNAL TRADE 187 needed to meet day-to-day requirements and for holding stocks of raw materials, spare parts, etc. to be used for current operations. Short term finance is often called working capital or short term capital, or circulating capital. As soon as goods are sold and funds are recovered the amount is again used for current operations. Generally, speaking, production processes are completed within a year and goods are ready for sale. Hence, short term funds can be used over and over again from year to year. How much short term finance will be required depends on (a) the nature of business undertaken; (b) the time gap between commencement of production or purchase of goods and their sale; and (c) The volume of business. Trading firms normally require proportionately more of short term capital than long term capital. Manufacturing concerns, on the other hand, need relatively smaller amounts of short term capital as compared to long term capital. Again, if production time and the timegap between production and sale is shorter (say one or two months), it will require much less short term finance than if the time gap is one year. The volume or scale of business activity also determines the amount of short term finance. Thus, a small factory needs much less short term capital than a large manufacturing enterprise. meaning of Financial Management Financial Management Management of funds is a critical aspect of financial management. Management of funds act as the foremost concern whether it is in a business undertaking or in an educational institution. Financial management, which is simply meant dealing with management of money matters. Meaning of Financial Management By Financial Management we mean efficient use of economic resources namely capital funds. Financial management is concerned with the managerial decisions that result in the acquisition and financing of short term and long term credits for the firm. Here it deals with the situations that require selection of specific assets, or a combination of assets and the selection of specific problem of size and growth of an enterprise. Herein the analysis deals with the expected inflows and outflows of funds and their effect on managerial objectives. In short, Financial Management deals with Procurement of funds and their effective utilization in the business. So the analysis simply states two main aspects of financial management like procurement of funds and an effective use of funds to achieve business objectives. Procurement of funds: As funds can be procured from multiple sources so procurement of funds is considered an important problem of business concerns. Funds obtained from different sources have different characteristics in terms of potential risk, cost and control.
Funds issued by the issue of equity shares are the best from risk point of view for the company as there is no question of repayment of equity capital except when the company is liquidated. From the cost point of view equity capital is the most expensive source of funds as dividend expectations of shareholders are normally higher than that of prevailing interest rates. Financial management constitutes risk, cost and control. The cost of funds should be at minimum for a proper balancing of risk and control. In the globalised competitive scenario, mobilization of funds plays a very significant role. Funds can be raised either through the domestic market or from abroad. Foreign Direct Investment (FDI) as well as Foreign Institutional Investors(FII) are two major sources of raising funds. The mechanism of procurement of funds has to be modified in the light of requirements of foreign investors. Utilization of Funds: Effective utilization of funds as an important aspect of financial management avoids the situations where funds are either kept idle or proper uses are not being made. Funds procured involve a certain cost and risk. If the funds are not used properly then running business will be too difficult. In case of dividend decisions we also consider this. So it is crucial to employ the funds properly and profitably. Scope of Financial Management Sound financial management is essential in all types of organizations whether it be profit or non-profit. Financial management is essential in a planned Economy as well as in a capitalist set-up as it involves efficient use of the resources. From time to time it is observed that many firms have been liquidated not because their technology was obsolete or because their products were not in demand or their labour was not skilled and motivated, but that there was a mismanagement of financial affairs. Even in a boom period, when a company make high profits there is also a fear of liquidation because of bad financial management. Financial management optimizes the output from the given input of funds. In a country like India where resources are scarce and the demand for funds are many, the need of proper financial management is required. In case of newly started companies with a high growth rate it is more important to have sound financial management since finance alone guarantees their survival. Financial management is very important in case of non-profit organizations, which do not pay adequate attentions to financial management. How ever a sound system of financial management has to be cultivated among bureaucrats, administrators, engineers, educationalists and public at a large. Hi, Can I please get full details of "Accounting Profit" & "Economic Profit" and how does they differ from each other. Early response is much appreciated.
Management From Wikipedia, the free encyclopedia For other uses, see Management (disambiguation). Management in all business and human organization activity is simply the act of getting people together to accomplish desired goals and objectives. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, and natural resources. Management can also refer to the person or people who perform the act(s) of management.Contents [hide] 1 Overview 1.1 Theoretical scope 1.2 Nature of managerial work 2 Historical development 2.1 Early writing 2.1.1 Sun Tzu's The Art of War 2.1.2 Niccolò Machiavelli's The Prince 2.1.3 Adam Smith's The Wealth of Nations 2.2 19th century 2.3 20th century 2.4 21st century 3 Management topics 3.1 Basic functions of management 3.2 Formation of the business policy 3.2.1 How to implement policies and strategies 3.2.2 Where policies and strategies fit into the planning process 3.3 multi-divisional management hierarchy 4 Areas and categories and implementations of management 5 See also 6 References 7 External links [edit] Overview The verb manage comes from the Italian maneggiare (to handle — especially a horse), which in turn derives from the Latin manus (hand). The French word mesnagement (later ménagement) influenced the development in meaning of the English word management in the 17th and 18th centuries.[1] Some definitions of management are:
Organization and coordination of the activities of an enterprise in accordance with certain policies and in achievement of clearly defined objectives. Management is often included as a factor of production along with machines, materials, and money. According to the management guru Peter Drucker (1909–2005), the basic task of a management is twofold: marketing and innovation. Directors and managers who have the power and responsibility to make decisions to manage an enterprise. As a discipline, management comprises the interlocking functions of formulating corporate policy and organizing, planning, controlling, and directing the firm's resources to achieve the policy's objectives. The size of management can range from one person in a small firm to hundreds or thousands of managers in multinational companies. In large firms the board of directors formulates the policy which is implemented by the chief executive officer. [edit] Theoretical scope Mary Parker Follett (1868–1933), who wrote on the topic in the early twentieth century, defined management as "the art of getting things done through people". She also described management as philosophy.[2] One can also think of management functionally, as the action of measuring a quantity on a regular basis and of adjusting some initial plan; or as the actions taken to reach one's intended goal. This applies even in situations where planning does not take place. From this perspective, Frenchman Henri Fayol[3] considers management to consist of seven functions: planning organizing leading co-ordinating controlling staffing motivating Some people, however, find this definition, while useful, far too narrow. The phrase "management is what managers do" occurs widely, suggesting the difficulty of defining management, the shifting nature of definitions, and the connection of managerial practices with the existence of a managerial cadre or class. One habit of thought regards management as equivalent to "business administration" and thus excludes management in places outside commerce, as for example in charities and in the public sector. More realistically, however, every organization must manage its work, people, processes, technology, etc. in order to maximize its effectiveness. Nonetheless, many people refer to university departments which teach management as "business schools." Some institutions (such as the Harvard Business School) use that name while others (such as the Yale School of Management) employ the more inclusive term "management."
English speakers may also use the term "management" or "the management" as a collective word describing the managers of an organization, for example of a corporation. Historically this use of the term was often contrasted with the term "Labor" referring to those being managed. [edit] Nature of managerial work The neutrality of this section is disputed. Please see the discussion on the talk page. Please do not remove this message until the dispute is resolved. (December 2007) In for-profit work, management has as its primary function the satisfaction of a range of stakeholders. This typically involves making a profit (for the shareholders), creating valued products at a reasonable cost (for customers), and providing rewarding employment opportunities (for employees). In nonprofit management, add the importance of keeping the faith of donors. In most models of management/governance, shareholders vote for the board of directors, and the board then hires senior management. Some organizations have experimented with other methods (such as employee-voting models) of selecting or reviewing managers; but this occurs only very rarely. In the public sector of countries constituted as representative democracies, voters elect politicians to public office. Such politicians hire many managers and administrators, and in some countries like the United States political appointees lose their jobs on the election of a new president/governor/mayor. Public, private, and voluntary sectors place different demands on managers, but all must retain the faith of those who select them (if they wish to retain their jobs), retain the faith of those people that fund the organization, and retain the faith of those who work for the organization. If they fail to convince employees of the advantages of staying rather than leaving, they may tip the organization into a downward spiral of hiring, training, firing, and recruiting. Management also has the task of innovating and of improving the functioning of organizations. [edit] Historical development Difficulties arise in tracing the history of management. Some see it (by definition) as a late modern (in the sense of late modernity) conceptualization. On those terms it cannot have a pre-modern history, only harbingers (such as stewards). Others, however, detect management-like-thought back to Sumerian traders and to the builders of the pyramids of ancient Egypt. Slave-owners through the centuries faced the problems of exploiting/motivating a dependent but sometimes unenthusiastic or recalcitrant workforce, but many pre-industrial enterprises, given their small scale, did not feel compelled to face the issues of management systematically. However, innovations such as the spread of Arabic numerals (5th to 15th centuries) and the codification of double-
entry book-keeping (1494) provided tools for management assessment, planning and control. Given the scale of most commercial operations and the lack of mechanized recordkeeping and recording before the industrial revolution, it made sense for most owners of enterprises in those times to carry out management functions by and for themselves. But with growing size and complexity of organizations, the split between owners (individuals, industrial dynasties or groups of shareholders) and day-to-day managers (independent specialists in planning and control) gradually became more common. [edit] Early writing While management has been present for millennia, several writers have created a background of works that assisted in modern management theories.[4] [edit] Sun Tzu's The Art of War Written by Chinese general Sun Tzu in the 6th century BC, The Art of War is a military strategy book that, for managerial purposes, recommends being aware of and acting on strengths and weaknesses of both a manager's organization and a foe's.[4] [edit] Niccolò Machiavelli's The Prince Believing that people were motivated by self-interest, Niccolò Machiavelli wrote The Prince in 1513 as advice for the leadership of Florence, Italy.[5] Machiavelli recommended that leaders use fear—but not hatred—to maintain control. [edit] Adam Smith's The Wealth of Nations Written in 1776 by Adam Smith, a Scottish moral philosopher, The Wealth of Nations aims for efficient organization of work through Specialization of labor.[5] Smith described how changes in processes could boost productivity in the manufacture of pins. While individuals could produce 200 pins per day, Smith analyzed the steps involved in manufacture and, with 10 specialists, enabled production of 48,000 pins per day.[5] [edit] 19th century Classical economists such as Adam Smith (1723 - 1790) and John Stuart Mill (1806 1873) provided a theoretical background to resource-allocation, production, and pricing issues. About the same time, innovators like Eli Whitney (1765 - 1825), James Watt (1736 - 1819), and Matthew Boulton (1728 - 1809) developed elements of technical
production such as standardization, quality-control procedures, cost-accounting, interchangeability of parts, and work-planning. Many of these aspects of management existed in the pre-1861 slave-based sector of the US economy. That environment saw 4 million people, as the contemporary usages had it, "managed" in profitable quasi-mass production. By the late 19th century, marginal economists Alfred Marshall (1842 - 1924), Léon Walras (1834 - 1910), and others introduced a new layer of complexity to the theoretical underpinnings of management. Joseph Wharton offered the first tertiary-level course in management in 1881. [edit] 20th century By about 1900 one finds managers trying to place their theories on what they regarded as a thoroughly scientific basis (see scientism for perceived limitations of this belief). Examples include Henry R. Towne's Science of management in the 1890s, Frederick Winslow Taylor's The Principles of Scientific Management (1911), Frank and Lillian Gilbreth's Applied motion study (1917), and Henry L. Gantt's charts (1910s). J. Duncan wrote the first college management textbook in 1911. In 1912 Yoichi Ueno introduced Taylorism to Japan and became first management consultant of the "Japanesemanagement style". His son Ichiro Ueno pioneered Japanese quality assurance. The first comprehensive theories of management appeared around 1920. The Harvard Business School invented the Master of Business Administration degree (MBA) in 1921. People like Henri Fayol (1841 - 1925) and Alexander Church described the various branches of management and their inter-relationships. In the early 20th century, people like Ordway Tead (1891 - 1973), Walter Scott and J. Mooney applied the principles of psychology to management, while other writers, such as Elton Mayo (1880 - 1949), Mary Parker Follett (1868 - 1933), Chester Barnard (1886 - 1961), Max Weber (1864 - 1920), Rensis Likert (1903 - 1981), and Chris Argyris (1923 - ) approached the phenomenon of management from a sociological perspective. Peter Drucker (1909 – 2005) wrote one of the earliest books on applied management: Concept of the Corporation (published in 1946). It resulted from Alfred Sloan (chairman of General Motors until 1956) commissioning a study of the organisation. Drucker went on to write 39 books, many in the same vein. H. Dodge, Ronald Fisher (1890 - 1962), and Thornton C. Fry introduced statistical techniques into management-studies. In the 1940s, Patrick Blackett combined these statistical theories with microeconomic theory and gave birth to the science of operations research. Operations research, sometimes known as "management science" (but distinct from Taylor's scientific management), attempts to take a scientific approach to solving management problems, particularly in the areas of logistics and operations.
Some of the more recent developments include the Theory of Constraints, management by objectives, reengineering, Six Sigma and various information-technology-driven theories such as agile software development, as well as group management theories such as Cog's Ladder. As the general recognition of managers as a class solidified during the 20th century and gave perceived practitioners of the art/science of management a certain amount of prestige, so the way opened for popularised systems of management ideas to peddle their wares. In this context many management fads may have had more to do with pop psychology than with scientific theories of management. Towards the end of the 20th century, business management came to consist of six separate branches, namely: Human resource management Operations management or production management Strategic management Marketing management Financial management Information technology management responsible for management information systems [edit] 21st century In the 21st century observers find it increasingly difficult to subdivide management into functional categories in this way. More and more processes simultaneously involve several categories. Instead, one tends to think in terms of the various processes, tasks, and objects subject to management. Branches of management theory also exist relating to nonprofits and to government: such as public administration, public management, and educational management. Further, management programs related to civil-society organizations have also spawned programs in nonprofit management and social entrepreneurship. Note that many of the assumptions made by management have come under attack from business ethics viewpoints, critical management studies, and anti-corporate activism. As one consequence, workplace democracy has become both more common, and more advocated, in some places distributing all management functions among the workers, each of whom takes on a portion of the work. However, these models predate any current political issue, and may occur more naturally than does a command hierarchy. All management to some degree embraces democratic principles in that in the long term workers must give majority support to management; otherwise they leave to find other work, or go on strike. Despite the move toward workplace democracy, command-andcontrol organization structures remain commonplace and the de facto organization structure. Indeed, the entrenched nature of command-and-control can be seen in the way that recent layoffs have been conducted with management ranks affected far less than
employees at the lower levels of organizations. In some cases, management has even rewarded itself with bonuses when lower level employees have been laid off.[6] [edit] Management topics [edit] Basic functions of management Management operates through various functions, often classified as planning, organizing, leading/motivating, and controlling. Planning: Deciding what needs to happen in the future (today, next week, next month, next year, over the next 5 years, etc.) and generating plans for action. Organizing: (Implementation) making optimum use of the resources required to enable the successful carrying out of plans. Staffing: Job Analyzing, recruitment, and hiring individuals for appropriate jobs. Leading: Determining what needs to be done in a situation and getting people to do it. Controlling: Monitoring, checking progress against plans, which may need modification based on feedback. Motivating: the process of stimulating an individual to take action that will accomplish a desired goal. [edit] Formation of the business policy The mission of the business is its most obvious purpose -- which may be, for example, to make soap. The vision of the business reflects its aspirations and specifies its intended direction or future destination. The objectives of the business refers to the ends or activity at which a certain task is aimed. The business's policy is a guide that stipulates rules, regulations and objectives, and may be used in the managers' decision-making. It must be flexible and easily interpreted and understood by all employees. The business's strategy refers to the coordinated plan of action that it is going to take, as well as the resources that it will use, to realize its vision and long-term objectives. It is a guideline to managers, stipulating how they ought to allocate and utilize the factors of production to the business's advantage. Initially, it could help the managers decide on what type of business they want to form. [edit] How to implement policies and strategies All policies and strategies must be discussed with all managerial personnel and staff. Managers must understand where and how they can implement their policies and strategies. A plan of action must be devised for each department. Policies and strategies must be reviewed regularly.
Contingency plans must be devised in case the environment changes. Assessments of progress ought to be carried out regularly by top-level managers. A good environment and team spirit is required within the business. The missions, objectives, strengths and weaknesses of each department must be analysed to determine their roles in achieving the business's mission. The forecasting method develops a reliable picture of the business's future environment. A planning unit must be created to ensure that all plans are consistent and that policies and strategies are aimed at achieving the same mission and objectives. Contingency plans must be developed, just in case. All policies must be discussed with all managerial personnel and staff that is required in the execution of any departmental policy. Organizational change is strategically achieved through the implementation of the eightstep plan of action established by John P. Kotter: Increase urgency, get the vision right, communicate the buy-in, empower action, create short-term wins, don't let up, and make change stick. [7] [edit] Where policies and strategies fit into the planning process They give mid- and lower-level managers a good idea of the future plans for each department. A framework is created whereby plans and decisions are made. Mid- and lower-level management may add their own plans to the business's strategic ones. [edit] multi-divisional management hierarchy The management of a large organization may have three levels: Senior management (or "top management" or "upper management") Middle management Low-level management, such as supervisors or team-leaders Foreman Rank and File Top-level management Require an extensive knowledge of management roles and skills. They have to be very aware of external factors such as markets. Their decisions are generally of a long-term nature Their decisions are made using analytic, directive, conceptual and/or behavioral/participative processes They are responsible for strategic decisions. They have to chalk out the plan and see that plan may be effective in the future.
They are executive in nature. Middle management Mid-level managers have a specialized understanding of certain managerial tasks. They are responsible for carrying out the decisions made by top-level management. Lower management This level of management ensures that the decisions and plans taken by the other two are carried out. Lower-level managers' decisions are generally short-term ones. Foreman / lead hand They are people who have direct supervision over the working force in office factory, sales field or other workgroup or areas of activity. Rank and File The responsibilities of the persons belonging to this group are even more restricted and more specific than those of the foreman. [edit] Areas and categories and implementations of managementAccounting management Agile management Association management Capability Management Change management Conflict management Commercial operations management Communication management Constraint management Cost management Crisis management Critical management studies Customer relationship management Decision making styles Design management Disaster management Distributed management Earned value management Educational management Environmental management Facility management Financial management Forecasting Human resources management Hospital management Information technology management Innovation management Interim management Inventory management Knowledge management Land management
Leadership management Logistics management Lifecycle management Management on demand Marine fuel management Marketing management Materials management Office management Operations management Organization development Perception management Practice management Program management Project management Process management Performance management Product management Public administration Public management Quality management Records management Relationship management Research management Resource management Risk management Rural management Skills management Social entrepreneurship Spend management Spiritual management Strategic management Stress management Supply chain management Systems management Talent management Time management Technological Management Visual management
From time to time it is observed that many firms have been liquidated not because their technology was obsolete or because their products were not in demand or their labour was not skilled and motivated, but that there was a mismanagement of financial affairs. Even in a boom period, when a company make high profits there is also a fear of liquidation because of bad financial management. Financial management optimizes the output from the given input of funds. In a country like India where resources are scarce and the demand for funds are many, the need of proper financial management is required. In case of newly started companies with a high growth rate it is more important to have sound financial management since finance alone guarantees their survival. Financial management is very important in case of non-profit organizations, which do not pay adequate attentions to financial management. How ever a sound system of financial management has to be cultivated among bureaucrats, administrators, engineers, educationalists and public at a large. Objectives of Financial Management Efficient Financial management requires the existence of some objectives, which are as follows 1) Profit Maximization: The objective of financial management is the same as the objective of a company which is to earn profit. But profit maximization alone cannot be the sole objective of a company. It is a limited objective. If profits are given undue importance then problems may arise as discussed below. The term profit is vague and it involves much more contradictions. Profit maximization must be attempted with a realization of risks involved. A positive relationship exists between risk and profits. So both risk and profit objectives should be balanced. Profit Maximization fails to take into account the time pattern of returns. Profit maximization does not take into account the social considerations. 2) Wealth Maximization: It is commonly understood that the objective of a firm is to maximize value and wealth. The value of a firm is represented by the market price of the company's stock. The market price of a firm's stock represents the assesment of all market participants as to what the value of the particular firm is. It takes in to account present and prospective future earnings per share, the timing and risk of these earning, the dividend policy of the firm and many other factors that bear upon the market price of the stock. Market price acts as the performance index or report card of the firm's progress and potential. Prices in the share markets are affected by many factors like general economic outlook, outlook of the particular company, technical factors and even mass psychology. Normally this value is a function of two factors: The anticipated rate of earnings per share of the company The capitalization rate. The likely rate of earnings per shares depend upon the assessment of how profitable a company may be in the future. The capitalization rate reflects the liking of the investors for the company.
Methods of Financial Management: In the field of financing there are multiple methods to procure funds. Funds may be obtained from long term sources as well as from short term sources. Long term funds may be procured by owners that are shareholders, lenders by issuing debentures, from financial institutions, banks and the general public at large. Short term funds may be availed from commercial banks, public deposits, etc. Financial leverage or trading on equity is an important method by which a finance manager may increase the return to common shareholders. At the time of evaluating capital expenditure projects methods like average rate of return, pay back, internal rate of returns, net present value and profitability index are used. A firm can increase its profitability without adversely affecting its liquidity by an efficient utilization of the current resources at the disposal of the firm. A firm can increase its profitability without negatively affecting its liquidity by efficient management of working capital. Similarly, for the evaluation of a firm's performance there are different methods. Ratio analysis is a common technique to evaluate different aspects of a firm. An investor takes in to account various ratios to know whether investment in a particular company will be profitable or not. These ratios enable him to judge the profitability, solvency, liquidity and growth aspect of the firm. Financial Management Defined What is Financial Management? Financial Management can be defined as: The management of the finances of a business/organization in order to achieve financial objectives Taking a business as the most common structure, the key objectives of financial management would be to: • Create wealth for the business • Generate cash, and • Provide a return on investment keeping in mind the risks that the business is taking and the resources invested There are three primary elements to the process of financial management: (1) Financial Planning Management need to ensure that sufficient funding is available to meet the needs of the business. In the short term, funding may be needed to invest in equipment and stocks, pay employees and fund sales made on credit. In the medium and long term, funding may be needed for significant additions to the productive capacity of the business or to facilitate acquisitions. (2) Financial Control Financial control is a critically important activity to help the business ensure that said business is meeting its goals. Financial control addresses questions such as: • Are assets being used efficiently? • Are the businesses assets secure? • Does management act in the best interest of the shareholders and in accordance with business rules? (3) Financial Decision Making
The primary aspects of financial decision making relate to investment, financing and dividends: • Investments must be financed in some way; however there are always financing alternatives that can be considered. For example it is possible to raise funds from selling new shares, borrowing from banks or taking credit from suppliers. • A key financing decision is whether profits earned by the business should be retained rather than distributed to shareholders via dividends. If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits.
Types of Business Finance We have mentioned above, that funds are required by business firms for different purposes — to acquire fixed assets, to provide for operating expenses, and to improve methods of production. Depending on the nature and purpose to be served, we may distinguish between three types of finance. These are: (i) Long term finance; (ii) Medium term finance; (iii) Short term finance. (i) Long term finance: Funds which are required to be invested in the business for a long period (say more than five years) are known as long term finance. It is also known as long term capital or fixed capital. This type of finance is used for acquiring fixed assets, such as land, building, plant and machinery, etc. The amount of long term funds required naturally depends on the type of business and the investment required for fixed assets. For example, the manufacture of steel, cement, chemicals, etc. involve heavy expenses to be incurred on buildings, machinery and equipments. A small factory or a small workshop repairing electrical goods will require much smaller investment in fixed assets. On the other hand, traders generally, require smaller amounts for long term investment as compared to the requirement of manufacturers. This is because trading concerns do not require expensive long-lived assets to be used for their activities. The size of the business firm also determines the amount to be invested in fixed assets. Large scale manufacturing and trading activities will obviously require more long term capital than small scale enterprises. Long term finance is required for acquisition of assets and modernisation purposes. (ii) Medium term finance: Business firms often need funds for a period exceeding one year and not more than 5 years for particular purposes. This is referred to as medium term finance or medium term capital. They may include expenses on modernisation of plant and machinery, or introduction of a new product, adoption of new methods of production or distribution, or an advertisement campaign. The necessity of this type of finance generally, arises on account of changes in technology or increasing competition. Manufacturing industries are more often in need of such finance. The amount required depends on the nature or purpose. The expenditure incurred is regarded as an investment because higher returns are expected out of it.
(iii) Short term finance: This type of finance is required for a short period upto one year. It refers to funds EXTERNAL TRADE 187 needed to meet day-to-day requirements and for holding stocks of raw materials, spare parts, etc. to be used for current operations. Short term finance is often called working capital or short term capital, or circulating capital. As soon as goods are sold and funds are recovered the amount is again used for current operations. Generally, speaking, production processes are completed within a year and goods are ready for sale. Hence, short term funds can be used over and over again from year to year. How much short term finance will be required depends on (a) the nature of business undertaken; (b) the time gap between commencement of production or purchase of goods and their sale; and (c) The volume of business. Trading firms normally require proportionately more of short term capital than long term capital. Manufacturing concerns, on the other hand, need relatively smaller amounts of short term capital as compared to long term capital. Again, if production time and the timegap between production and sale is shorter (say one or two months), it will require much less short term finance than if the time gap is one year. The volume or scale of business activity also determines the amount of short term finance. Thus, a small factory needs much less short term capital than a large manufacturing enterprise. meaning of Financial Management Financial Management Management of funds is a critical aspect of financial management. Management of funds act as the foremost concern whether it is in a business undertaking or in an educational institution. Financial management, which is simply meant dealing with management of money matters. Meaning of Financial Management By Financial Management we mean efficient use of economic resources namely capital funds. Financial management is concerned with the managerial decisions that result in the acquisition and financing of short term and long term credits for the firm. Here it deals with the situations that require selection of specific assets, or a combination of assets and the selection of specific problem of size and growth of an enterprise. Herein the analysis deals with the expected inflows and outflows of funds and their effect on managerial objectives. In short, Financial Management deals with Procurement of funds and their effective utilization in the business. So the analysis simply states two main aspects of financial management like procurement of funds and an effective use of funds to achieve business objectives. Procurement of funds: As funds can be procured from multiple sources so procurement of funds is considered an important problem of business concerns. Funds obtained from different sources have different characteristics in terms of potential risk, cost and control.
Funds issued by the issue of equity shares are the best from risk point of view for the company as there is no question of repayment of equity capital except when the company is liquidated. From the cost point of view equity capital is the most expensive source of funds as dividend expectations of shareholders are normally higher than that of prevailing interest rates. Financial management constitutes risk, cost and control. The cost of funds should be at minimum for a proper balancing of risk and control. In the globalised competitive scenario, mobilization of funds plays a very significant role. Funds can be raised either through the domestic market or from abroad. Foreign Direct Investment (FDI) as well as Foreign Institutional Investors(FII) are two major sources of raising funds. The mechanism of procurement of funds has to be modified in the light of requirements of foreign investors. Utilization of Funds: Effective utilization of funds as an important aspect of financial management avoids the situations where funds are either kept idle or proper uses are not being made. Funds procured involve a certain cost and risk. If the funds are not used properly then running business will be too difficult. In case of dividend decisions we also consider this. So it is crucial to employ the funds properly and profitably. Scope of Financial Management Sound financial management is essential in all types of organizations whether it be profit or non-profit. Financial management is essential in a planned Economy as well as in a capitalist set-up as it involves efficient use of the resources. From time to time it is observed that many firms have been liquidated not because their technology was obsolete or because their products were not in demand or their labour was not skilled and motivated, but that there was a mismanagement of financial affairs. Even in a boom period, when a company make high profits there is also a fear of liquidation because of bad financial management. Financial management optimizes the output from the given input of funds. In a country like India where resources are scarce and the demand for funds are many, the need of proper financial management is required. In case of newly started companies with a high growth rate it is more important to have sound financial management since finance alone guarantees their survival. Financial management is very important in case of non-profit organizations, which do not pay adequate attentions to financial management. How ever a sound system of financial management has to be cultivated among bureaucrats, administrators, engineers, educationalists and public at a large. Hi, Can I please get full details of "Accounting Profit" & "Economic Profit" and how does they differ from each other. Early response is much appreciated.
Management From Wikipedia, the free encyclopedia For other uses, see Management (disambiguation). Management in all business and human organization activity is simply the act of getting people together to accomplish desired goals and objectives. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, and natural resources. Management can also refer to the person or people who perform the act(s) of management.Contents [hide] 1 Overview 1.1 Theoretical scope 1.2 Nature of managerial work 2 Historical development 2.1 Early writing 2.1.1 Sun Tzu's The Art of War 2.1.2 Niccolò Machiavelli's The Prince 2.1.3 Adam Smith's The Wealth of Nations 2.2 19th century 2.3 20th century 2.4 21st century 3 Management topics 3.1 Basic functions of management 3.2 Formation of the business policy 3.2.1 How to implement policies and strategies 3.2.2 Where policies and strategies fit into the planning process 3.3 multi-divisional management hierarchy 4 Areas and categories and implementations of management 5 See also 6 References 7 External links [edit] Overview The verb manage comes from the Italian maneggiare (to handle — especially a horse), which in turn derives from the Latin manus (hand). The French word mesnagement (later ménagement) influenced the development in meaning of the English word management in the 17th and 18th centuries.[1] Some definitions of management are:
Organization and coordination of the activities of an enterprise in accordance with certain policies and in achievement of clearly defined objectives. Management is often included as a factor of production along with machines, materials, and money. According to the management guru Peter Drucker (1909–2005), the basic task of a management is twofold: marketing and innovation. Directors and managers who have the power and responsibility to make decisions to manage an enterprise. As a discipline, management comprises the interlocking functions of formulating corporate policy and organizing, planning, controlling, and directing the firm's resources to achieve the policy's objectives. The size of management can range from one person in a small firm to hundreds or thousands of managers in multinational companies. In large firms the board of directors formulates the policy which is implemented by the chief executive officer. [edit] Theoretical scope Mary Parker Follett (1868–1933), who wrote on the topic in the early twentieth century, defined management as "the art of getting things done through people". She also described management as philosophy.[2] One can also think of management functionally, as the action of measuring a quantity on a regular basis and of adjusting some initial plan; or as the actions taken to reach one's intended goal. This applies even in situations where planning does not take place. From this perspective, Frenchman Henri Fayol[3] considers management to consist of seven functions: planning organizing leading co-ordinating controlling staffing motivating Some people, however, find this definition, while useful, far too narrow. The phrase "management is what managers do" occurs widely, suggesting the difficulty of defining management, the shifting nature of definitions, and the connection of managerial practices with the existence of a managerial cadre or class. One habit of thought regards management as equivalent to "business administration" and thus excludes management in places outside commerce, as for example in charities and in the public sector. More realistically, however, every organization must manage its work, people, processes, technology, etc. in order to maximize its effectiveness. Nonetheless, many people refer to university departments which teach management as "business schools." Some institutions (such as the Harvard Business School) use that name while others (such as the Yale School of Management) employ the more inclusive term "management."
English speakers may also use the term "management" or "the management" as a collective word describing the managers of an organization, for example of a corporation. Historically this use of the term was often contrasted with the term "Labor" referring to those being managed. [edit] Nature of managerial work The neutrality of this section is disputed. Please see the discussion on the talk page. Please do not remove this message until the dispute is resolved. (December 2007) In for-profit work, management has as its primary function the satisfaction of a range of stakeholders. This typically involves making a profit (for the shareholders), creating valued products at a reasonable cost (for customers), and providing rewarding employment opportunities (for employees). In nonprofit management, add the importance of keeping the faith of donors. In most models of management/governance, shareholders vote for the board of directors, and the board then hires senior management. Some organizations have experimented with other methods (such as employee-voting models) of selecting or reviewing managers; but this occurs only very rarely. In the public sector of countries constituted as representative democracies, voters elect politicians to public office. Such politicians hire many managers and administrators, and in some countries like the United States political appointees lose their jobs on the election of a new president/governor/mayor. Public, private, and voluntary sectors place different demands on managers, but all must retain the faith of those who select them (if they wish to retain their jobs), retain the faith of those people that fund the organization, and retain the faith of those who work for the organization. If they fail to convince employees of the advantages of staying rather than leaving, they may tip the organization into a downward spiral of hiring, training, firing, and recruiting. Management also has the task of innovating and of improving the functioning of organizations. [edit] Historical development Difficulties arise in tracing the history of management. Some see it (by definition) as a late modern (in the sense of late modernity) conceptualization. On those terms it cannot have a pre-modern history, only harbingers (such as stewards). Others, however, detect management-like-thought back to Sumerian traders and to the builders of the pyramids of ancient Egypt. Slave-owners through the centuries faced the problems of exploiting/motivating a dependent but sometimes unenthusiastic or recalcitrant workforce, but many pre-industrial enterprises, given their small scale, did not feel compelled to face the issues of management systematically. However, innovations such as the spread of Arabic numerals (5th to 15th centuries) and the codification of double-
entry book-keeping (1494) provided tools for management assessment, planning and control. Given the scale of most commercial operations and the lack of mechanized recordkeeping and recording before the industrial revolution, it made sense for most owners of enterprises in those times to carry out management functions by and for themselves. But with growing size and complexity of organizations, the split between owners (individuals, industrial dynasties or groups of shareholders) and day-to-day managers (independent specialists in planning and control) gradually became more common. [edit] Early writing While management has been present for millennia, several writers have created a background of works that assisted in modern management theories.[4] [edit] Sun Tzu's The Art of War Written by Chinese general Sun Tzu in the 6th century BC, The Art of War is a military strategy book that, for managerial purposes, recommends being aware of and acting on strengths and weaknesses of both a manager's organization and a foe's.[4] [edit] Niccolò Machiavelli's The Prince Believing that people were motivated by self-interest, Niccolò Machiavelli wrote The Prince in 1513 as advice for the leadership of Florence, Italy.[5] Machiavelli recommended that leaders use fear—but not hatred—to maintain control. [edit] Adam Smith's The Wealth of Nations Written in 1776 by Adam Smith, a Scottish moral philosopher, The Wealth of Nations aims for efficient organization of work through Specialization of labor.[5] Smith described how changes in processes could boost productivity in the manufacture of pins. While individuals could produce 200 pins per day, Smith analyzed the steps involved in manufacture and, with 10 specialists, enabled production of 48,000 pins per day.[5] [edit] 19th century Classical economists such as Adam Smith (1723 - 1790) and John Stuart Mill (1806 1873) provided a theoretical background to resource-allocation, production, and pricing issues. About the same time, innovators like Eli Whitney (1765 - 1825), James Watt (1736 - 1819), and Matthew Boulton (1728 - 1809) developed elements of technical
production such as standardization, quality-control procedures, cost-accounting, interchangeability of parts, and work-planning. Many of these aspects of management existed in the pre-1861 slave-based sector of the US economy. That environment saw 4 million people, as the contemporary usages had it, "managed" in profitable quasi-mass production. By the late 19th century, marginal economists Alfred Marshall (1842 - 1924), Léon Walras (1834 - 1910), and others introduced a new layer of complexity to the theoretical underpinnings of management. Joseph Wharton offered the first tertiary-level course in management in 1881. [edit] 20th century By about 1900 one finds managers trying to place their theories on what they regarded as a thoroughly scientific basis (see scientism for perceived limitations of this belief). Examples include Henry R. Towne's Science of management in the 1890s, Frederick Winslow Taylor's The Principles of Scientific Management (1911), Frank and Lillian Gilbreth's Applied motion study (1917), and Henry L. Gantt's charts (1910s). J. Duncan wrote the first college management textbook in 1911. In 1912 Yoichi Ueno introduced Taylorism to Japan and became first management consultant of the "Japanesemanagement style". His son Ichiro Ueno pioneered Japanese quality assurance. The first comprehensive theories of management appeared around 1920. The Harvard Business School invented the Master of Business Administration degree (MBA) in 1921. People like Henri Fayol (1841 - 1925) and Alexander Church described the various branches of management and their inter-relationships. In the early 20th century, people like Ordway Tead (1891 - 1973), Walter Scott and J. Mooney applied the principles of psychology to management, while other writers, such as Elton Mayo (1880 - 1949), Mary Parker Follett (1868 - 1933), Chester Barnard (1886 - 1961), Max Weber (1864 - 1920), Rensis Likert (1903 - 1981), and Chris Argyris (1923 - ) approached the phenomenon of management from a sociological perspective. Peter Drucker (1909 – 2005) wrote one of the earliest books on applied management: Concept of the Corporation (published in 1946). It resulted from Alfred Sloan (chairman of General Motors until 1956) commissioning a study of the organisation. Drucker went on to write 39 books, many in the same vein. H. Dodge, Ronald Fisher (1890 - 1962), and Thornton C. Fry introduced statistical techniques into management-studies. In the 1940s, Patrick Blackett combined these statistical theories with microeconomic theory and gave birth to the science of operations research. Operations research, sometimes known as "management science" (but distinct from Taylor's scientific management), attempts to take a scientific approach to solving management problems, particularly in the areas of logistics and operations.
Some of the more recent developments include the Theory of Constraints, management by objectives, reengineering, Six Sigma and various information-technology-driven theories such as agile software development, as well as group management theories such as Cog's Ladder. As the general recognition of managers as a class solidified during the 20th century and gave perceived practitioners of the art/science of management a certain amount of prestige, so the way opened for popularised systems of management ideas to peddle their wares. In this context many management fads may have had more to do with pop psychology than with scientific theories of management. Towards the end of the 20th century, business management came to consist of six separate branches, namely: Human resource management Operations management or production management Strategic management Marketing management Financial management Information technology management responsible for management information systems [edit] 21st century In the 21st century observers find it increasingly difficult to subdivide management into functional categories in this way. More and more processes simultaneously involve several categories. Instead, one tends to think in terms of the various processes, tasks, and objects subject to management. Branches of management theory also exist relating to nonprofits and to government: such as public administration, public management, and educational management. Further, management programs related to civil-society organizations have also spawned programs in nonprofit management and social entrepreneurship. Note that many of the assumptions made by management have come under attack from business ethics viewpoints, critical management studies, and anti-corporate activism. As one consequence, workplace democracy has become both more common, and more advocated, in some places distributing all management functions among the workers, each of whom takes on a portion of the work. However, these models predate any current political issue, and may occur more naturally than does a command hierarchy. All management to some degree embraces democratic principles in that in the long term workers must give majority support to management; otherwise they leave to find other work, or go on strike. Despite the move toward workplace democracy, command-andcontrol organization structures remain commonplace and the de facto organization structure. Indeed, the entrenched nature of command-and-control can be seen in the way that recent layoffs have been conducted with management ranks affected far less than
employees at the lower levels of organizations. In some cases, management has even rewarded itself with bonuses when lower level employees have been laid off.[6] [edit] Management topics [edit] Basic functions of management Management operates through various functions, often classified as planning, organizing, leading/motivating, and controlling. Planning: Deciding what needs to happen in the future (today, next week, next month, next year, over the next 5 years, etc.) and generating plans for action. Organizing: (Implementation) making optimum use of the resources required to enable the successful carrying out of plans. Staffing: Job Analyzing, recruitment, and hiring individuals for appropriate jobs. Leading: Determining what needs to be done in a situation and getting people to do it. Controlling: Monitoring, checking progress against plans, which may need modification based on feedback. Motivating: the process of stimulating an individual to take action that will accomplish a desired goal. [edit] Formation of the business policy The mission of the business is its most obvious purpose -- which may be, for example, to make soap. The vision of the business reflects its aspirations and specifies its intended direction or future destination. The objectives of the business refers to the ends or activity at which a certain task is aimed. The business's policy is a guide that stipulates rules, regulations and objectives, and may be used in the managers' decision-making. It must be flexible and easily interpreted and understood by all employees. The business's strategy refers to the coordinated plan of action that it is going to take, as well as the resources that it will use, to realize its vision and long-term objectives. It is a guideline to managers, stipulating how they ought to allocate and utilize the factors of production to the business's advantage. Initially, it could help the managers decide on what type of business they want to form. [edit] How to implement policies and strategies All policies and strategies must be discussed with all managerial personnel and staff. Managers must understand where and how they can implement their policies and strategies. A plan of action must be devised for each department. Policies and strategies must be reviewed regularly.
Contingency plans must be devised in case the environment changes. Assessments of progress ought to be carried out regularly by top-level managers. A good environment and team spirit is required within the business. The missions, objectives, strengths and weaknesses of each department must be analysed to determine their roles in achieving the business's mission. The forecasting method develops a reliable picture of the business's future environment. A planning unit must be created to ensure that all plans are consistent and that policies and strategies are aimed at achieving the same mission and objectives. Contingency plans must be developed, just in case. All policies must be discussed with all managerial personnel and staff that is required in the execution of any departmental policy. Organizational change is strategically achieved through the implementation of the eightstep plan of action established by John P. Kotter: Increase urgency, get the vision right, communicate the buy-in, empower action, create short-term wins, don't let up, and make change stick. [7] [edit] Where policies and strategies fit into the planning process They give mid- and lower-level managers a good idea of the future plans for each department. A framework is created whereby plans and decisions are made. Mid- and lower-level management may add their own plans to the business's strategic ones. [edit] multi-divisional management hierarchy The management of a large organization may have three levels: Senior management (or "top management" or "upper management") Middle management Low-level management, such as supervisors or team-leaders Foreman Rank and File Top-level management Require an extensive knowledge of management roles and skills. They have to be very aware of external factors such as markets. Their decisions are generally of a long-term nature Their decisions are made using analytic, directive, conceptual and/or behavioral/participative processes They are responsible for strategic decisions. They have to chalk out the plan and see that plan may be effective in the future.
They are executive in nature. Middle management Mid-level managers have a specialized understanding of certain managerial tasks. They are responsible for carrying out the decisions made by top-level management. Lower management This level of management ensures that the decisions and plans taken by the other two are carried out. Lower-level managers' decisions are generally short-term ones. Foreman / lead hand They are people who have direct supervision over the working force in office factory, sales field or other workgroup or areas of activity. Rank and File The responsibilities of the persons belonging to this group are even more restricted and more specific than those of the foreman. [edit] Areas and categories and implementations of managementAccounting management Agile management Association management Capability Management Change management Conflict management Commercial operations management Communication management Constraint management Cost management Crisis management Critical management studies Customer relationship management Decision making styles Design management Disaster management Distributed management Earned value management Educational management Environmental management Facility management Financial management Forecasting Human resources management Hospital management Information technology management Innovation management Interim management Inventory management Knowledge management Land management
Leadership management Logistics management Lifecycle management Management on demand Marine fuel management Marketing management Materials management Office management Operations management Organization development Perception management Practice management Program management Project management Process management Performance management Product management Public administration Public management Quality management Records management Relationship management Research management Resource management Risk management Rural management Skills management Social entrepreneurship Spend management Spiritual management Strategic management Stress management Supply chain management Systems management Talent management Time management Technological Management Visual management
