Concept of Management and Its Importance

Conceptual Skills

• Conceptual skills involve viewing the enterprise as a whole and analyzing the implications of external environmental factors (economic, social, political, technological, etc.) for its successful functioning.

Importance of Management

• Enables an enterprise to achieve its desired objectives through proper planning and control
• Ensures the optimum utilization of resources (materials, machines, and money) and efficient use of human resources
• Fulfills social obligations by monitoring the business environment and making necessary changes to policies and practices
• Ensures the stability of the organization in a fast-changing environment
• Improves the personality and caliber of people to raise their efficiency and productivity
• Meets the challenge of change through innovation and creativity
• Integrates various interests to achieve the objectives of the organization

Functions of Management

Planning

• Deciding in advance what should be done in the future
• Helps to work in a systematic manner
• Provides the basis for measuring actual performance
• Eliminates the tendency to work at random
• Determines the priorities of the business
• Is goal-oriented, an intellectual activity, primary, all-pervasive, continuous, and forward-looking

Organizing

• The process of bringing together the necessary resources for the accomplishment of the objectives
• Divides the total work into different parts for better performance
• Provides authority and responsibility
• Establishes answerability or accountability on the part of subordinates to their superiors
• Identifies the activities to be performed
• Groups activities

Staffing

• Employing the right number and right kind of employees to do various jobs
• Ensures the efficient use of human resources
• Impacts the cost of operation and the potential of employees

Distinction Between Public Company and Private Company

• Minimum paid-up capital: Rs. 1,00,000 for Private Company, Rs. 5,00,000 for Public Company
• Minimum number of members: 2 for Private Company, 7 for Public Company
• Limited liability: limited to the extent of capital in both cases
• Perpetual existence: Public Company has a separate legal entity, unaffected by death, retirement, or insolvency of shareholders
• Transfer of shares: freely transferable in Public Company, requires consent of all partners in Private Company
• Finance: vast and unlimited scope for raising finance in Public Company, relatively limited in Private Company

Cooperative Societies

• Have a separate legal entity
• Limited liability: liability of members is limited to the extent of their capital
• Perpetual existence: unaffected by death, insolvency, retirement, or lunacy of members
• Social service: fosters fellow feeling and inculcates moral values
• Open membership: open to all, regardless of caste, color, creed, or economic status
• Tax advantage: exempt from income-tax and surcharge on earnings up to a certain limit
• State assistance: receives grants, loans, and financial assistance from the government
• Democratic management: management is entrusted to the managing committee elected by members

Disadvantages of Cooperative Societies

• Lack of secrecy: annual reports and accounts are submitted to the Registrar of Cooperative Societies

Systems Approach

• Factors: dependency, responsiveness, results, and focus
• Advantages: helps to see the problem at a holistic level, resolves issues, and understands the problem in a better way
• Disadvantages: problems may be too complex, and focus on sub-systems may be required