The Principles of Management are the essential, underlying factors that form the foundations of

successful management. According to Henri Fayol in his book General and Industrial

Management (1916), there are 14 'Principles of Management'.

1. Division of Work - According to this principle the whole work is divided into small tasks. The
specialization of the workforce according to the skills of a person, creating specific personal
and professional development within the labour force and therefore increasing productivity;
leads to specialization which increases the efficiency of labour.
2. Authority and Responsibility - This is the issue of commands followed by responsibility for
their consequences. Authority means the right of a superior to give enhance order to his
subordinates; responsibility means obligation for performance.
3. Discipline - It is obedience, proper conduct in relation to others, respect of authority, etc. It is
essential for the smooth functioning of all organizations.
4. Unity of Command - This principle states that each subordinate should receive orders and
be accountable to one and only one superior. If an employee receives orders from more
than one superior, it is likely to create confusion and conflict.
5. Unity of Direction - All related activities should be put under one group, there should be one
plan of action for them, and they should be under the control of one manager.
6. Subordination of Individual Interest to Mutual Interest - The management must put aside
personal considerations and put company objectives firstly. Therefore the interests of goals
of the organization must prevail over the personal interests of individuals.
7. Remuneration - Workers must be paid sufficiently as this is a chief motivation of employees
and therefore greatly influences productivity. The quantum and methods of remuneration
payable should be fair, reasonable and rewarding of effort.
8. The Degree of Centralization - The amount of power wielded with the central management
depends on company size. Centralization implies the concentration of decision making
authority at the top management.
9. Line of Authority/Scalar Chain - This refers to the chain of superiors ranging from top
management to the lowest rank. The principle suggests that there should be a clear line of
authority from top to bottom linking all managers at all levels.
10. Order - Social order ensures the fluid operation of a company through authoritative
procedure. Material order ensures safety and efficiency in the workplace. Order should be
acceptable and under the rules of the company.
11. Equity - Employees must be treated kindly, and justice must be enacted to ensure a just
workplace. Managers should be fair and impartial when dealing with employees, giving
equal attention towards all employees.
12. Stability of Tenure of Personnel - Stability of tenure of personnel is a principle stating that
in order for an organization to run smoothly, personnel (especially managerial personnel)
must not frequently enter and exit the organization.
13. Initiative - Using the initiative of employees can add strength and new ideas to an
organization. Initiative on the part of employees is a source of strength for organization
because it provides new and better ideas. Employees are likely to take greater interest in
the functioning of the organization.
14. Esprit de Corps/Team Spirit - This refers to the need of managers to ensure and develop
morale in the workplace; individually and communally. Team spirit helps develop an
atmosphere of mutual trust and understanding. Team spirit helps to finish the task on time.

What is Management?

The organization and coordination of the activities of a business in order to achieve 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
management includes both marketing and innovation. Practice of modern management originates
from the 16th century study of low-efficiency and failures of certain enterprises, conducted by the
English statesman Sir Thomas More (1478-1535). Management consists of the interlocking functions
of creating corporate policy and organizing, planning, controlling, and directing an organization's
resources in order to achieve the objectives of that policy.

The directors and managers who have the power and responsibility to make decisions and oversee
an enterprise.
The size of management can range from one person in a small organization to hundreds or
thousands of managers in multinational companies.
What is finance?

Finance is a broad term that describes activities associated with banking, leverage or
debt, credit, capital markets, money, and investments. Basically, finance represents
money management and the process of acquiring needed funds. Finance also
encompasses the oversight, creation, and study of money, banking, credit, investments,
assets, and liabilities that make up financial systems.

What is budgeting?

Budgeting is the process of creating a plan to spend your money. This spending plan is
called a budget. Creating this spending plan allows you to determine in advance
whether you will have enough money to do the things you need to do or would like to
do.

What is investment?

An investment is an asset or item acquired with the goal of generating income or

appreciation. In an economic sense, an investment is the purchase of goods that are
not consumed today but are used in the future to create wealth. In finance, an
investment is a monetary asset purchased with the idea that the asset will provide
income in the future or will later be sold at a higher price for a profit.

Source of funds

Section within the statement of changes in financial position showing the increase in
funds for the accounting period. Funds are typically defined as working capital or cash.
Sources of working capital include: (1) working capital provided from operations (net
income plus nonworking capital expenses less nonworking capital revenue); (2)
decrease in noncurrent assets; (3) increase in noncurrent liabilities; and (4) increase in
stockholders’ equity. If funds are defined as cash rather than working capital, the
following two additional sources of funds are used: (1) decrease in current assets other
than cash; and (2) increase in current liabilities.