English for Management and Finance

NATURE AND SIGNIFICANCE OF

MANAGEMENT
Definitions:
Management is an art of getting things done through others. Management can be defined as, the process of getting
things done with the aim of achieving goals effectively and efficiently.

“Management is defined as the process of planning, organizing, and controlling an organization’s operations in order to
achieve coordination of the human and material resources essential in the effective and efficient attainment of
objectives.”
Robert L. Trewelly and M. Gene Newport

Concept of Management:
Management is a process that aims to bring the efforts of the people working in the organization to achieve a common
objective effectively and efficiently. (pool together the efforts of people) create of synergy of skills

Efficiency and Effectiveness: Efficiency means doing the task correctly at minimum cost while effectiveness means
completing the task correctly. Although Efficiency and effectiveness are different but they are interrelated. It is
important for management to be both i.e. effective and efficient.
1. Goal oriented Process : It is a goal oriented process, which is undertaken to achieve already specified and desired
objectives.

1. Pervasive : Management is pervasive in nature. It is used in all types of organizations whether economic, social or
political and at every level.

2. Multidimensional : It is multidimensional as it involves management of Work, People and operations.

3. Continuous : It is a continuous process i.e. its functions are being performed by all managers simultaneously. The
process of management continues till an organization attais its objectives.

4. Group Activity : It is a group activity since it involves managing and coordinating activities of different people as a
team to attain the desired objectives.

5. Dynamic function : it is a dynamic function since it has to adapt to the changing environment.

6. Intangible Force : It is an intangible force as its effects are felt in the output (whether the objectives are met and
whether people are motivated or not).
Objectives of management
(A)Organizational objectives of Survival (Earning enough revenues to cover cost); Profit (To Cover cost and risk);
& Growth (To improve its future Prospects).
(B) Social Objectives of giving benefits to society like using environmental friendly practices and giving
employment to disadvantaged sections of society etc.
(C)Personal Objectives because diverse personal objectives of people working in the organization have to be
reconciled with organizational objectives.

Importance of management
(1) Achieve Group Goals : Management helps in achieving group goals. Manager give common direction to the
individual effort in achieving the overall goal of the organization.
(2) Increase Efficiency : Management increases efficiency by using resources in the best possible manner to reduce
cost and increase productivity.
(3) Create Dynamic Organization : Management helps in creating Dynamic organisation which could adopt
changing situations easily.
(4) Achieve Personal Objectives : Management helps in achieving objectives of individuals working in the
organization.
(5) Develop Society : Management helps in the development of society by producing good quality products,
creating employment opportunities and adopting new technology.
Management as an Art
Art refers to skillful and personal application of existing knowledge to achieve desired results. It can be acquired
through study, observation and experience. The features of art are as follows.
(1) Existence of theoretical knowledge: In every art, systematic & organized study material should be available
compulsorily to acquire theoretical knowledge.
(2) Personalized application: The use of basic knowledge differs from person to person and thus, art is a very
personalized concept.
(3) Based on practice and creativity: Art involves the creative practice of existing theoretical knowledge.
All the features of art are present in management so it can be called an art.

Management as a science
Science is a systematized body of knowledge that is based on general truths which can be tested anywhere, anytime.
The features of science are as follows:
(1) Systematized body of knowledge based on principles and experiments.
(2) Principles based on experiments and observation
(3) Universal Validity

Management has systematic body of knowledge and its principles are developed over a period of time based on
repeated experiments & observation, which are universally applicable. As the principles of management are not as exact
as the principles of pure science, so it may be called inexact science.
Management as a profession :
Profession means an occupation for which specialized knowledge and skills are required. The main features of
profession are as follows.
(1) Well-defined body of knowledge
(2) Restricted entry : educational qualifications.
(3) Professional Associations : All professions are affiliated to a professional association which regulates entry and
frame code of conduct relating to the profession.
(4) Ethical code of conduct : All professions are bound by a code of conduct which guides the behavior of its
members
(5) Service Motive : The main aim of a profession is to serve its customers.
Levels of Management : Top, Middle and operational levels.

Top Level
Consists of Chairperson, Chief Executive Officer, Chief Operating Officer or equivalent and their team. Chief
task is to integrate and to coordinate the various activities of the business, framing policies, formulating
organisational goals & strategies.

Middle Level
Consists of divisional heads, Plant Superintendent and Operations Manager etc. Main tasks are to interpret the
policies of the top management, to ensure the availability of resources to implement Policies & to coordinate all
activities, ensure availability of necessary personnel & assign duties & responsibilities to them.

Lower Level / Supervisory Level

Consists of Foremen and supervisors etc. Main task is ensure actual implementation of the policies as per
directions, bring workers grievances before the management & maintain discipline among the workers.
Functions of Management : Planning, Organizing, Staffing, Directing and Controlling.

Planning is deciding in advance what to do in future and how to do it.

Organizing is to assign duties, grouping tasks, establishing authority and allocating resources required to carry out
a specific plan.

Staffing is finding the right people for the right job.

Directing is leading, influencing and motivating employees to perform the tasks assigned to them.

Controlling is monitoring the organizational performance towards the attainment of organizational goals.

Coordination : The essence of Management

Coordination is the force which synchronizes all the functions of management and activities of different
departments.
It integrates the group efforts. It ensure unity of action. It is a continuous process.
It is an all pervasive function. It is a deliberate function. It is the responsibility of all managers
 FINANCIAL MANAGEMENT:

Financial
Functions and Importance
Management
Financial Management means planning, organizing, directing and controlling the financial activities such as
procurement and utilization of funds of the enterprise.

 It means applying general management principles to financial resources of the company.

 Financial – planning, obtaining, and managing the
company’s funds in order to accomplish its objectives.

 Maximizing overall worth (the turnover) rate (figures )


Meeting expenses (overheads=charges=costs) / ASSETS/LIABILITIES

PROFIT MARGIN


Investing in assets (to tie up money in property)

Increasing profits to shareholders (the dividens)
Return on investment
Scope/Elements

 Investment decisions

 includes investment in fixed assets (called capital budgeting).

 Investment in current assets are also part of investment decisions called working capital
decisions.
The turnover
Investment Decisions

 Most important of the three decisions. What is the optimal firm

 size?
 What specific assets should be acquired?
 What assets (if any) should be reduced or eliminated?
Asset Management Decisions

 How do we manage existing assets efficiently?

 Financial Manager has varying degrees of operating
responsibility over assets.
 Greater emphasis on current asset management than fixed asset
management.
Objectives of Financial Management

 The financial management is generally concerned with

procurement, allocation and control of financial resources of a
concern.

The objectives can be-

 To ensure regular and adequate supply of funds.

Objectives
Management

 To ensure adequate returns to the shareholders which will depend upon

the earning capacity, market price of the share, expectations of the
shareholders.
Objectives
Management

 To ensure optimum funds utilization.

 Once the funds are procured, they should
be utilized in maximum possible way at least
cost

 . To ensure safety on investment, i.e, funds

should be invested in safe ventures so that
adequate rate of return can be achieved.
Objectives

 To plan a sound capital structure-

 There should be sound and fair composition of capital so that a balance is

maintained between debt and equity capital.
Functions of Financial Management

 Estimation of capital requirements:

 A finance manager has to make estimation with
regards to capital requirements of the company.

 This will depend upon expected costs and profits

and future programmes and policies of a concern.
Functions of Financial Management
Management

 Investment of funds:

 The finance manager has to decide to allocate

funds into profitable ventures so that there is safety
on investment and regular returns is possible.
Functions of Financial Management
Management

 Management of cash:
 Finance manager has to make decisions with
regards to cash management.
 Cash is required for many purposes like payment of
wages and salaries, payment of electricity and
water bills, payment to creditors, meeting current
liabilities, maintenance of enough stock, purchase
of raw materials, etc.
Functions of Financial Management
Management

 Financial controls:
 The finance manager has not only to plan, procure
and utilize the funds but he also has to exercise
control over finances.

 This can be done through many techniques like ratio

analysis, financial forecasting, cost and profit
control, etc.
Financial Planning
Importance of
Financial Planning

 Financial Planning is process of framing objectives,

policies, procedures, programmes and budgets
regarding the financial activities of a concern.

 This ensures effective and adequate financial and

investment policies.
Importance of
Financial Planning

 Financial Planning helps in ensuring a reasonable

balance between outflow and inflow of funds so
that stability is maintained.

 Financial Planning ensures that the suppliers of

funds are easily investing in companies which
exercise financial planning
Importance of
Financial Planning

 Financial Planning helps in making growth and

expansion programmes which helps in long-run
survival of the company.

 Financial Planning reduces uncertainties with

regards to changing market trends which can be
faced easily through enough funds.
REMINDER
 Writing activity: (paper writing: submission deadline: March 26, 2023)

• Topic: Financial Management and Digitalization: Challenges, Opportunities and Prospects

 Public speaking on Management issues (March 25, 2023)

 Case studies:
here are a few examples of Moroccan companies that have effectively used financial planning:
By implementing robust financial planning strategies, companies can manage risk, control costs, and invest in
growth, all while maintaining strong financial performance.

1. Attijariwafa Bank: Attijariwafa Bank is one of the largest banks in Morocco, and it has been recognized for
its effective financial planning. The bank has implemented a variety of financial planning strategies, including
a robust budgeting process, cash flow forecasting, and risk management. The bank's focus on financial
planning has helped it to weather economic downturns and maintain stability in the face of financial
uncertainty.
2. Maroc Telecom: Maroc Telecom is a leading telecommunications company in Morocco, and it has also
been recognized for its effective financial planning. The company has implemented a range of financial
planning strategies, including cost control measures, capital investment planning, and debt management. By
carefully managing its finances, Maroc Telecom has been able to invest in new technologies and expand its
operations, while maintaining strong financial performance.
3. OCP Group: OCP Group is a leading fertilizer producer in Morocco, and it has been recognized for its
effective financial planning. The company has implemented a range of financial planning strategies,
including risk management, cost control measures, and capital investment planning. OCP Group's focus
on financial planning has helped it to maintain strong financial performance, even in the face of economic
uncertainty.
4. BMCE Bank: BMCE Bank is another leading bank in Morocco, and it has been recognized for its effective
financial planning. The bank has implemented a range of financial planning strategies, including risk
management, capital investment planning, and cost control measures. By carefully managing its finances,
BMCE Bank has been able to expand its operations and maintain strong financial performance, even during
challenging economic times.
 How can financial performance be measured
in small and medium-sized companies?
1.Profitability Ratios: These ratios measure a company's ability to generate profits from its operations.
Examples include gross profit margin, net profit margin, return on assets (ROA), and return on equity
(ROE).

2.Liquidity Ratios: These ratios measure a company's ability to meet its short-term financial
obligations. Examples include current ratio and quick ratio.

3.Debt Ratios: These ratios measure a company's ability to manage its debt levels. Examples include
debt-to-equity ratio, debt-to-assets ratio, and interest coverage ratio.

4.Efficiency Ratios: These ratios measure a company's ability to use its assets efficiently to generate
revenue. Examples include asset turnover ratio and inventory turnover ratio.

5.Cash Flow Metrics: These metrics measure a company's ability to generate and manage cash flow.
Examples include cash flow from operations, free cash flow, and cash conversion cycle.
 How can a financial manager keep the stability of
the financial performance of a company?

1.Develop and maintain a financial plan: A financial plan should include a budget, cash flow forecast, and
financial projections. By regularly reviewing and updating the financial plan, the financial manager can help
ensure that the company is on track to meet its financial goals.

2.Monitor key financial metrics: The financial manager should regularly monitor key financial metrics such as
revenue growth, profitability, cash flow, and liquidity. This will help identify potential issues early on and allow
for prompt action to be taken to address them.
3. Manage risks: The financial manager should identify and manage risks that could impact the company's
financial performance. This includes risks related to market conditions, competition, and regulatory changes.

4. Optimize financial resources: The financial manager should optimize the use of the company's financial
resources by making informed decisions on investments, financing, and working capital management.

5.Foster communication and collaboration: The financial manager should work closely with other departments in
the company to ensure that financial considerations are integrated into business decisions. They should also
foster communication and collaboration to ensure that everyone is aligned with the company's financial goals
and objectives.
 How can financial management create value for the company

1.Efficient Allocation of Resources: Financial management helps in identifying the best use of financial
resources, such as investments in new projects, research and development, or expansion plans. By
allocating resources efficiently, the company can increase its profitability, generate higher returns, and
ultimately increase its value.

2. Effective Cash Flow Management: Cash flow management is a crucial aspect of financial
management, which helps in managing the inflow and outflow of cash. Effective cash flow management
can help the company maintain liquidity, avoid cash crunches, and make timely payments to suppliers
and creditors, which can improve the company's financial health and increase its value.

3.By developing sound financial plans and forecasts, the company can make informed
decisions, identify potential risks and opportunities, and ultimately increase its value.
How can human resources help financial planning?

1.Workforce Planning: by forecasting workforce needs based on business growth plans, identifying potential
skills gaps and developing plans to fill them, and identifying opportunities to optimize workforce productivity.
This information can help in financial planning by providing estimates of labor costs, which can help in
budgeting and forecasting.

2. Compensation and Benefits Management: Human resources manages employee compensation and
benefits, which can be a significant expense for the organization. By tracking and analyzing compensation
and benefits data, human resources can help in identifying areas where the organization can save money or
reduce costs. This information can help in financial planning by providing estimates of labor costs and benefits
expenses.
How is financial performance important to the company?

1.Attracting Investors: A company's financial performance is one of the most critical factors that investors
consider when deciding whether to invest in a company. Good financial performance can attract new investors
and help the company raise additional capital, which can be used to fund growth and expansion.

2. Access to Financing: A company's financial performance is also essential in obtaining financing from banks
and other financial institutions. Good financial performance can help the company secure favorable loan
terms, lower interest rates, and better financing options.
3. Growth and Expansion: A company's financial performance is directly linked to its ability to fund growth and
expansion. Strong financial performance can help the company invest in new projects, research and
development, and expansion plans, which can help the company stay competitive and grow its market share.

4. Competitive Advantage: Good financial performance can give a company a competitive advantage by
allowing it to offer better products or services, invest in innovation and technology, and attract and retain top
talent.

5. Stakeholder Confidence: A company's financial performance is critical to maintaining stakeholder

confidence, including customers, suppliers, employees, and shareholders. Good financial performance can
help build trust and credibility with stakeholders, which can lead to long-term loyalty and support.
5. Employee Retention and Engagement: Employee turnover can be a significant expense for the organization.
Human resources can help in identifying factors that contribute to employee turnover and develop strategies to
improve employee retention and engagement. By reducing turnover, the organization can save money on
recruitment and training expenses, which can positively impact financial planning.

6. Risk Management: Human resources plays a critical role in managing regulatory risks related to employment
laws, regulations, and labor practices. By identifying and managing these risks, human resources can help in
modifying potential legal and financial risks for the organization, which can positively impact financial planning.
what needs to be done when the financial planning is not efficient?

1.Analyze Financial Data: The first step in improving financial planning is to review and analyze financial data,
including historical financial statements, budgets, and forecasts. This will help identify areas where financial
planning is not efficient, such as inaccurate revenue projections, high expenses, or poor cash flow
management.

2. Identify the Root Cause: This may involve reviewing processes and procedures, assessing the skills and
capabilities of the finance team, or analyzing external factors such as market conditions or changes in
regulations.

3. Develop an Action Plan: Once the root cause has been identified, an action plan should be developed to
address the inefficiencies. This may involve implementing new processes and procedures, investing in training
and development, or leveraging technology to improve financial planning and analysis.
4. Monitor and Measure Progress: After implementing the action plan, it is important to monitor and measure
progress to ensure that financial planning is becoming more efficient. This may involve tracking key
performance indicators (KPIs) such as revenue growth, profit margins, and cash flow, and comparing them to
industry benchmarks or historical data.

5. Continuously Improve: Financial planning is an ongoing process, and it is essential to continuously

improve and refine it. This may involve regularly reviewing and updating financial plans, conducting regular
performance assessments, and staying up-to-date with market trends and best practices.