Functional Areas of Management

Functional Areas of Management – Personnel Management, Financial

Management, Marketing Management, Production Management and a Few
Others

Functional areas of management mean the sum total of all those activities which
are performed in an organisation to achieve the objectives of the organisation.
These functions can be of different types but personnel, finance, marketing and
production activities have a special importance.

Some major functional areas are given below:

1. Personnel Management

2. Financial Management

3. Marketing Management

4. Production Management

5. Purchase Management

6. Development Management

7. Maintenance Management

8. Office Management

1. Personnel Management:
All means of production (men, materials, machines, money, etc.) may be divided into
two parts – active and passive. Active means include men while machines, materials,
money etc. belong to passive means of production. An enterprise may have large
quantity of passive means of production, such as, machines, materials and money but
the same are of no use if not properly utilized. These can be utilized properly only with
the help of active means, that is, human beings.

What is needed is that such human resource be made available as is perfectly efficient.
It is the job of personnel management to make efficient human resource available . In

order to fulfil this task, personnel department is established in large organisations. This
department functions under the supervision of personnel manager.
Functions of Personnel Management:

Personnel Management is that branch of management which is concerned with

the recruitment, selection, deployment , development and the optimum use of the
employees. In other words, personnel management is concerned with the
employees engaged at all levels of an organisation.

Objectives (5) of Personnel Management:

(1) To Provide able Employees:

First objective of personnel management is to provide able employees to the

organisation. Able employees alone can contribute to the achievement of the
objectives of the organisation.

(2) To Increase Employees’ Efficiency:

Proper selection of the employees is not sufficient for the success of the
organisation. Rather it is necessary to add to their efficiency continuously.
Personnel manager performs this function by arranging training for the
employees.

(3) To Develop Team-Spirit:

It is the objective of personnel management to inculcate team-spirit among all the

persons employed in the organisation. Objectives of the enterprise can easily be
achieved in this way.

(4) To Develop Cordial Industrial Relations:

The aim of the personnel management is to develop a spirit of goodwill,

confidence and mutual respect between the labourers and the employers. Such a
spirit makes industrial relations cordial.

(5) To Develop Congenial work Environment:

The environment of work in which the employees have to work has great effect
on their efficiency. Clean and healthy environment increase their efficiency. It is,
therefore, the function of personnel management to provide good work
environment.

Nature of personnel management is clear from the following facts:

(1) It is Related with People :

Personnel management is concerned with human resource. Its scope extends to

employees working in an organisation at all levels. It includes recruitment of employees,
selection, training, job evaluation, determination of remuneration, provision of good
working conditions etc. In short, every activity of personnel management relates with
people.

(2) It is a Pervasive Function:

Nature of personnel management is all pervasive. Pervasive here means that the
function of personnel management is performed at all levels of management. In
other words, managers at all levels perform this function with respect to their
employees. In fact, the function of personnel management is performed by a
separately established personnel department.

But it is necessary here to make it clear that establishment of this department

does not relieve other managers of their personnel management function. Rather
the objective of the establishment of this department is only to help other
managers to accomplish their function of personnel management. However, its
final responsibility remains with all the concerned managers.

(3) It is a Multiple-Objective Function:

Nature of personnel management is multi-objective.

It has to achieve three objectives at the same time:

(i) Organisational Objective:

As an organisational objective, personnel management has to make maximum

utilisation of the available labour resources possible in an organisation.
(ii) Employee Satisfaction Objective:

Another objective of personnel management is to satisfy the employees by

ensuring proper remuneration, promotion, training, etc.

(iii) Social Objective:

To maintain industrial peace is the social objective of personnel management.

(4) It is a Group of Personnel Activities:

Under personnel management comes several activities concerning employees. It is

therefore called a group of personnel activities. Main personnel activities are
recruitment, selection, training, job evaluation, fixation of remuneration, etc.

(5) It Requires the knowledge of Psychology:

Personnel management deals with human resource of production. Every individual

working in an organisation has his own desires, expectations and tastes. In order to get
maximum work out of his subordinates, a manager has to keep in mind all these things.
Managers must, therefore, have knowledge of human psychology

Role of Personnel Manager:

In modern organisations, a personnel manager performs not one but many

roles which are mentioned below:

(1) As a Line Executive:

Personnel manager is the head of personnel department. In order to discharge

the responsibility of his department when he performs the functions of
recruitment, selection, training, etc. he acts as a line executive. The
characteristic of a line executive is that he is directly responsible for his activities.

(2) As a Staff Executive:

When a personnel manager advises heads of other departments regarding

solution to the problems relating to their employees, then he acts as a staff
executive. It is the feature of a staff executive that he is not answerable for the
results of his advice.

(3) As a Counsellor:

When a personnel manager listens to the problems of different employees

working in the organisation and brings the same to the notice of general
manager, then he plays the role of a counsellor. He gives his advice to the
general manager regarding solution to these problems.

(4) As a Mediator:

When a personnel manager seeks to solve dispute between management and

employees, then he plays the role of a mediator. Many times he also acts as a
mediator to resolve inter-personnel disputes.

(5) As a Representative:

A personnel manager represents his organisation in the meeting convened by

the government and non-government organisations to find solution to the
problems of employees. Thus he also plays the role of a representative.
Financial Management:

The major objective of any business concern is to make profit for its owners by
selling goods or services. To reach this goal finance is required. In this context it
can be said that finance is the soul of any business concern. Keeping this in
view, the proper management of finance is absolutely necessary.

In every business, three main questions which arise regarding finance are –

(i) How much finance will be required for different business activities?
(ii) How much of it will be obtained from different sources? And
(iii) How profit earned from different business activities will be distributed?

Answer to all above questions is inherent in financial management.

In other words, it can be said that under financial management, first of all, need
for finance is estimated and then different sources of obtaining finance and its
quantum are determined and finally arrangements are made for the distribution
of profit.

To conclude, it can be said that under financial management, financial needs of a

business are met in such a manner that its goals can easily be achieved.

Scope or Aspects of Financial Management:

Regarding scope or aspects of financial management there are two approaches.

One, traditional approach and two, modern approach. According to traditional
approach, procurement of necessary finance for a business is called financial
management. Under modern approach scope of financial management is seen in
a wider perspective. It includes not only procurement of finance but also its
efficient utilization. Modern thinkers have made a mention of three important
decisions taken by a financial manager.

The same area as under:

(1) Investment Decision:

Investment decision refers to the selection of those assets in which investment is

to be made by the business or the assets which are to be purchased for running
the business.

Assets which are obtained by the business are of two types:

(i) Fixed assets and

(ii) Current assets.

On the same basis, investment decision is also divided into two parts:

(i) Fixed Assets Investment Decision:

In order to take this decision, the financial manager must know what assets are
required to be bought for other departments like production department,
purchase department, sale department, etc. For example- production department
is in need of a machine for producing a particular commodity. On receipt of this
information from production department, financial manager has to decide which
of the different alternatives (different machines) available in the market is the
best for producing that particular commodity.

In order to make selection of the best alternatives, cost-benefit analysis of

different alternatives is undertaken. That alternative is selected which yields
more profit at less cost. Decision regarding investment in fixed assets is called
Capital Budgeting.

(ii) Current Assets Investment Decision:

Current assets include mainly Cash, Stock, Debtors, etc. Financial manager has
to ensure that there is adequate investment in current assets. By adequate
investment is meant that investment in these assets should be so much as to
meet the daily liabilities of the business on time. In other words, liquidity of the
business must be maintained. It may however be mentioned here that if the
amount of current assets is large, liquidity position of the business will improve
but profitability will go down.

On the contrary, if the amount of current assets is less than required, it will add
to the profitability of the business but liquidity position is adversely affected .
Thus, the financial manager has to decide about the optimum amount of
investment in current assets. Decision regarding investment in current assets is
called management of working capital.

(2) Financing Decision:

The other decision by financial manager relates to different sources from where
finance is to be procured to meet the requirements of the business. He is to
ascertain the different sources from where the necessary finance is to be
mobilized and in what amount. This question relates to capital structure. Capital
structure is the sum of debt capital and share capital.

There should be a proper balance between debt and share capital as it

influences the market price of the shares and cost of capital. Such a capital
structure as makes use of proper amount of debt capital is called optimum capital
structure. Such a capital structure has the attribute of maximum market price of
shares and minimum cost of capital.

(3) Dividend Decision:

How much of the total profit be distributed among the shareholders as dividend
and how much be retained by the business as reserve, is another decision that a
financial manager has to take. Shareholders want that they should get maximum
dividend and the managers want that maximum profit be retained as reserve to
meet the future requirements of the business.

The financial manager has to strike a balance between these two demands on
profit, so that both the parties are satisfied. This decision is also called disposal
of surplus decision.

Marketing Management:
Marketing management refers to all managerial activities relating to marketing.
Marketing includes all those activities ranging from knowing the needs of the
consumers to their satisfaction. On the other hand, management includes
planning, organising, staffing, directing and controlling. Performing of all
managerial functions in the context of marketing is called Marketing
Management.

Thus, main activities of marketing management are as under:

(i) Planning of marketing activities.

(ii) Organising of marketing activities.

(iii) Staffing for accomplishing marketing activities.

(iv) Directing the marketing activities.

(v) Controlling of marketing activities.

Objectives of Marketing Management:

Main objectives of marketing management are as under:

(1) To Ensure Consumer Satisfaction:

Prime objective of marketing management is to ensure consumer satisfaction. To

achieve this objective, marketing manager makes an intensive study of the needs
of the consumers. Production and distribution of goods are in tune with their
needs.

(2) To Serve the Society:

Under marketing management, marketing manager plays an important role in

discharging the social obligation of the business. To this end, his constant
endeavour is to produce good quality products, to supply goods and services at
reasonable prices, to avoid false promises through publicity media, to ensure
good behaviour to the customers, etc. As a result of this effort, on the one hand,
social obligation of the business is fulfilled and on the other, its goodwill is
enhanced.

(3) To Increase the Market Share:

Increase in market share means increase in sales. Aim of a marketing manager

is to bring under his possession a large part of the market. With a view to
increasing the sale of goods and services, he adopts all means of sales
promotion, such as, free samples, exhibition, discount sales, etc.

(4) To Generate Maximum Earning for the Business:

Marketing alone is such a business activity as yields income. It is quite clear, that
in the absence of profit no business can last for long. It is, therefore, the
objective of the marketing manager to generate maximum earning for the
business while keeping in mind full satisfaction of the consumers.

(5) To Perform the Marketing Function Efficiently:

Marketing functions include – marketing research, product planning, purchase,

sale, branding, packing, pricing, advertising, etc. Marketing manager is
responsible for performing all these functions. He is expected to accomplish it
efficiently. Thus, an important function of the marketing manager is to perform
efficiently all these functions.

(6) To Perform the Managerial Activities in Reference to the Marketing

Efficiently:

With a view to performing marketing functions, marketing manager has to plan,

organise, direct and control them. It is the objective of the marketing manager
that he should perform all managerial activities efficiently.

Functions of Marketing Management:

Functions of marketing management refer to those activities which are carried

out to achieve the objectives of marketing. In the first instance, marketing
objectives are determined. Then to achieve the same, need is felt for planning,
organising, staffing, directing and controlling of marketing activities. These are,
as a matter of fact, functions of marketing management.

Their brief description is as under:

(1) Planning of Marketing Activities:

First of all, planning of marketing activities is done in order to achieve marketing

goals or to perform marketing activities. Here planning means to determine
when, how, where and by whom different marketing activities are to be
conducted.

(2) Organising of Marketing Activities:

In order to conduct different activities (purchase, assemble, sale, storage,

transportation, packing, pricing, advertising, marketing research, etc.) the same
are divided into some groups. Under grouping, a special post is created to carry
out similar kind of activities. Rights and duties of different posts so created are
clearly defined. Who will be the officer and who will be the subordinates are also
decided?

(3) Staffing for Marketing Activities:

Under this function, appointments are made to do different marketing activities.

In big organisations, personnel department is established for making
appointments. Marketing manager helps personnel manager to secure staff for
his department.

(4) Directing of Marketing Activities:

Directing refers to giving of proper guidance to persons working on different

posts so that they may discharge their duties efficiently. Under this function,
marketing manager supervises his subordinates, provides them good leadership
and from time to time motivates them.
(5) Controlling of Marketing Activities:

By controlling of marketing activities is meant review of marketing activities from

time to time so that deviations could be traced out. In case of negative deviation,
the same is removed by taking corrective action immediately.

Advertising is any form of paid non-personal presentation of ideas, goods or

services for the purpose of including people to buy. According to Sheldon –
‘Advertising is a business force, which through the printed words, sells or help
sales, builds reputation and foster goodwill.’

It aims to introduce new products, to enhance product acceptance and to create

new customers etc. It emphasise and influence the buying decision and to get
public participation in selling the products.

Production Management:

Production is an important and specific part of the entire business. It performs all
the managerial functions like planning, decision making, organising, coordination,
direction and control for the production and manufacturing process in any
concern. It aims to determine and prepare product planning, plant layout, select
the production systems, the requirement of raw material, equipment, machineries
and different infrastructural facilities. It has the major parts like product planning,
product standards and norms, manufacturing process, work performance and
research and development etc.

The production management is needed by the manufacturing organisations.

These organisations change the form of the raw material and make it more
useful.

This functional area of management includes the following activities:

(i) To anticipate the production activities,

(ii) To determine the kind and quantity of the goods to be produced,

(iii) To make provision for the raw material well in time,

(iv) To plan and control production,

(iv) To determine the need of the employees of the production department

and

arrange for the recruitment and selection process,

(vi) To conduct the time and motion study,

(vii) To determine the method of production,

(viii) To control the quality of the goods produced, etc.

Purchase Management:

Purchase management means planning and controlling purchase. It means to

determine as to what goods are to be purchased, where to purchase from, when
to purchase, etc.

The following are the main functions to be performed under the purchase
management:

(i) To obtain the requisition letter of purchase,

(ii) To make enquiry before purchase,

(iii) To place orders for purchase of goods,

(iv) To receive the goods,

(v) To arrange for the storing of goods,

(vi) To control the receipt of goods, its stock and issue.

Development Management:
Development management is related with the management of research activities.

The following activities are performed under it:

(i) To develop new production process,

(ii) To carry on research in relation to the goods, machines and implements used
in the process of production,

(iii) To develop new products,

(iv) To discover new substitutes for raw material.

Office Management:
Office means a place for where the different activities of the organisation are
planned and controlled. To run this place in a planned manner is called office
management. It is the place from where the employees are given directions and
guidance.

Office management is a pivot and central point of the business management. In

fact, all the activities, performance, directions and policy implementation are
directed and controlled over this focal point. It manages and maintain all the
records and accounts relevant to different sections and departments of the
concern.

The office management includes the following activities:

(i) To prepare accounts and keep them safe,

(ii) To provide for effective communication,

(iii) To lay down plans,

(iv) To establish coordination among different departments

(v) To provide all the necessary equipments in the office,

(vi) To correspond, and

(v) To ensure the best use of the services of employees, and of all other
sources.
Cost Management:

Cost management is concerned to collect, evaluate, analyse, account and

classify the expenditures relating to the activities of the concern. It deals to
manage, organise, coordinate and control all the direct and indirect components
of the cost of different tasks. It includes different aspects particularly the
elements of cost, cost estimation, calculation of cost, cost structure and variation
between estimated cost and actual cost etc.

Accounting Management:

Accounting management is also an important part of functional management. It

includes the systems, procedures, documents and records concerning the
financial managerial and cost management etc. It aims to manage and maintain
the accounts, records, statements and other informative documents to be used in
these accounting area.

Maintenance Management:

It is the responsibility of this functional area of management to keep the ship in

working condition. If the machines of the engine room are not in proper
condition, the efficiency of the employees will certainly be reduced. It will,
therefore, not be satisfying both for the owner and the employees. Therefore,
maintenance management is important for both the categories.

The chief functions of the maintenance management are given below:

(i) To keep the machines and implements in proper condition,

(ii) To ensure the cleanliness of the ship and its engine room.,

(iii) To plan for ensuring maintenance, Must have a planned maintenance (PMS)
in place.

(iv) To control the maintenance activities, etc.

Communication Management:

According to Newman and summer – ‘Communication is an exchange of facts,

ideas, opinions or emotions from one person to another.’ In any business
organisation, information are used for making and implementing different targets
and policies for the achievements of organisational objectives.

The communication management organise a mutual process to make more

reliable and integrated relations, to determine plans and policies, making sound
decisions, coordination and to develop motivational aspects within different
multidimensional structure in business organisation.

On board ship we have internal communication and external communication.

Public Relation Management:

The objectives of public relations is not the sale a product but to produce a
favourable image of a concern and improve on it, if necessary. It is a media and
have a two way communication with the society. Within business scenario, the
public relations management perform the tasks like products’ publicity,
promotional programmes, social services, community relations, advisory
functions, welfare amenities and civil affairs etc.

Environmental Management:

It is also an important part of business area. It analyses and evaluates different roles of
environmental factors and their consequence effects on the working and performance of
business concern. The major factors to be considered are consumers’ demand, supply
of product, price level, level of competition, new technology, Government rules and
different demographical aspects etc. It develops and manage various measures and
devices to make better environmental situation.
Service Management:

According to Philip Kotler – ‘A service is any activity or benefit that are being
offered to another that is essentially intangible and does not result in the
ownership of anything. In business concern, the service area is an important and
decisional part to raise the customisation, value added aspects, customers’
relationship pattern and customers’ retention etc. The services can also provide
market opportunities, product images, customers’ cares and products’ reliability
etc., in the market.’

Quality Management:

Basically the concept of total quality is the notion that excellences is essential in
all the functions of business and its allied activities. It aims to manage
specialisation, raise the productivity, better work performance, create reliability in
product and services, optimum utilise the resources, and raise the level of
customers’ satisfaction etc.

Research and Development Management:

Today it is needful to make some worthwhile coordination and follow the different
aspects of changing environment. With the emerging issues like innovations,
change environment, technological upgradation, professionalism, social values,
service patterns and new behavioural approaches, there is a need to manage the
research investigation and organise the developmental activities at large.

In any business, within the purview of strategical and operational planning, there
is a needful area to develop the research and developmental task properly. It
aims to make optimum allocation and utilisation of resources, quality
maintenance, process control, innovative concepts, cost control, performance
measures and time management etc.