Department of Collegiate and Technical Education

GOVERNMENT POLYTECHNIC, KARWAR

FUNCTIONAL MANAGEMENT (15CP32 T)
(IIIR SEMESTER)
COMMERCIAL PRACTICE
BY
GUNAVANT V GUNAGI
LECTURER IN COMMERCIAL PRACTICE,
GOVT. POLYTECHNIC, KARWAR
 Unit 1
FUNCTIONAL MANAGEMENT
 Table of Content

• Introduction – Meaning-Defination-Features
• Principles of Management
• Importance of Management
• Levels of Management & Skills –Management Functions
• Manager-Managerial Skills-duties & Responsibilities of a Manager
• Functional Areas of Management
• Human Resources- Marketing-office—Operations-Finance.
Commercial Practice15CP31T
 Learning Objectives

• Course Objectives:

The students shall be able to:

To acquire knowledge of Management and its principles

To Analyse and apply the concepts of Management
and Principles.
Commercial Practice 15CP31T
 COURSE OUTCOMES : At the end of the course, the students will be able to:

Apply the Principles of Management in Business

 INTRODUCTION
Meaaning : Management is universal process in all organized, social and
economic activities. Wherever there is human activity, there is
management. Management is the art of getting thigs done through
people and directing the efforts of individuals towards a common
objective.

Defination:
According to Henry Fayol. “To manage is to forecast, to plan, to
organise, to command, to co-ordinate and control.” 

According to P. Drucker “Management is a multipurpose organ

that manages a business and manages manager, and manages worker
and work.” Commercial Practice 15CP31T
NATURES/CHARATERISTICS/OBJECTIVES/ OF MANAGEMENT
 Nature/Characteristics/Objectives of Management.

 Universal: All the organizations, whether it is profit-making or not, they require

management, for managing their activities. Hence it is universal in nature.

 Goal-Oriented: Every organization is set up with a predetermined objective and

management helps in reaching those goals timely, and smoothly.

 Continuous Process: It is an ongoing process which tends to persist as long as the

organization exists. It is required in every sphere of the organization whether it is
production, human resource, finance or marketing.

 Multi-dimensional: Management is not confined to the administration of people

only, but it also manages work, processes and operations, which makes it a multi-
disciplinary active.

 Social Process: Management is a social process. It takes place only through

NATURE/CHARACTERISTICS/OBJECTIVES OF MANAGEMENT

Good Leadership: Management implies good leadership. Management is the

Function of executive leadership everywhere .
Management at different levels: Management is needed at different levels of organisation at
Top level, Middle level and Lower level.
Need for Organisation: There is the need for organisation for the success of management.
Management uses the organisation for achieving the objectives determined by
administration.
Science as well as Art: Management is a science as well as an art.
Management is a Professional: Management is professional .
Directing and Controlling: Management is concerned with directing and controlling of the
various activities of the organisation to attain the pre-determined objectives.
OBJECTIVES OF MANAGEMENT

 Organised or Group activity: An organization consists of various members who have

different needs, expectations and beliefs. Every person joins the organization with a
different motive, but after becoming a part of the organization they work for achieving the
same goal. It requires supervision, teamwork and coordination, and in this way,
management comes into the picture.

 Dynamic function: An organization exists in a business environment that has various

factors like social, political, legal, technological and economic. A slight change in any of
these factors will affect the organization’s growth and performance. So, to overcome these
changes management formulates strategies and implements them.

 Intangible force: Management can neither be seen nor touched but one can feel its
existence, in the way the organization functions.
Principles of Management
1. Division of Work

Managers should divide work among individuals and groups. This ensures that effort and
attention will be focused on special portions of the work. Output can increase if employees
are specialized. This is because they become increasingly skilled and efficient in their
fields.

2. Authority
Fayol defined authority as “the right to give orders and the power to exact obedience.” The
managers should have the power to give orders. But they should also remember that with
authority comes responsibility.

3. Discipline
It is essential to maintain discipline. However, the methods for doing this can vary.
Successful company will need the common effort of workers. You can apply penalties to
inspire this common effort.
4. Subordination of Individual Interests to the General Interest
The interests of any one employee should never be given more importance than
the interest of the group. Even the manager’s interest comes after the group

5. Unity of Direction
Teams, which have the same goal, should work under one manager’s direction.
They should use one plan. This will guarantee that the action is coordinated properly.
Unity of direction means the entire firm will move in the same direction.

6. Equity
Managers must always be fair to staff. They are expected to maintain discipline
when needed and act with kindness when it seems right.
7. Remuneration
Fair remuneration should be given to everyone. This ensures employee satisfaction.
Remuneration includes both financial and non-financial compensation. There are many
variables which should be considered before deciding a worker’s rate of pay. Some of the
variables are:

 Cost of living
 Supply of qualified personnel
 General business conditions
 Success of the business
8. Centralization
Centralization refers to how involved employees are in the decision-making process. Managers
should aim for a suitable balance. Fayol defined this as “lowering the importance of the
subordinate role.” Decentralization means to increase the importance. The degree of
centralization or decentralization a firm should adopt depends on the specific organization.
7. Remuneration
Fair remuneration should be given to everyone. This ensures employee satisfaction.
Remuneration includes both financial and non-financial compensation. There are many variables
which should be considered before deciding a worker’s rate of pay. Some of the variables are:

 Cost of living
 Supply of qualified personnel
 General business conditions
 Success of the business
8. Centralization
Centralization refers to how involved employees are in the decision-making process.
Managers should aim for a suitable balance. Fayol defined this as “lowering the importance of the
subordinate role.” Decentralization means to increase the importance. The degree of centralization
or decentralization a firm should adopt depends on the specific organization.
 Principles of Management
9. Scalar Chain: This is the line of Authority or Chain of superiors running from
the highest rank to the lowest rank. The line authority should be followed
ordinarily or normally. However, when the strict following of the line of
authority becomes deterimental, the chain can be short –circuited.
10. Order: This is the principle of organisation in the arrangement of thigs
and persons. According to this principle, theremust be place for every thing
and everyone must be in its place.
11. Initiative : This principle imples that the managers of an undertakings
should permit their subordinates to take some initiative in thinking out and
executing plans.
FUNCTION OF MANAGEMENT
 FUNCTION OF MANAGEMENT

 Planning: It is the first and foremost function of management, i.e. to

decide beforehand what is to be done in future.Planning is deciding in
advance the future course of operation for a given period. It is course of
action. It implies decision making as to what to do, When to do it,
where to do it, who is to do it and how to evalute the result. It
encompasses formulating policies, establishing targets, scheduling
actions and so forth.

 Organizing: Once the plans are formulated, the next step is to organise
the activities and resources, as in identifying the tasks, classifying them,
assigning duties to subordinates and allocating the resources. It brings
together the manpower and material sources namely men, money,
machines, materials personal etc. And putting them into working order
FUNCTION OF MANAGEMENT
Controlling: The controlling function of management involves a
number of steps to be taken to make sure that the performance of
the employees is as per the plans. It involves establishing
performance standards and comparing them with the actual
performance. In case of any variations, necessary steps are to be
taken for its correction.
Coordination is an important feature of management which means
the integration of the activities, processes and operations of the
organization and synchronisation of efforts, to ensure that every element of
the organization contributes to its success.
 Function of Management
Communicating or Communication

Communicating means sharing a common idea or establishing a common ground of

understanding with some one. It is the process of passing information and
understanding from one person to another. Communication is the exchange of facts
and viewpoints among persons in an organisation or between organisations which bring
about commonness of interest, purpose and effort.
 FUNCTIONAL AREAS OF MANAGEMENT
• Management has several functional areas. It covers the following functional
areas.

1. Financial Management:
Financial Management includes financial planning, cost control, budgetary
control,Standard of costing, Profit Planning, Management accounting etc.
• 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 these questions is inherent in financial status.
• To conclude, it can be said that under financial management, finan cial needs of a business are met in
such a manner that its goals can easily be achieved
 2. Personnel Management
Personnel Management is that branch of management which is concerned
with the recruitment, selection, Training, Transfer,
Promotion,remuneration to labour , development and the optimum use of
the employees. In other words, personnel management is concerned with
the employees engaged at all levels of an organization.
• The following are the nature of Personnel Managementg
• 1. Managing People
• 2. Concerned with Employees
• 3. Helping employees
• 4. Universal Application
• 5. Continuous Application
3. Marketing Management:
Marketing Management deals with marketing of goods, channel of
distribution, Market Research, sales promotion, advertisement and publicity
etc., 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 of marketing activities.
(v) Controlling of marketing activities.
4. Production Management:
As far as manufacturing organization is concerned, production is a core function.
Production Management is concerned with the various aspects of production
such as plant location, plant layout, production planning, quality control and
inspection, production control etc., The entire production operations are to be
planned, organized, directed, coordinated and controlled.
The production activities encompass the following:
i. Product designing.
ii. Acquisition of materials.
iii. Storage of materials.
iv. Planning and controlling of factory operations.
v. Repairs and maintenance.
vi. Inventory and quality control.
vii. Research and development.
5. Cost Management:
Cost management is concerned to collect, evaluate, analyze, 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.

6. 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 
7.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.
8. 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 is an integral part of business. With the increasing complexities of
business activities, need and importance of office is inevitable.

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 equipment's in the office,
(vi) To correspond, and
(vii) To ensure the best use of the services of employees, and of all other sources.
 ANCE OF MANAGEMENT
in Achieving Group Goals - It arranges the factors of production,
and organizes the resources, integrates the resources in effective
achieve goals. It directs group efforts towards achievement of pre-
d goals. By defining objective of organization clearly there would be no
f time, money and effort. Management converts disorganized resources
achines, money etc. into useful enterprise. These resources are
ed, directed and controlled in such a manner that enterprise work
ttainment of goals.
um Utilization of Resources - Management utilizes all the physical
resources productively. This leads to efficacy in management.
ent provides maximum utilization of scarce resources by selecting its
ble alternate use in industry from out of various uses. It makes use of
rofessional and these services leads to use of their skills, knowledge, and
lization and avoids wastage. If employees and machines are producing
um there is no under employment of any resources.
 uces Costs - It gets maximum results through minimum input by proper
g and by using minimum input & getting maximum output. Management uses
l, human and financial resources in such a manner which results in best
ation. This helps in cost reduction.
ablishes Sound Organization - No overlapping of efforts (smooth and
ated functions). To establish sound organizational structure is one of the
e of management which is in tune with objective of organization and for
ent of this, it establishes effective authority & responsibility relationship i.e. who
ntable to whom, who can give instructions to whom, who are superiors & who
ordinates. Management fills up various positions with right persons, having right
aining and qualification. All jobs should be cleared to everyone.
ablishes Equilibrium - It enables the organization to survive in changing
ment. It keeps in touch with the changing environment. With the change is
l environment, the initial co-ordination of organization must be changed. So it
organization to changing demand of market / changing needs of societies. It is
ible for growth and survival of organization.
6. Essentials for Prosperity of Society - 

Efficient management leads to better economical production which helps in

turn to increase the welfare of people. Good management makes a difficult task easier
by avoiding wastage of scarce resource. It improves standard of living. It increases the
profit which is beneficial to business and society will get maximum output at
minimum cost by creating employment opportunities which generate income in
hands. Organization comes with new products and researches beneficial for society.

7. Increased Profits:
Profits can be increased in any organization either by increasing the sales
revenue or reducing cost. To increase the sales revenue is beyond the control of an
organization.
8. Smooth running of business : Management ensures efficient and smooth
running of business through better planning, sound organization, effective control
and the various tools of management.
 Importance Management
9. Provides Innovation
Management provides new ideas, imagination and visions to the
organisation.
10. Social Benefits
Management is beneficial not only to the business enterprises but
to the society as a whole. It raise the standard of living of the people by
providing good quality products and services at the lowest possible
cost.
LEVELS OF MANAGEMENT
p-Level Management: This is the highest level in the organizational
archy, which includes Board of Directors and Chief Executives. They
responsible for defining the objectives, formulating plans, strategies and
cies.
ddle-Level Management: It is the second and most important level in the
porate ladder, as it creates a link between the top and lower-level
nagement. It includes departmental and division heads and
nagers who are responsible for implementing and controlling plans and
tegies which are formulated by the top executives.
wer Level Management: Otherwise called as functional or operational
l management. It includes first-line managers, foreman, supervisors.
ower-level management directly interacts with the workers, it plays a crucial
in the organization because it helps in reducing wastage and idle time of the
kers, improving the quality and quantity of output.
action. (for doing something)

Management Skill or Managerial Skills

Meaning: Simply, managerial skills are the knowledge and ability of the
individuals in a managerial position to fulfill some specific management activities or
tasks

This knowledge and ability can be learned and practiced. However, they also
can be acquired through practical implementation of required activities and tasks.
Therefore, he can develop each skill through learning and practical experience as a
manager.

Types / Kinds of Managerial Skill or Management Skill

Those three Categories or types of Managerial Skills
•1. Technical skills,
•2. Conceptual skills and
•3. Human or interpersonal management
1. Technical Skills as One Part of Management Skills
As the name of these skills tells us, they give the manager’s knowledge and
ability to use different techniques to achieve what they want to achieve. Technical
skills are not related only for machines, production tools or other equipment, but
also they are skills that will be required to increase sales, design different types
of products and services, market the products and services, etc.

2. Conceptual Skills
Conceptual skills present knowledge or ability of a manager for more
abstract thinking. That means he can easily see the whole through analysis and
diagnosis of different states. In such a way they can predict the future of the business
or department as a whole.

Conceptual skills are vital for top managers, less critical for mid-level
managers, and not required for first-level managers. As we go from the bottom of the
managerial hierarchy to the top, the importance of these skills will rise.
3. Human or Interpersonal Managerial Skills

Human or interpersonal management skills present a manager’s

knowledge and ability to work with people. One of the most critical 
management tasks is to work with people. Without people, there will not be a need
for the existence of management and managers.
These skills will enable managers to become leaders and motivate
employees for better accomplishments. Also, they will help them to make more
effective use of human potential in the company. Simply, they are the essential
skills for managers.
Interpersonal management skills are essential for all hierarchical levels in
the company.
Duties and Responsibilities of a Manager
1. Daily Operations: The primary role of a manager is to ensure the daily
functioning of a department or group of employees.

2. Staffing: Most employers expect their managers to interview, hire, and train new
employees.

3. Set Goals: A manager articulates both short and long-term goals to ensure a
company’s longevity.

4.Liaising: Although a manager typically oversees a group of employees, managers

also effectively communicate with their bosses and convey the necessary information
to the various company parties.

5. Administration: Managers complete administrative work and correspond with

other departments.
MANAGER
Meaning: A manager is a person in the organisation who directs the activities of others.
The managers perform their work at different levels and they are called by different names.

Qualities of Manager
1. He must be decisive
2. He must be aggressive
3. He must self starting.
4. He must be well-informed
5. He must be determinate.
6. He should be efficient or productive
7. He must be creative
8. He must be intelligent.
9. He must be responsible
10.He must be enterprising
11.He must have clear cut thinking.
12.He must be positive in his approach to problems.
Role of Manager

1. Figurehead Role of Manager

Managers perform the duties that are ceremonial and symbolic in nature such as welcoming official visitors, signing legal
documents etc as head of the organization or strategic business unit or department.
2. Leadership Role of Manager
•All managers have a leadership role. The manager, as in charge of the organization / department, coordinates the work of others
and leads his subordinates.
•This role includes hiring, training, motivating and disciplining employees. Formal authority and functional authority provides
greater potential power to exercise and get the things done.

•10. Negotiator Role of Manager

•In this tole, the manager represents the organization in bargaining and negotiations with outsiders and insiders, in order to gain
advantages for his own unit. He negotiates with the subordinates for improved commitment and loyalty, with the peers for
cooperation, coordination and integration, with workers and their unions regarding conditions of employment, commitment,
productivity, with the government about providing facilities for business expansion etc.
•These negotiations are integral part of the manager’s job for only he has authority to commit organizational resources and has
nerve centre of information.
• 
3. Liaison Role of Manager
As the leader of the organization or unit, the manager has to perform the
functions of motivation, communication, encouraging team spirit and the like.
Further, he has to coordinate the activities of all his subordinates, which involves
the activity of liaison.
4. Monitoring Role of Manager
As a result of the network of contacts, the manager gets the information by
scanning his environment, subordinates, peers and superiors.The manager seeks
and receives information concerning internal and external events so as to gain
understanding of the organization and its environment. Typically this is done
through reading magazines and talking with others to learn the changes in the
public’s tastes, what competitors may be planning, and the like.Managers, mostly
collect information in verbal form often as gossip, hearsay, speculation and
through grapevine channels.
 Managers also perform a spokesperson role when they
5. Spokesman Role of Manager

represent the organization to outsiders. Manager is required to

speak on behalf of the organization and transmit information on
organization’s plan, policies and actions.

6. Entrepreneurial Role of Manager

As an entrepreneur, the manager is a creator and
innovator. He initiates and oversee new products that will
improve their organization’s performance.
7. Disseminator Role of Manager
Manager disseminates the information, he collects from different sources and through various
means. He passes some of the privileged information directly to his subordinates, peers and
superiors who otherwise have no access to it. This information is gathered by him from his
environments and from his own equals in the organization.
8. Disturbance Handler Role of Manager
As a disturbance handler, managers take corrective action to response to previously unforeseen
problems. Disturbance handler role presents the manager as the involuntarily responding to
pressures. Pressures of the situation are severe and highly demand the attention of the manager and
as such the manager cannot ignore the situation.
9. Resource Allocator Role of Manager
The most important resource that a manager allocates to his subordinates is his time. As a resource
allocator, managers are responsible for allocating human, physical and monetary resources.
Accordingly, setting up of a time schedule for the completion of an operation or approval of
expenditure on a particular project, etc., are the functions which the managers perform in the role of
a resource allocator.