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Principles of Management
FUNCTIONS OF MANAGEMENT 
Management has been described as a social process involving responsibility for economical and
effective planning & regulation of operation of an enterprise in the fulfillment of given purposes. It is
a dynamic process consisting of various elements and activities. These activities are different from
operative functions like marketing, finance, purchase etc. Rather these activities are common to each
and every manger irrespective of his level or status. 

Different experts have classified functions of management. According to George & Jerry, “There are
four fundamental functions of management i.e. planning, organizing, actuating and controlling”.
According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to
control”. Whereas. Planning, Organizing, Leading and Controlling. For theoretical purposes, it may
be convenient to separate the function of management but practically these functions are overlapping
in nature i.e. they are highly inseparable. Each function blends into the other & each affects the
performance of others.

1.Planning
Planning involves deciding on the course of action of the organization. Once the plan is finalized, the
resources of the business will be used accordingly. Planning for the future of the organization involves
setting aims or targets. For example, ‘a school will aim to increase its sixth form to over 200 students
in two years time’ or ‘we should plan to increase sales of our new fruit juice range by 50% in three
years.

These aims or targets will give the organization a sense of direction or purpose. There will be a
common feeling in the organization of having something to work towards. It is a poor manager who
does not plan for the future at all.

Moreover, to these aims, a manager must also plan for the resources which will be needed. For
example, to be able to achieve the aim of increasing student numbers in the sixth form, there is a need
to build a new sixth form centre. Another example is that to be able to increase the sale of the fruit
juices, an increase in advertising expenditure have to be done. Thus, these are 2 cases of strategies
which are designed to help the business achieve its aim.

Uses of business planning:

It helps to plan for the future.
It helps management to better understand the business and the market in which it operates.
It enables management to identify the main causes of action needed to start and run the business.
Also, it helps to set objectives against which the performance of the business can be measured.
A business plan allows an entrepreneur to present a request for extra funding. A business plan would
provide all information, a potential landed or investor will need to decide whether they wish to invest.
Even after the business has been set-up and running, a business plan continues to be an essential
planning tool. It will provide regular checks on the progress regarding cash flows, financial forecast
and objectives of the business.

The content of a business plan:

Business description: It includes the starting date, history of the business, the type of business it is, the
legal structure objectives of the firm.
Product or services: In this case, there is a need for the description of product or service being
produced and sold, benefits to consumers from consuming this product or service, how it is different
from competitors. All these will help for further development in the organization.
Market analysis: Moreover, planning is important for the analysis of market and competitions. That is,
to find out customer’s needs and information about competitors, the size of the market, information
about customers who uses the product, assessing the future needs of the market.

Strategy and implementation: Here, analysis of decisions and strategies are needed to be carried out,
marketing strategies to be adopted, which pricing method to be used, promotions and sales strategies.
Management team: Key workers and staff organization are necessary to be planned. In other words,
there should be a plan on the information of the number of workers required and also the salary
structure.
Financial plan: It is the preparation of financial documents such as the income statement, Balance
sheet, cash flows, break-even analysis, budgeting and costing and other financial forecast.

Strategic planning
In strategic planning, management studies internal and external factors that may affect the business, its
objectives and goals. One of the primary tools of strategic planning is the use of SWOT Analysis.
SWOT Analysis is a technique used by the marketing department to assess a product by identifying its
strength, weaknesses, opportunities and threats.
To carry out SWOT analysis, four boxes are drawn up. The top two boxes, strengths and weaknesses,
relate to the actual position of the product and are internal factors. On the other side, the bottom two
boxes, opportunities and threats, relate to the product’s future potential and are external to the
organization.

2.Organizing
The second function of management is organizing. A manager cannot do everything by himself. Thus,
tasks must be delegated to others in the organization. Organizing involves coordinating and directing
activities to ensure that everyone is aware of what is expected from them and are working towards the
set objectives. It is therefore the manager’s responsibility to organize people and resources effectively.
Hence, an organizational chart is being made to show who has the authority to do different jobs.
Organizational structure refers to the level of management and division of responsibilities within an
organization. This can be illustrated as follows:
http://igcsebusinessstudies.files.wordpress.com/2010/04/organizational-structure111-copy.gif
An organization structure shows the relationship between different departments and their functions. It
also shows different levels of hierarchy within the firm and the responsibility of each staff.
Hierarchy means the different levels of position that exist within an organization. A staff who is on a
higher level on the hierarchy have more power, responsibility, authority and status but at the same
time, its accountability for the responsibilities given to him and vice-versa.
There are 2 types of organizational design these are:

Informal organization: It is usually one in which works and activities do not follow any establish
procedures, rules and regulations to be carried out. Most small organizations mainly sole traders are
informal organization because the owner shoulders all the responsibilities in owning and running the
business.
Formal organization: It is one which there is established procedures and rules on how works and
activities are to be performed. An organization becomes a formal one when it expands, as it grows in
size the owner cannot shoulder all the responsibilities, therefore, he has to delegate responsibilities to
other workers to carry out other tasks effectively. Thus, through delegation, new sections, departments
are created and workers are recruited so that work within the organization is carried out effectively. In
addition, in this type of organization, workers would do exactly what are their responsibilities and
what functions the different departments have to perform.

Functions of different departments in an organization

Human resources department
Managers in this department will be responsible for:
Keeping staff records.
Disciplining and warning staff if necessary.
Preparing job descriptions and job satisfactions.

Marketing department
Managers in this department will be responsible for:
Planning new products, working closely with the Research and Development and Production
Development.
Deciding upon the best ‘marketing mix’ for each product and making sure that this is put into effects.

Accounting and Finance department

The main responsibilities include:
Deciding on the most appropriate methods of finance.
Analyzing the profitability of new investment projects.
Keeping control of the cash flow of the business.

Production department or operation management

Here, managers will be responsible for:
Controlling production to ensure high levels of efficiency.
Maintaining the efficiency of all machinery.

Administration department
The work of the Administration department varies greatly from one business to another. A typical
administration department will undertake the following functions:
Clerical and office support service
Responsibility for the Information Technology System
Cleaning, maintenance and security.

Now comes with the steps in organizing function from the perspective of a manager:
Classification of jobs and activities
All activities which have been occurred should first of all be identified in an organization. For
instance, the accounts department will require a cashier, while the assembly line will need the services
of supervisors and workers, both skilled and unskilled. However, before that, the activities like
accounting of pay-in slips or the procedures involved in the production must be cleared for managers.
For examples, preparation of account, making sales, record keeping, quality control, inventory control
and among others.

Departmentally organizing the activities

This is the second step which has to be done. The manager tries to join and group similar and related
activity into departments. This part of organizing deals with Division of Labour. Division of labour is
the process of a work provided into smaller tasks and each of these will be performed by a worker or a
group of workers. An example is classifying the workers in charge of welding under a separate
supervisor, or forming up a team of software engineers under a team leader.

The distribution of Authority

After the departments are done, the manager will have to organize the powers and its extent to the
managers. This is done through a hierarchy. This step is important for the division of responsibility
and effective reporting

Co-ordination between authority and responsibility

Simply classifying and handing over responsibility is not enough. The manager should also see the co-
ordination between authority and responsibility. The manager must ensure the different departments’
co-ordinate among themselves and identify the powers and duties which are given to each one of
them.

3. Leading
Subsequently, the third step of management is leading which is also called as directing. Through this
function, it helps management control and supervises the actions of the staff. Moreover, it helps the
workers by guiding them which is the right direction. Thus, through this process, the organization will
achieve its objectives and in addition, accomplish their personal or career goals, which can be powered
by motivation, communication, department dynamic and department leadership.
Likewise, leading can be in terms of commanding.

Commanding
Not only planning and organizing are important in an organization; but also commanding plays an
important role in an organization. Other word for commanding is to give order. At this point, the task
of management is more concerned with guiding, leading and supervising people than just telling them
what to do. Managers have to make sure that all supervisors and workers are keeping to targets and
deadlines. Instructions and guidance must be provided by managers and it is also their responsibility to
make sure that the tasks are carried out by people below them in the organization.

Characteristics of directing:
Pervasive function - At all levels of organization, leading is necessary. Directing tries to motivate and
lead the workers towards business goals. Thus, all managers give guidance and inspiration to his
subordinates.
Continuous activity – Direction is a continuous activity as it continues to operate till the end life of the
business.

Human factor – In addition, directing is a human function of management. That is, it deals with
people on a personal basis. Here, direction process becomes a major role since human factor is
complex and its behavior is unpredictable.

Creativity activity – Also, direction helps in converting plans and put it into practice. If this function
would not have been existing, people would become immobile and physical resources would be
worthless.
Delegate function – Directing aims to delegate tasks to subordinates. In other words, doing the right
thing in the right way can be useful in increasing the level of productivity.

4. Controlling
Evaluating control
Evaluating is the last function of management. This is a never-ending task of management. In this
case, evaluating also called as controlling involves regular check on operations and taking corrective
actions if the need arises. In other words, managers must try to measure and evaluate the work in
individuals and groups to make sure that they are on target. Although, if disciplinary staff might be
important, this is not necessarily be the only reason. There might be other reasons for poor
performance other than inefficient workers. It is the manager’s job to find out why targets are not
being met and then correct the problem.

According to Brech, "Controlling is a systematic exercise which is called as a process of checking

actual performance against the standards or plans with a view to ensure adequate progress and also
recording such experience as is gained as a contribution to possible future needs."

According to Donnell, "Just as a navigator continually takes reading to ensure whether he is relative to
a planned action, so should a business manager continually take reading to assure himself that his
enterprise is on right course."

Controlling has got two basic purposes:

It facilitates co-ordination
It helps in planning
Characteristics of controlling function of management:
Controlling is an end function- A function which take place once the performances are made in respect
to the plans.
Controlling is a pervasive function- which means managers make use of it at all level and in multiple
types of concerns.
Controlling is forward looking- if past is not being controlled, effective control will not be possible.
Controlling always looks to expectations so that follow-up can be made whenever requisite.
Controlling is a dynamic process- as controlling requires taking reviewable methods; wherever
possible changes have to be mad.

Controlling is related with planning- Planning and Controlling are two inseparable functions of
management. If planning was not done, controlling would be a meaningless exercise and without
controlling, planning is useless. Planning presupposes controlling and controlling succeeds planning.

CONCLUSION:
As a result, it can be concluded that management is not easy to define, but the functions of
management helps to demonstrate the varied and important work that good managers should be doing.
When studying these functions that is planning, organizing, leading and evaluating, it should also be
clear why management is necessary to any organization. Without clear and effective management, a
business is going to lack:
A sense of control and direction
Leading to wastage of effort/resources
Control of employees
Organization of resources, leading to low output and sales. Thus, this will lead to a fall in profits.
Therefore, in short, without management in an organization, the firm will drift and eventually fail.