Directing

By REKHA RANI

The managerial function of directing is like the activities of a teacher in a classroom. In order to teach, a teacher has to guide his students, maintain discipline, inspire them and lead them to the desired goal. It is a very important function in the management of any enterprise. It helps the managers in ensuring quality performance of jobs by the employees and achievement of organisational goals. It involves supervision, communication and providing leadership to the subordinates and motivating them to contribute to their best of output.

objective of directing:-

state the meaning and importance of directing function;

identify the elements of directing;

describe the meaning and importance of communication;

state the different types of communication;

explain the meaning, functions and importance of supervision;

describe the meaning and importance of motivation;

state the various ways of motivation;

explain the meaning and importance of leadership; and

identify the qualities of a good leader.

Importance of Directing

·         Direction initiates actions to get the desired results in an organisation.

·         Direction attempts to get maximum out of employees by identifying their capabilities.

·         Direction is essential to keep the elements like Supervision, Motivation, Leadership and Communication effective.

·         It ensures that every employee work for organisational goals.

·         Coping up with the changes in the Organisation is possible through effective direction.

·         Stability and balance can be achieved through directing.

Elements of Direction

supervision

"Guiding and directing efforts of employees and other resources to accomplish stated work outputs"

- Terry and Franklin.

Supervision is an element of direction.

"Day-to-day relationship between an executive and his immediate assistant and covers training, direction, motivation, coordination, maintenance of discipline, etc."

- Newman and Warren.

Supervision denotes the functions performed by the supervisors.

Motivation

"Motivation is the complex force starting and keeping a person at work in an organisation. Motivation is something that moves the person to action, and continues him in the course of action already initiates."

- Dubin.

Motivation is the core of management. Technically, the term motivation can be traced to the Latin word movere, which means 'to move'. Motivating is a term which implies that one person induces another, to engage in action by ensuring that a channel to satisfy the motive becomes available to the individual. Motive is energizer of action, motivating is the channelisation and activation of motives, motivation is the work behavior itself. Motivation depends on motives and motivating. It is a complex process.

Leadership

"Leadership is essentially a continuous process of influencing behaviour. A leader breathes life into the group and motivates it towards goals. The lukewarm desires for achievement are transformed into burning passion for accomplishment"

- George R. Terry.

Leadership is the process of influencing the behavior of others to work willingly and enthusiastically for achieving predetermined goals. It is an essential ingredient for successful organisation.The successful organisation has one major attribute that sets sets it apart from unsuccessful organisation that is dynamic and effective leadership.

Communication

"Communication is the transfer of information from one person to another person. It is a way of reaching others by transmitting ideas, facts, thoughts, feeling sand values."

- Newstrom and Davis.

Communication is regarded as basic to the functioning of the organisation, in its absence, the organisation would cease to exist. It is the process through which two or more persons come to exchange ideas and understanding among themselves.

Direction has got following characteristics:

1. Pervasive Function - Directing is required at all levels of organization. Every manager provides guidance and inspiration to his subordinates.
2. Continuous Activity - Direction is a continuous activity as it continuous throughout the life of organization.
3. Human Factor - Directing function is related to subordinates and therefore it is related to human factor. Since human factor is complex and behaviour is unpredictable, direction function becomes important.
4. Creative Activity - Direction function helps in converting plans into performance. Without this function, people become inactive and physical resources are meaningless.
5. Executive Function - Direction function is carried out by all managers and executives at all levels throughout the working of an enterprise, a subordinate receives instructions from his superior only.
6. Delegate Function - Direction is supposed to be a function dealing with human beings. Human behaviour is unpredictable by nature and conditioning the people’s behaviour towards the goals of the enterprise is what the executive does in this function. Therefore, it is termed as having delicacy in it to tackle human behaviour.

Authority

By Rekha Rani CSE

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (November 2008)

Authority (from the Latin auctoritas) is a right conferred by recognized social position. Authority often refers to power vested in an individual or organization by the state. Authority can also refer to recognized expertise in an area of academic knowledge. An Authority (capitalized) refers to a governing body upon which certain authority (with lower case a) is vested; for example, the Puerto Rico Electric Power Authority.

Contents

 

•           1 Authority in various settings

o          1.1 Politics

o          1.2 Academia

o          1.3 Religion

o          1.4 Governmental agencies

•           2 Controversy

•           3 See also

•           4 References

•           5 External links

Authority in various settings

 Politics

In government, authority is the scope of an entity's legitimate power (Cline n.d.) when acting on behalf of the government. This power is conferred through officially recognized channels within the government, and represents a portion of the government's overall power. For example, a government might have the authority to execute criminals. The government could then contain a jury authorized to determine if a citizen is a criminal or a non-criminal; a judge authorized to sentence criminals to execution; and an executioner authorized to kill criminals who have been sentenced to execution. In contrast, a mob of citizens might have the power to do all of the above things, but still lack the authority because the actions would not be legitimate.

Political authority can also be seen in situations that are typically considered apolitical. (Agarwal n.d.) In truth bestowing authority is a function of any social institution. A corporation, for example, must hire employees as a standard function of its existence. However, most of the corporation's members are not authorized to hire employees. This authority is passed down through the corporation to specific individuals without government involvement. This same phenomenon can be found in religious organizations, charities, fraternities, etc.

Academia

A person (or group) may be considered an "authority" on a subject matter if their expertise is well established. This means that any statements the person makes, with regard to their field of expertise, will have the burden of proof in their favor. That is, if a professor of mathematics makes a statement about numbers, it will be assumed to be true in the absence of evidence to the contrary. This will also overrule any unsupported objections by an individual without such expertise. Professional scholars are common examples of this, but they are not the only examples. A carpenter might be considered an authority on wood, for example.

 Religion

Authority can be understood to have been exercised by God toward man as the Scriptures are consulted for direction from a statement or command, an example of action that is seen to be apporved by God, or when it is obvious that God intended common sesne to infer needed direction to obey an understood command. The Lord's Supper was directly spoken about by Jesus as being expected for His followers to participate in, the day of the week in seen in an example of believers partaking of the elements on the first day of the week, and it is clear that every week has a first day so that the frequency, day, and necessity of taking the Lord's supper(the communion) is what the author rules to happen.

 Governmental agencies

Every state has a number of institutions which exercise authority based on longstanding practices. Apart from this, every state sets up agencies which are competent in dealing with one particular matter. All this is set up within its charter. One example would be a port authority like the Port of London. They are usually created by special legislation and are run by a board of directors. Several agencies and institutions are created along the same lines and they exercise authority in certain matters. They are usually required to support themselves through property taxes or other forms of collection or fees for services.

 Controversy

In contemporary social science, the nature of authority is a matter of debate. According to Michaels, in the Encyclopedia of Social Sciences, authority is the capacity, innate or acquired for exercising ascendancy over a group. Other scientists argue that authority is not a capacity but a relationship. It is sanctioned power, institutionalized power.

In political philosophy, the jurisdiction of political authority, the location of sovereignty, the balancing of freedom and authority (cf. Cristi 2005), and the requirements of political obligations have been core questions from Plato and Aristotle to the present. In many democratic societies, there is an ongoing discussion regarding the legitimate extent of governmental authority in general. In the United States, for instance, there is a widespread belief that the political system as it was instituted by the Founding Fathers should accord the populace as much freedom as reasonable, and that government should limit its authority accordingly

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Pawan Dhankhar
Asst Prof
KITM
Kurukshetra

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Pawan Dhankhar
Asst Prof
KITM 

FINANCIAL MANAGEMENT

By Sakshi Jain

Meaning of financial management :

Financial management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of the enterprises. It means applying general management principles to financial resources of the enterprise.

Definitions :

Finance management J.F. Bradlery :-

“Financial management is the area of business management devoted to a judicious use of capital and a careful selection of sources of capital in order to enable a business firm to move in the direction of reaching its goals”

Business finance Guthmann and dougall :-

”business finance can be broadly defined as the activity concerned with the planning, raising, controlling and administering the funds used in the business”.

Financial management is application of principles of management to the subject called finance , it involves planning, controlling decision making with respect to finance activity of the business.

NATURE OF FINANCIAL MANAGEMENT:

·        FM is an area of decision making in finance function of the business.

·        It is descriptive/ theoretical/statistical/ historical and analytical in nature.

·        It involves application of management principles to the finance function.

·        It is applicable to every organization irrespective of its size, nature, and place.

·        It deals with accumulation and utilization of financial resources (business resources).

·        It is directed towards achieving business objectives.

Objectives of financial management:

The objectives or goals of financial management are- (a) Profit maximization, (b) Return maximization, and (c) Wealth maximization. We shall explain these three goals of financial management as under: 

1)     Goal of Profit maximization: 

Maximization of profits is generally regarded as the main objective of a business enterprise. Each company collects its finance by way of issue of shares to the public. Investors in shares purchase these shares in the hope of getting medium profits from the company as dividend It is possible only when the company's goal is to earn maximum profits out of its available resources. If company fails to distribute higher dividend, the people will not be keen to invest their money in such firm and persons who have already invested will like to sell their stocks. On the other hand, higher profits are the barometer of its efficiency on all fronts, i.e., production, sales and management. A few replace the goal of 'maximization of profits' to 'fair profits'. 'Fair Profits' means general rate of profit earned by similar organization in a particular area. 

2)    Goal of Return Maximization:

The second goal of financial management is to safeguard the economic interest of the persons who are directly or indirectly connected with the company, i.e., shareholders, creditors and employees. The all such interested parties must get the maximum return for their contributions. But this is possible only when the company earns higher profits or sufficient profits to discharge its obligations to them. Therefore, the goals of maximization of returns are inter-related. 

3)    Goal of Wealth Maximization: 

Frequently, Maximization of profits is regarded as the proper objective of the firm but it is not as inclusive a goal as that of maximizing its value to its shareholders. Value is represented by the market price of the ordinary share of the company over the long run which is certainly a reflection of company's investment and financing decisions. The log run means a considerably long period in order to work out a normalized market price. The management can make decision to maximize the value of its shares on the basis of day-today fluctuations in the market price in order t raise the market price of shares over the short run at the expense of the long fun by temporarily diverting some of its funds to some other accounts or by cutting some of its expenditure to the minimum at the cost of future profits. This does not reflect the true worth of the share because it will result in the fall of the share price in the market in the long run. It is, therefore, the goal of the financial management to ensure its shareholders that the value of their shares will be maximized in the long-run. In fact, the performances of the company can well be evaluated by the value of its share.

Sources of finance:

The 12 best sources according to Dr. Dileep Rao are:

1. Bootstrapping: Many billion-dollar entrepreneurs find a way to grow without external financing so that financiers don't control their destinies or grab a disproportionate slice of the wealth pie. For more on the sound strategic thinking you'll need in order to live on your own cash flow.

2. Internal Revenue Service: No, the IRS does not lend money. But it does allow you to deduct expenses. If you are paying a heap in taxes, evaluate whether you can use your profits to expand your business--and reduce your tax bill.

3. Tax Increment Financing: TIF subsidies are geared toward real estate development in targeted areas. Depending on the state, the subsidies can be as large as 20% to 30% of the cost of the project. Better yet, you may even be able to borrow against this subsidized value. If your own community does not offer a TIF program, look at communities that do. You may end up a little farther from your home or office, but it could be worth your while.

4. Small Business Innovation Research (SBIR) grants: Getting past the paper-intensive application process and SBIR grants can be a great way to turn your intellectual property into mailbox money.

5. Friends and family members: If you're lucky, friends and family members might be the most lenient investors of the bunch. They don't tend to make you pledge your house, and they might even agree to sell their interest in your company back to you for a nominal return.

6. Vendors: Dick Schulze built Best Buy  ( BBY- news-people) with financing from large consumer electronics firms--in other words, his suppliers. This way, your financiers do not control your growth; you do. Just be sure not to enslave yourself to a handful of powerful suppliers in the process.

7. Customers: Advance payments from customers--assuming the terms aren't too onerous--can give you the cash you need, at a relatively low cost, to keep your business growing. Advances also demonstrate a level of commitment by that customer to your operation. About half of the world-beating entrepreneurs in my book, Bootstrap to Billions , were funded by their customers. This strategy allowed them to grow faster and with limited resources, and to operate with relative impunity with respect to their investors.

8. Local and state economic development organizations: Economic-development organizations can charge tantalizingly low interest rates when lending alongside a bank.

Say you need to raise $200,000 for a building. A bank may offer $150,000 on a first mortgage at a variable interest rate of prime, now 3.25%, plus 200 basis points, for a total of 5.25%. The local development entity might lend you another $30,000 on a second mortgage at a fixed-interest rate of 4%, without seeking equity shares or warrants. (Without the development corporation's contributions, you would have to scare up $50,000 in equity--expensive.) If you don't have the cash flow to cover the interest, the development organization may offer extended terms. Some loans are interest-only for the first year or two, and even the interest payments can be accrued for a certain time period.

Development groups may not agree to finance an entire operation, but they make snagging the remainder from other private sources a lot easier. Talk to your local chamber of commerce to find these programs.

9. SBA 7(a) loans: Of all the federally sponsored debt-financing programs, this is the most popular, and perhaps the best. It loosens the flow of credit by guaranteeing the lender against a portion of any loss incurred on the loan. Not to say that banks aren't careful when making 7(a) loans: They are required to keep the non-guaranteed portion on their books.

The interest rate can vary based on the size of the loan, with smaller amounts costing a little more. Shop around. Some banks reap servicing fees and nice profits by selling the guaranteed portion of the loan to insurance companies and pension funds; in those cases, a lender may be willing to offer you a better rate.

10. Bank loans: Banks are like the supermarket of debt financing. They provide short-, mid- or long-term financing, and they finance all asset needs, including working capital, equipment and real estate. This assumes, of course, that you can generate enough cash flow to cover the interest payments (which are tax deductible) and return the principal.

Banks want assurance of repayment by requiring personal guarantees and even a secured interest (such as a mortgage) on personal assets. Unlike other financing relationships, banks offer some flexibility: You can pay off your loan early and terminate the agreement. VCs and other institutional investors may not be so amenable.

11. Smart leases: Leasing fixed assets conserves cash for working capital (to cover inventory), which is generally tougher to finance, especially for an unproven business. Warning: Don't put so much money down that you end up spending the same amount of cash as you would have had you bought the asset with a down payment. The cost of a lease may be slightly higher than bank financing (see source No. 10), but the cost of the down payment you did not have to make is likely to be less painful than the dilution you suffer from giving away equity.

12. Angel equity: If you must sell an ownership stake to get your company off the ground, start by finding a respected industry executive who is willing to invest a reasonable amount and give your venture credibility with other investors. The advice and networking--without all the heavy-handed demands of a VC--come in handy, too.