Management Concepts Practices (Syllabus)

Notes 195 Pages

Directorate of Distance & Continuing Education (Utkal University)

Master of Business Administration (MBA)

Contributed by

Fardeen Gopal

AUTHORS
Dr. Ullas Chandra Das
Dr. Ajit Kumar Mishra

Center for Distance & Online Education
Utkal University, Bhubaneswar- 751007

Page 1
Centre for Distance and Online Education, Utkal University, Bhubaneswar.
Program Name: Master in Commerce (MCOM) Program Code: 030300
Course Name: Financial Management Paper Code: MCM 1.4
Semester: I Credit: 4 Block No. 1 to 4 Unit: No 1 to 16

EXPERTCOMMITTEE:-
Prof. (Dr.) Prabodha Kumar Hota
HOD, Commerce Dept, Utkal University
Dr Rabindra Ku Swain
Commerce Dept, Utkal University
COURSE WRITERS:
Dr Santosh Ku Mishra
Reader In Commerce
P N College Khurda
COURSE EDITORS
Dr. Biswo Ranjan Mishra
Asst.Prof.(S-II),CDOE,Utkal University
MATERIAL PRODUCTION
Utkal University
Vanivihar, Bhubaneswar

Page 2
Block wise syllabus
Financial Management
Block No
Block
Unit No
Unit
Block 1
Introduction to
Financial
management &
financial budgeting
Unit 1
Meaning, nature and scope of finance, financial goal-profit vs.
wealth maximization
Unit 2
Finance functions Investment, financing and dividend
decisions.
Unit 3
Innovative finance functions.
Unit 4
Financial Budgeting Nature of investment decisions
Block 2
Investment
Evaluation, Cost of
Capital, Concept of
retained earnings,
Concept of Leverage
Unit 5
Investment evaluation criteria-net present value, internal rate of
return, payback period, accounting rate of return, capital
rationing, risk analysis in capital budgeting.
Unit 6
Cost of Capital: Meaning and significance of cost of capital,
Calculation of cost of debit, preference capital, and equity
capital
Unit 7
Retained earnings, combined cost of capital (weighted).
Unit 8
Operating and Financial Leverage: Measurement of leverages,
effects of Operating and financial leverage on profit
Block 3
Modern Financial
plan, combined
leverage, concept of
dividends, MM
hypothesis
Unit 9
Analyzing alternate financial plans
Unit 10
Combined financial and operating leverage.
Unit 11
Capital Structure Theories: Traditional and M.M. hypotheses
determining capital structure in practice
Unit 12
Dividend Policies: Issues in dividend decisions, Walter's model,
Gordon's model, M-hypothesis, dividend and uncertainty,
relevance of dividend, dividend policy in practice
Block 4
Dividend policy,
working capital
concept, estimation
& management of
working capital
Unit 13
Forms of dividends, stability in dividend policy, corporate
dividend behavior.
Unit 14
Requirement of Working Capital & Financing: Meaning,
Significance and types of working capital, calculating operating
cycle period
Unit 15
Estimation of working capital requirements, financing of
working capital, finance of working capital, spontaneous source
and negotiated source.
Unit 16
Management of Working Capital: Dimensions of working capital
management

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3

C.D.O.E.
Education For All

CENTRE FOR DISTANCE & ONLINE EDUCATION UTKAL
UNIVERSITY: VANI VIHAR BHUBANESWAR: -751007

From the Director’s Desk

The Centre for Distance and Online Education, originally established as the University Evening
College way back in 1962 has travelled a long way in the last 52 years. ‘EDUCATION FOR ALL’ is our
motto. Increasingly the Open and Distance Learning institutions are aspiring to provide education for
anyone, anytime and anywhere. CDOE, Utkal University has been constantly striving to rise up to the
challenges of Open Distance Learning system. Nearly one lakh students have passed through the
portals of this great temple of learning. We may not have numerous great tales of outstanding aca-
demic achievements but we have great tales of success in life, of recovering lost opportunities, tre-
mendous satisfaction in life, turning points in career and those who feel that without us they would
not be where they are today. There are also flashes when our students figure in best ten in their
honours subjects. Our students must be free from despair and negative attitude. They must be en-
thusiastic, full of energy and confident of their future. To meet the needs of quality enhancement and
to address the quality concerns of our stake holders over the years, we are switching over to self
instructional material printed courseware. We are sure that students would go beyond the course
ware provided by us. We are aware that most of you are working and have also family responsibility.
Please remember that only a busy person has time for everything and a lazy person has none. We
are sure, that you will be able to chalk out a well planned programme to study the courseware. By
choosing to pursue a course in distance mode, you have made a commitment for self improvement
and acquiring higher educational qualification. You should rise up to your commitment. Every student
must go beyond the standard books and self instructional course material. You should read number
of books and use ICT learning resources like the internet, television and radio programmes etc. As
only limited number of classes will be held, a student should come to the personal contact pro-
gramme well prepared. The PCP should be used for clarification of doubt and counseling. This can
only happen if you read the course material before PCP. You can always mail your feedback on the
course ware to us. It is very important that one should discuss the contents of the course materials
with other fellow learners.

We wish you happy reading.

DIRECTOR

Page 4
Page 5
Centre for Distance and Online Education, Utkal University, Bhubaneswar.
Program Name: Master in Commerce (MCOM) Program Code: 030300
Course Name: Quantitative Methods for Management Paper Code: MCM 1.2
Semester: I Credit: 4 Block No. 1 to 4 Unit: No 1 to 16

EXPERT COMMITTEE:-
Prof. (Dr.) Prabodha Kumar Hota
HOD, Commerce Dept, Utkal University
Dr Rabindra Ku Swain
Commerce Dept, Utkal University
COURSE WRITERS:
Dr. Ullash Chandra Das. Dr Ajit Ku Mishra
Asst. Prof. Baranga College, Utkal University Asst. Prof, Dept of IMBA, Utkal University
COURSE EDITORS
Dr. Biswo Ranjan Mishra
Asst.Prof.(S-II),CDOE,Utkal University
MATERIAL PRODUCTION
Utkal University
Vanivihar, Bhubaneswar

Page 6
Center for Distance & Online Education
UNIVERSITY: VANI VIHAR BHUBANESWAR:-751007.

From the Director’s Desk
The Directorate of Distance & Continuing Education, originally established as the University
Evening College way back in 1962 has travelled a long way in the last 52 years. ‘EDUCATION FOR ALL’
is our motto. Increasingly the Open and Distance Learning institutions are aspiring to provide education
for anyone, anytime and anywhere. DDCE, Utkal University has been constantly striving to rise up to the
challenges of Open Distance Learning system. Nearly ninety thousand students have passed through
the portals of this great temple of learning. We may not have numerous great tales of outstanding
academic achievements but we have great tales of success in life, of recovering lost opportunities,
tremendous satisfaction in life, turning points in career and those who feel that without us they would
not be where they are today. There are also flashes when our students figure in best ten in their
honours subjects. In 2014 we have as many as fifteen students within top ten of honours merit list of
Education, Sanskrit, English and Public Administration, Accounting and Management Honours. Our
students must be free from despair and negative attitude. They must be enthusiastic, full of energy and
confident of their future. To meet the needs of quality enhancement and to address the quality concerns
of our stake holders over the years, we are switching over to self instructional material printed
courseware. Now we have entered into public private partnership to bring out quality SIM pattern
courseware. Leading publishers have come forward to share their expertise with us. A number of
reputed authors have now prepared the course ware. Self Instructional Material in printed book format
continues to be the core learning material for distance learners. We are sure that students would go
beyond the course ware provided by us. We are aware that most of you are working and have also
family responsibility. Please remember that only a busy person has time for everything and a lazy
person has none. We are sure you will be able to chalk out a well planned programme to study the
courseware. By choosing to pursue a course in distance mode, you have made a commitment for self
improvement and acquiring higher educational qualification. You should rise up to your commitment.
Every student must go beyond the standard books and self instructional course material. You should
read number of books and use ICT learning resources like the internet, television and radio
programmes etc. As only limited number of classes will be held, a student should come to the personal
contact programme well prepared. The PCP should be used for clarification of doubt and counseling.
This can only happen if you read the course material before PCP. You can always mail your feedback on
the course ware to us. It is very important that you discuss the contents of the course materials with
other fellow learners.

We wish you happy reading.
DIRECTOR

Page 7
8

1.1.INTRODUCTION
Management is a universal process in all organized, social and economic activities. Wher-
ever there is human activity there is management.
Management is a vital aspect of the economic life of man, which is an organized group
activity. A central directing and controlling agency is indispensable for a business concern. The
productive resources –material, labour, capital etc. are entrusted to the organizing skill, admin-
istrative ability and enterprising initiative of the management. Thus, management provides lead-
ership to a business enterprise. Without able managers and effective managerial leadership, the
resources of production remain merely resources and never become production. Management
occupies such an important place in the modern world that the welfare of the people and the
destiny of the country are very much influenced by it.
1.2 MEANING OF MANAGEMENT
Management is a technique of extracting work from others in an integrated and coordi-
nated manner for realizing the specific objectives through productive use of material resources.
Mobilising the physical, human and financial resources and planning their utilization for business
operations in such a manner as to reach the defined goals can be benefited to as management.
1.3 DEFINITION OF MANAGEMENT
Management may be defined in many different ways. Many eminent authors on the subject have
defined the term "management". Some of these definitions are reproduced below:
In the words of George R Terry - "Management is a distinct process consisting of planning,
organising, actuating and controlling performed to determine and accomplish the objectives by
the use of people and resources".
According to James L Lundy - "Management is principally the task of planning, coordinating,
motivating and controlling the efforts of others towards a specific objective",
In the words of Henry Fayol - "To manage is to forecast and to plan, to organise, to command,
to co-ordinate and to control".
According to Peter F Drucker - "Management is a multipurpose organ that manages a business
and manages managers and manages worker and work".
In the words of J.N. Schulze - "Management is the force which leads, guides and directs an
organisation in the accomplishment of a pre-determined object".
In the words of Koontz and O'Donnel - "Management is defined as the creation and maintenance
of an internal environment in an enterprise where individuals working together in groups can
perform efficiently and effectively towards the attainment of group goals".
According to Ordway Tead - "Management is the process and agency which directs and guides
the operations of an organisation in realising of established aims".
According to Stanley Vance - "Management is simply the process of decision-making and con-
trol over the actions of human beings for the express purpose of attaining predetermined goals".
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According to Wheeler - "Business management is a human activity which directs and controls
the organisation and operation of a business enterprise. Management is centred in the adminis-
trators of managers of the firm who integrate men, material and money into an effective operat-
ing limit".
In the words of William Spriegel - "Management is that function of an enterprise which concerns
itself with the direction and control of the various activities to attain the business objectives".
In the words of S. George - "Management consists of getting things done through others. Man-
ager is one who accomplishes the objectives by directing the efforts of others".
In the words of Keith and Gubellini - "Management is the force that integrates men and physical
plant into an effective operating unit".
According to Newman, Summer and Warren - "The job of management is to make cooperative
endeavour to function properly. A manager is one who gets things done by working with people
and other resources".
According to John F M - "Management may be defined as the art of securing maximum results
with a minimum of effort so as to secure maximum results with a minimum of effort so as to
secure maximum prosperity and happiness for both employer and employee and give the public
the best possible service".
In the words of Kimball and Kimball - "Management embraces all duties and functions that
pertain to the initiation of an enterprise, its financing, the establishment of all major policies, the
provision of all necessary equipment, the outlining of the general form of organisation under
which the enterprise is to operate and the selection of the principal officers. The group of offi-
cials in primary control of an enterprise is referred to as management".
According to E. Peterson and E.G Plowman - Management is "a technique by means of which
the purpose and objectives of a particular human group are determined, classified and effectu-
ated".
According to Mary gushing Niles - "Good management or scientific management achieves a
social objective with the best use of human and material energy and time and with satisfaction
for the participants and the public".
If the views of the various authorities are combined, management could be defined as "a distinct
ongoing process of allocating inputs of an organisation (human and economic resources) by typ-
ical managerial functions (planning, organising, directing and controlling) for the purpose of
achieving stated objectives namely - output of goods and services desired by its customers (en-
vironment). In the process, work is performed with and through personnel of the organisation in
an ever-changing business environment".
Management is a universal process in all organised social and economic activities. It is not
merely restricted to factory, shop or office. It is an operative force in all complex organisations
trying to achieve some stated objectives. Management is necessary for a business firm, govern-
ment enterprises, education and health services, military organisations, trade associations and
so on.

1.4 NATURE OR CHARACTERISTICS OF MANAGEMENT
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An analysis of the various definitions of management indicates that management has certain
characteristics. The following are the salient characteristics of management.
1. Management is a Factor of Production: Manager's primary task is to secure the productive
performance through planning, direction and control. It is expected of the management to
bring into being the desired results. Rational utilisation of available resources to maximise
the profit is the economic function of a manager. Professional manager can prove his ad-
ministrative talent only by economising the resources and enhancing profit. According to
Kimball -"management is the art of applying the economic principles that underlie the con-
trol of men and materials in the enterprise under consideration".
2. Management also implies skill and experience in getting things done through people:
Management involves doing the job through people. The economic function of earning
profitable return cannot be performed without enlisting co-operation and securing positive
response from "people". Getting the suitable type of people to execute the operations is the
significant aspect of management.
3. Management is a process: Management is a process, function or activity. This
process continues till the objectives set by administration are actually achieved.
"Management is a social process involving co-ordination of human and material
resources through the functions of planning, organising, staffing, leading and
controlling in order to accomplish stated objectives".
3. Management is a universal activity: Management is not applicable to business
undertakings only. It is applicable to political, social, religious and educational
institutions also. Management is necessary when group effort is required.
4. Management is a Science as well as an Art: Management is an art because
there are definite principles of management. It is also a science because by the
application of these principles predetermined objectives can be achieved.
5. 'Management is a Profession: Management is gradually becoming a profession
because there are established principles of management which are being applied in
practice, and it involves specialised training and is governed by ethical code arising
out of its social obligations.
6. Management is an endeavour to achieve pre-determined objectives:Management is
concerned with directing and controlling of the various activities of the organisation to
attain the pre-determined objectives. Every managerial activity has certain objectives. In
fact, management deals particularly with the actual directing of human efforts.
8. Management is a group activity: Management comes into existence only when
there is an group activity towards a common objective. Management is always
concerned with group efforts and not individual efforts. To achieve the goals of an
organisation management plans, organises, co-ordinates, directs and controls the
group effort.
9. Management is a system of authority: Authority means power to make others
act in a predetermined manner. Management formalises a standard set of rules
and procedure, to be followed by the subordinates and ensures their compliance
with the rules and regulations. Since management is a process of directing men to
perform a task, authority to extract the work from others is implied in the very concept
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Management Concepts Practices (Syllabus)

Management Concepts Practices (Syllabus)

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