Significance of Management
Management ensures the excellency in the execution of all the activities of business. The principles of management play vital role in making excellency in the implementation of various activities.
1. Optimal Utilization of Available Resources
Management practices always does the complete and proper use of available resources. Resources such as employees, finance, technology (machinery and equipment), Material (input for manufacturing or production of product), and methods adopted.
Optimal use of employees: Employees productivity or performance may be high or low depends upon their motivation, job satisfaction and capability. Management principles guides or direct, how to motivate the employees, how to increase their job satisfaction and how effectively utilizes their capability.
Optimal use of Finance: sufficient allocation of funds for the execution of various activities of business can make optimal use of finance. For example, advertising in marketing management department should have sufficient finance in order to promote the brand.
Optimal use of Technology: Many manufacturing companies are under utilization of their manufacturing capacity. This may be due to less demand or sell. Some companies are not making technological advancements. Companies should produce the products with full capacity so that the cost can be reduced and revenue can be increased.
Optimal use of Material: Six sigma quality certification indicates how accuracy can be maintained by manufacturing unit. Reduction of wastages or faulty production can reduce the cost and increase the profit. The material can be utilized to fulfil future increased demand.
Optimal use of Methods: Appropriate methods used for the execution of various activities of business can achieve the goal easily. For example, production type is selected as per requirement and cost effectiveness. Mass production type is selected for single variety and large volume.
2. Satisfying social need
Any business organization can play important role in fulfilling social responsibility. These social needs fulfilled by the following ways.
Producing products with right quality and cost: Products produced by company should meet the customers needs. It should be made by offering products of good quality and with less price so that maximum consumer can buy.
Providing fair remuneration: Employees work for better living standard in society. It can be possible only when they get paid as per standard.
Expansion with employment generation: companies’ objective not to expand only. Organization should expand their business with number of employees so that the employment generation can be increased. It plays effective role in reducing unemployment.
Utilize all the human resource with advancement in the technology: Indian companies using advancement is technology reducing the requirements of workers. most of the companies in India are trying to reduce requirement of workers by making advancement in the technology. Instead of reducing the employees the company can expand the business and retain the existing employees. For example Chinese manufacturing companies are utilizing whole human resource to expand and increase the growth of their companies. The increased production quantity can be exported. Chinese manufacturing companies increasing their production/manufacturing by considering whole world as single market.
3. Meet the need of Changing Environment
Management principles implemented for better result. Taking right decision In unstable or uncertain business environment is imperative necessity of any business organization. For example, during the Covid19 pandemic, most of the businesses was facing number of problems in running their business activities. Management practices help in directing and solving the unexpected problems in effective manner. It can be done by following way.
Change in methods: methods used during pre-pandemic was different. But during such situation, company can make changes in the existing methods such as distribution supply chain management during pandemic. Mediums of Advertising, recruitment and selection process, Customer relationship management practices etc. can be implemented in different way.
4. Expansion and Growth
Better management practices in business organization can be responsible for business expansion and growth. Following are the functional areas of management which plays vital role in expansion and growth of business organization.
Marketing Management: Demand forecasting, sales forecasting plays important role in determining the scope of business and according to the future demand the production management department can determine their production capacity they have to maintain. Innovation and creativity in advertising plays effective role in increasing the awareness or attracting more customers.
Production Management: Reduction of wastages, avoiding under utilization of resources by producing maximum quantity and maintaining the quality in the execution of all the activities of production department. Demand forecasting and sales forecasting help to maintain the appropriate level of production capacity.
Human Resource Management: Potential employees can be make or selected. Effective and proper implementation of Recruitment and selection process provide the potential employees. Training and development can enhance the skills and potential of existing employees. Hence the employees capability can increase the overall productivity of organization and hence the growth too.
Financial Management: Capital budgeting plays vital role in the growth of business organization. It determines whether the organization should invest or not.
5. Reduction of Cost
Better management practices in the functional areas such as marketing, finance, human resource and production can reduces the cost required to execute various operations.
Reduction in cost by Marketing Management: Vodafone had implemented creativity and innovation in adverting to reduce the cost and increase effectiveness. Vodafone had not appointed brand ambassador, instead of that they had created very attractive advt. using ZooZoo character. They have saved the expenses that required for brand ambassador.
Reduction in cost in Production Management: Reducing the wastages and faulty production the cost of the product can be reduced. It can also be reduced by economies of scale in which the increasing the quantity of product can reduce the cost per unit.
For example, Most of the Chinese manufacturing companies have been following this technique of production management. which enable them to reduce the cost of product. This is the reason the Chinese manufacturing companies can sell their product at less price than any other companies across the globe.
Cost reduction by Human resource management: Development of existing employees enables Human resource management practices to reduces the cost of new recruitment and selection. Arranging training programmes for existing employees the company can fulfil the need of new skills or potential.
Effective budgeting can fulfil the financial requirements of each and every activity of business. Sufficiency in finance can increases the efficiency of all the functional area.