Entrepreneurship and Start-ups

03600201
Prof. Sharad Ganjegaonkar
Lecturer-Applied science, Diploma study
Entrepreneurship and Start-ups 03600201
 CHAPTER-4
Management of business
What is Management?
What is Management?

Management can be defined as the process of administering and controlling the

affairs of the organization, irrespective of its nature, type, structure and size. It is
an act of creating and maintaining such a business environment wherein the
members of the organization can work together, and achieve business
objectives efficiently and effectively.
What is Management?
Characteristics 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.
What is Management?
Group activity:
An organization Dis-advantagesists 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.
What is Management?

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
activity.

Intangible force:
Management can neither be seen nor touched but one can feel its existence, in
the way the organization functions.
What is Management?
Levels of Management:
Top-Level Management: This is the highest level in the organizational hierarchy,
which includes Board of Directors and Chief Executives. They are responsible for
defining the objectives, formulating plans, strategies and policies.
Middle-Level Management: It is the second and most important level in the
corporate ladder, as it creates a link between the top and lower-level
management. It includes departmental and division heads and managers who
are responsible for implementing and controlling plans and strategies which are
formulated by the top executives.
Lower Level Management: Otherwise called as functional or operational level
management. It includes first-line managers, foreman, and supervisors. As
lower-level management directly interacts with the workers,
What is Management?
Functions of Management
Functions of Management:
Planning:
It is the first and foremost function of management, i.e. to decide beforehand
what is to be done in future. It encompasses formulating policies, establishing
targets, scheduling actions and so forth.
Organizing:
Once the plans are formulated, the next step is to organize the activities and
resources, as in identifying the tasks, classifying them, assigning duties to
subordinates and allocating the resources.
Staffing:
It involves hiring personnel for carrying out various activities of the organization.
It is to ensure that the right person is appointed to the right job.
Functions of Management
Directing:
It is the task of the manager to guide, supervise, lead and motivate the subordinates, to
ensure that they work in the right direction, so far as the objectives of the organization
are concerned.
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 synchronization of efforts, to ensure
that every element of the organization contributes to its success
 2.1 What is organization?

organization refer to the collection of people and other resources in

the organization who are involved in achieving the pre- define
objective. which can also be defined as the second most important
managerial function after planning.
 2.1 What is organization?

Organization includes the works of employees, procure

resources and combine the resources in achieving the
predefined target.
 Definition of organization (O.S.) structure

Organizational structure details how all the activities in the company are
delegated to the junior by the senior.
 Definition of organization (O.S.) structure

•The organizational goal outlines the employee’s its role and various
responsibilities within a company. The more authority employees, have
the higher responsibility. There will be efficiencies. The more organized
structure is the more efficiently a company work.
 Definition of organization (O.S.) structure

The main four type of organization structure are

1.functional organizational structure
2.line organizational structure
3.Matrix organizational structure and
4. project organizational structure
 2.3-Goals of organization structure -

1.To clear the responsibility of employees.

2.To clear the to whom, report.
3.It helps for effective and transparent communication.
4.It helps for better co-ordination.
5.It clears the authority of each employee.
6.It helps to know the minimum qualification for each responsibility
center.
Factors considered in formulating organizational structure

The main target of creating organization structure is to finish the target

using the available resource. Hence it should be suitable, clear and simple
to understand. following are main factor consider during the formulation
of organization structure.

1. Nature of work
Factors considered in formulating organizational structure

2. Nature of work
3. Time available for target
4. Cost of organization structure
5. Resource available
Factors considered in formulating organizational structure

6. Cost of organizational structure

7. Resource available
8. Ability of senior and junior.
9. Nature of leadership
10. Control requirement
11. Resource available
 Division of labor

• division of labor, the separation of work process into a number of

tasks, with each task performed by a separate person or group of
persons.
• It is most often applied to systems of mass and is one of the basic
organizing principles of the assemly line
• Breaking down work into simple, repetitive tasks eliminates
unnecessary motion and limits the handling of different tools and
parts.
 Division of labor

•The consequent reduction in production time and the ability to replace

craftsmen with Separation of target into small workable part or goal into
different small, small manageable part . like a company is divided into
small department like production, market, store….
•And a department like production is again divided into operator,
planning, paper work.
 Division of labor
Importance of division of work
1. Work becomes easy

2. Work clarity

3. Easy to control

4. Easy to plan

5. Easy to assign
Division of labor
Division of labor
 2.6 Scalar and functional processes.

• Scalar Chain. Fayol believed in constant communication between

supervisors and employees. Fayol defines the scalar chain as
the chain of supervisors ranging from the ultimate authority to the
lowest rank.
2.6 Scalar and functional processes.

An should feel free to contact his supervisor about anything

through the scalar chain.
employee It shows the relationship between different
authorities.
 2.7 Span of control

(Fig 2.1 Span is three and span is two – less span-

https://en.wikipedia.org/)
 2.7 Span of control

(Fig 2.2 span is 6 or 7 and 5 broad span of control

-https://en.wikipedia.org/)
 2.7 Span of control

Refers to the number of subordinates that a manger can efficiently

manage.
Number of subordinates directly reporting to a manager is known as
span of management
 2.7 Span of control

Factors determining the span of management:

1.Capacity of manager: Each manager has different capacity and ability in

terms of decision making, leadership, communication,

2.Capacity of subordinates: capacity of subordinates also affects the span

of a manager. Efficient and trained subordinates may.
 2.7 Span of control

Factors determining the span of management:

3.Nature of work: If subordinates are performing similar and repetitive

routine work, they can do their work without having much time

4.Degree of Decentralization: degree of centralization or decentralization

affects the span by affecting the involvement in decision
 2.7 Span of control

Factors determining the span of management:

5.Degree of Planning: If the planning is effectively done particularly if

standing plans procedures rules methods are clear.

6.Communication System: If communication system is modern i.e. tools

like electronic devices will save time of face to face interaction, which
require more time, span of manager can be increased
 2.7 Span of control

Factors determining the span of management:

7.Level of Management: level of management also affects the span.
Higher the level of management lesser the number of Physical locations: If
all the persons to be supervised are located at same place within the
direct supervision of manager, he can supervise.
 Delegation of authority

means division of authority and powers downwards to the subordinate.

Delegation is about entrusting someone else to do parts of your job.

 Delegation of authority

Delegation of authority can be defined as subdivision and sub-allocation of

powers to the subordinates in order to achieve effective results.
 Delegation of authority

Authority Can Be Delegated

As a leader, you can transfer pieces of your formal authority to another

teammate when assigning a task to that person. In essence, you can
deputize your teammate to take action on your behalf within the
boundaries of the delegated (transferred) authority.
 Delegation of authority

Authority chiefly comes from the power of position. The more authority
you have, the greater your ability to delegate higher-level, more
meaningful and challenging tasks to others to help them learn, develop,
and grow.
 Delegation of authority

Responsibility Cannot Be Delegated, but It Can Be Assigned

As a leader, you can assign responsibility to another teammate in terms of

the results that need to be achieved. However, you need to keep in mind
that you only assigned responsibility to your teammate.
 Delegation of authority

Benefit of delegation of authority to senior

a. Work load of senior reduce.

b. Senior get free time for other work.
c. Alone senior cannot do task.
d. Headache or burden of senior reduce.
 Delegation of authority

Benefit of delegation of authority to junior.

a. Junior get opportunity

b. Feeling of achievement
c. Get motivation.
 Delegation of authority

Difficulties in delegation

a) Junior oppose as he thinks he will be overloaded

b) Senior resist as his authority gets reduce
 Delegation of authority

Benefit of delegation of authority to junior.

a. Junior get opportunity

b. Feeling of achievement
c. Get motivation.
2.10 Centralization and Decentralization of authority

If authority to make decisions is retained at top levels, the organisation

is said to be centralised; if the decision-making authority is distributed
widely throughout the organisation and lower-level managers have the
authority to use resources at their discretion, the organisation is said to
be decentralised.
 2.10 Centralization and Decentralization of authority

To begin with, authority is retained at the top. As the organisation

size increases, the scope of authority gets narrow at top levels and
gets distributed to lower-level managers. To what extent it flows
down the level depends on the degree to which the organisation is
decentralised.
2.10 Centralization and Decentralization of authority

To begin with, authority is retained at the top. As the organisation size

increases, the scope of authority gets narrow at top levels and gets
distributed to lower-level managers.

To what extent it flows down the level depends on the degree to which the
organisation is decentralised.
2.10 Centralization and Decentralization of authority

Centralization is “the extent to which power and authority are retained at

the top organizational levels” and decentralization is “the extent to which
power and authority are delegated to lower levels.” No organization can be
completely centralized or decentralized
2.10 Centralization and Decentralization of authority

In a completely centralized organization, all decisions will be taken by top

managers and there will be no subordinate managers. In a completely
decentralized organization, authority to make decisions is delegated to
lower-level managers and, therefore there will be no top managers. Both the
structures cannot exist absolutely.
2.10 Centralization and Decentralization of authority

(Fig -2.6 centralization -https://www.investopedia.com)

 Explain factors affecting Organizational culture
Organizational culture includes an organization’s
1. Expectations.
2. nature of junior and senior.
3. experiences.
4. role of company for society,
5. philosophy. Thought
 Explain factors affecting Organizational culture
Organizational culture includes an organization’s
6. values that guide member behaviour,
7. inner workings
8. interactions with the outside world,
9. future expectations.
 Explain factors affecting Organizational culture

Culture is based on shared attitudes, beliefs, customs, and written and unwritten
rules that have been developed over time and are considered valid
Culture also includes the organization’s vision, values, norms, systems, symbols,
language, assumptions, beliefs, and habit
Explain factors affecting Organizational culture

2.13 factors affecting Organizational culture

1. salary
2. The attitudes
3. mentalities,
4. interests,
 Explain factors affecting Organizational culture

5. The nature of the business

6. The culture of the organization is also affected by its goals and objectives
7. The clients and the external parties
8. The management and its style of handling the employees
 Explain factors affecting Organizational culture

8, sex of the employee

9.The nature of the business
10.The culture of the organization is also affected by its goals and
objectives
11.The clients and the external parties
12.The management and its style of handling the employees
 Type of organization

Type of organization
01 Functional Structure (Line and staff)
02 Divisional Structure (line organization structure)
03 Matrix organizational structure
 functional organization structure -advantages,
disadvantages, flexibility and applications

Fig-2.9 functional organizational structure -https://www.investopedia.com)

 functional organization structure -advantages,
disadvantages, flexibility and applications

• Each portion of the organization is grouped according to its purpose.

In this type of organization, there may be a marketing department, a
sales department and a production department.
 functional organization structure -advantages,
disadvantages, flexibility and applications

• The functional structure works very well for small businesses in which
each department can rely on the talent and knowledge of its workers
and support itself. However, one of the drawbacks to a functional
structure is that the coordination and communication between
departments can be restricted by the organizational boundaries of
having the various departments working separately.
functional organization structure -advantages,
disadvantages, flexibility and applications

•Advantages
1.Get benefits of Expert

2. Work quality improve

3. Reduce burden of employs

functional organization structure -advantages,
disadvantages, flexibility and applications

Disadvantages
1.Cost of expert is more.

2.Sometime expert has no work

3.Communication is lengthy.
Divisional organization structure -advantages,
disadvantages, flexibility and applications

(Fig-2.10 divisional - organizational structure -https://www.investopedia.com)

 Divisional organization structure -advantages,
disadvantages, flexibility and applications

Divisional structure is used in larger companies that operate in

• a wide geographic area multi national company
1. separate smaller organizations like tata group. reliance group.
2. Many divisions, zone, border.
Divisional organization structure -advantages,
disadvantages, flexibility and applications

• The benefit of this structure is that needs can be met more

rapidly and more specifically; however, communication is
inhibited because employees in different divisions are not
working together.
• Divisional structure is costly because of its size and scope. Small
businesses can use a divisional structure on a smaller scale,
having different offices in different parts of the city, for example,
or assigning different sales teams to handle different geographic
areas.
Divisional organization structure -advantages,
disadvantages, flexibility and applications

Advantages
2. Easy to form
3. Low cost is invested in man power
4. Quick decision possible
5. Communication fast
 Divisional organization structure -advantages,
disadvantages, flexibility and applications

• Dis- advantages -
1. Does not get benefit of expert.
2. Load is more.
3. One man has to handle all the activity hence burden increases.
2.17 -Matrix organizational structure
 -Matrix organizational structure

• The third main type of organizational structure, called the matrix

structure, is a hybrid of divisional and functional structure. Typically
used in large multinational companies, the matrix structure allows for
the benefits of functional and divisional structures to exist in one
organization. This can create power struggles because most areas of
the company will have a dual management--a functional manager and
a product or divisional manager working at the same level and
covering some of the same managerial territory
 Recruitment and management of talent

• Recruitment and management of talent

• The terms Human Resource Management, Talent Acquisition and Talent
Management are often used interchangeably, despite being different
functions. Our guide will help you distinguish between these HR roles and
learn how they work together to attract, hire, develop and retain skilled
employees.
Talent Management:
Talent Management is the ongoing process of developing and retaining
employees throughout a company. Talent Management professionals:
1. Coach high-potential employees
2. Deliver employee training programs
3. Build hiring and succession plans
4. Mentor, reward and promote employees
 Recruitment and management of talent

 Recruitment: Recruitment refers to the process of identifying, attracting,

interviewing, selecting, hiring and on boarding employees. In other words, it
involves everything from the identification of a staffing need to filling position.
 Human Resource Management, otherwise known as HRM or HR for short, is
the function of people management within an organization. HR is responsible
for facilitating the overall goals of the organization through effective
administration of human capital — focusing on employees as the company's
most important asset.
• Recruitment is the first step in building an organization's human capital. At a
high level, the goals are to locate and hire the best candidates, on time, and on
budget.
 Recruitment and management of talent

• Recruitment Process:
• The Recruitment programme is designed to attract more and more
applicants such that the pool of candidates applies for the job, and the
organization has more options to select the best out of them. The
recruitment process Dis-advantagesists of five interrelated stages which
are as follows:
• Recruitment Planning: The recruitment process begins with the
planning where in the vacant job positions are analysed and then the
comprehensive job draft is prepared that includes: job specifications and
its nature, skills, qualifications, experience needed for the job, etc.
 Recruitment and management of talent

• Strategy Development: Once the comprehensive job draft is prepared, and the
type and the number of recruits required are decided upon; the next step is to
decide a strategy that is adopted while recruiting the advantagespective
candidates in the organization. The following strategic Dis-
advantagesiderations should be kept in mind:
• Make or Buy Employees, which means the firm either decides to select less
skilled employees and invest in training and education programmes or hire
skilled professionals.
 Recruitment and management of talent

• Methods of Recruitment,
• the firm decides on the methods used for recruiting the individuals. Such as
the internet provides detailed information about the advantages active
candidates and helps in shortlisting the best-qualified individuals.
• Geographical Area, the next decision is related to the area from where the
candidates shall be searched. The firm looks for those areas where the handful
amount of qualified employees is concentrated, with a view to curtailing a
search cost.
• Sources of Recruitment, there are two sources of recruitment: Internal source
(within the organization), external source (outside the organization). The firm
must decide the source from where the candidates are hired.
 Recruitment and management of talent

Searching:
Once the strategy is prepared the search for the candidates can be initialized. It
includes two steps: source activation and selling. The source activation means, the
search for the candidate activates on the employee requisition i.e. until and unless the
line manager verifies that the vacancy exists, the search process cannot be initiated.
The next point to be Discus is selling, which means the firm must judiciously select
that media of communication that successfully conveys the employment information
to the prospective candidates.
Screening:
The screening means shortlisting the applications of the candidates for further
selection process. Although, the screening is as the starting point of selection but is
integral to the recruitment process. This is because the selection process begins only
after the applications are scrutinized and shortlisted on the basis of job requirements.
The purpose of recruitment here is to remove those applications at an early stage
which clearly seems to be unqualified for the job.
 Recruitment and management of talent

The recruitment
is a costly process as it includes the salaries of recruiters, time spent by the
management, cost of advertisement, cost of selection, a price paid for the
overtime, and outsourcing in case the vacancy remains unfilled. Thus, a firm is
required to gather all this relevant information to evaluate the performance of a
recruitment process effectively.
Talent Management:
Talent management is just another one of those pesky Human Resources terms,
right? Wrong. Talent management is an organization's commitment to recruit,
hire, retain, and develop the most talented and superior employees available in
the job market.
 Recruitment and management of talent

Evaluation and Control:

Evaluation and control is the last stage in the recruitment process wherein the
validity and effectiveness of the process and the methods used therein is
assessed. This stage is crucial because the firm has to check the output in terms
of the cost incurred.
 Recruitment and management of talent

The recruitment
is a costly process as it includes the salaries of recruiters, time spent by the
management, cost of advertisement, cost of selection, a price paid for the
overtime, and outsourcing in case the vacancy remains unfilled. Thus, a firm is
required to gather all this relevant information to evaluate the performance of a
recruitment process effectively.
Talent Management:
Talent management is just another one of those pesky Human Resources terms,
right? Wrong. Talent management is an organization's commitment to recruit,
hire, retain, and develop the most talented and superior employees available in
the job market.
 Objectives of Financial Management

Objectives of Financial Management

1.The financial management is generally concerned with procurement, allocation,

and control of financial resources of a concern. The objectives can be-
2.To ensure a regular and adequate supply of funds to the concern.
3.To ensure adequate returns to the shareholders which will depend upon the
earning capacity, the market price of the share, and expectations of the
shareholders.
4.To ensure optimum funds utilization. Once the funds are procured, they should
be utilized in the maximum possible way at the least cost
 Objectives of Financial Management

Objectives of Financial Management

4. To ensure safety on investment, i.e, funds should be invested in safe ventures

so that an adequate rate of return can be achieved.

5. To plan a sound capital structure-There should be sound and fair composition

of capital so that a balance is maintained between debt and equity capital.
 Functions of Financial Management

Functions of Financial Management

1. Estimation of capital requirements:
A finance manager has to make an estimation with regard to the capital
requirements of the company. This will depend upon expected costs and profits
and future programmers and policies of a concern. Estimations have to be made
in an adequate manner which increases earning capacity of the enterprise.
2. Determination of capital composition:
Once the estimation has been made, the capital structure has to be decided. This
involves short-term and long-term debt equity analysis. This will depend upon the
proportion of equity capital a company is possessing and additional funds which
have to be raised from outside parties.
 Functions of Financial Management

3.Choice of sources of funds

: For additional funds to be procured, a company has many choices like-
a. Issue of shares and debentures
b. Loans to be taken from banks and financial institutions
c. Public deposits to be drawn in form of bonds.
Choice of factor will depend on the relative merits and demerits of each source
and period of financing.
 Functions of Financial Management

4. Investment of funds:
The finance manager has to allocate funds to profitable ventures so that
safety on investment and regular returns is possible.
5. Disposal of surplus:
The net profits decision has to be made by the finance manager. This
can be done in two ways:
a. Dividend declaration - It includes identifying the rate of
dividends and other benefits
b. Retained profits - The volume has to be decided which will depend
upon the expansion, innovational, and diversification plans of the company.
 Functions of Financial Management

6. Management of cash: Finance manager has to make decisions with

regards to cash management. Cash is required for many purposes like payment of
wages and salaries, payment of electricity and water bills, payment to creditors,
meeting current liabilities, maintainance of enough stock, purchase of raw
materials, etc.
7. Financial controls: The finance manager has not only to plan, procure
and utilize the funds but he also has to exercise control over finances. This can be
done through many techniques like ratio analysis, financial forecasting, cost and
profit control, etc.
 Functions of Financial Management

6. Management of cash: Finance manager has to make decisions with

regards to cash management. Cash is required for many purposes like payment of
wages and salaries, payment of electricity and water bills, payment to creditors,
meeting current liabilities, maintainance of enough stock, purchase of raw
materials, etc.
7. Financial controls: The finance manager has not only to plan, procure
and utilize the funds but he also has to exercise control over finances. This can be
done through many techniques like ratio analysis, financial forecasting, cost and
profit control, etc.
References
1. https://www.researchgate.net/publication/
301659818_Introduction_to_Entrepreneurship
2. https://www.cmu.edu/swartz-center-for-entrepreneurship/education-and-
resources/project-olympus/pdf/entrepreneurship-101.pdf
3. http://sim.edu.in/wp-content/uploads/2018/11/Entrepreneurship.pdf
www.paruluniversity.ac.in