Introduction to the

Different Areas of
Management
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Learning Objectives:
At the end of the chapter, the student is expected to understand
the following:
1. Marketing Management
2. Production Management
3. Materials and Procurement Management
4. Financial Management
5. Human Resource Management
6. Office Management
Marketing management
 4

Marketing management is
the process of planning,
organizing, staffing,
directing, and controlling
the marketing activities.
 5

A system approach
elements of the Firm’s
Marketing System and
Environment
 6

The term “market" connotes many things. Its

scope includes a wide range of activities. It
can be a trading place, may refer to sales
trends or fluctuations in consumer demand,
and refers to the sales of corporation stocks
in the stock exchange. Thus, a market must
have a buyer and a seller, a commodity or
service, an exchange and an agreed selling
price.
 The Nature and Scope of
Marketing
Marketing is the performance of business activities that direct
the flow of goods and services from producer to consumers or
users for the latter's ultimate, consumption. It refers to all
activities involving the processing, sale and physical distribution
of goods from the time they are produced up to the time they are
delivered to their ultimate consumer. It also includes marketing
research, transportation, product packaging, and the use of
advertising and credits as the means of satisfying consumer
needs and influencing consumer patronage.
 8

Marketing is the system of interrelated

business activities-of designing, promoting,
pricing, and distributing goods and services to
satisfy the needs and wants of potential
users.
 9

The Sales and

Marketing Concept
Contrasted
 10

Market refers to the system of interrelated

business activities of product development,
designing, promoting, pricing, and distributing
goods and services to ultimate consumers.
PRODUCTION and
OPERATIONS MANAGEMENT
 12

Production Production is the creation of

management is the anything of value such as
process of planning, goods, services, or ideas that
organizing, staffing, people want and are willing to
directing, and pay for. Production is thus the
controlling the operation stage of any
production activities. business. With reference to
manufacture, production is the
processing of materials into a
new expected form.
Industrial Research
Industrial research is as old as production, but this area
has not been given the same importance as sales and
finance until recently. The research industry made its
appearance at the turn of the twentieth century with a few
small research laboratories. The most important function
of research is product improvement. A product can never
be perfect, and unless it is improved, its manufacturer
may discover that other similar products have already
dominated the market.
Manufacturing Process
The process of manufacturing a finished product follows
after the raw materials have been procured. A finished
product in one industry may be considered a raw material
in another industry that uses it in the. manufacture of a
more complex product. The term "manufacturing process"
refers to the method used to change the form of materials.
The Extractive Process
The raw materials used in making a new product are
taken from the land, the air, and the ocean.
The Analytical Process
An analytical process is one in which a raw material is
broken up into its components.
 17

Integrated
Production
Management
System, Skeleton
Flow Chart
The Synthetic Process
The synthetic process is exactly the opposite of the
'analytic-to synthesize is to put together. The synthetic
process combines raw materials to form new products.
The Fabricating Process
To fabricate is to put together things to form a whole. The
fabricating process includes the shaping of materials into
new forms (stamping an auto fender from sheet metal, for
instance) as well as the assembling of many parts into an
integrated product
 20

Manufacturing pertains to the coordinated employment

of men and machines to produce economic goods from
raw materials. It is the cornerstone of any business
because it employs directly approximately one-fourth
of all gainfully employed persons, and in addition,
supports many other closely-related business
activities. Without manufacturing, there would be little
need for transportation and communication, and few
goods to merchandise.
 21

Manufacturing is characterized by the practices of

specialization, mechanization, and mass operations.
The machine is the key to modem industrial processes;
manpower is utilized to supervise, maintain, and
operate and coordinate mechanized operations.
 22

Procedural production control is secured through

planning, routing, scheduling and dispatching. The
performance control standard is obtained by time and
motion studies and comparisons of outputs with
expected standards. Inspection is used to maintain
standards, identify defective materials and
workmanship, and discover areas where improvement
in the manufacturing processes are needed.
 23

Flow Chart of the

Production
Development
Process
 24

Procurement management is the process of planning,

organizing, staffing, directing, and controlling the
procurement activities.
PROCUREMENT
MANAGEMENT
 26

"Procurement" encompasses
broader areas and covers the
“Purchasing"
responsibilities performed by
describes the process
purchasing, as well as other
of buying, identifying
functions of material supervision
the need, selecting
and management, such as
supplies, negotiating
inventory control, receiving,
prices, and following up
incoming inspection, and
to insure effective
salvage operations. Procurement
delivery.
covers production control,
traffic, and shipping.
 Importance of Procurement
Procurement is a vital function. If the procurement function is
disregarded or not effectively handled, production may be
delayed or interrupted because of lack of materials and
supplies. Sales contracts may be cancelled and profits
affected: If the procurement function is intelligently and
competently performed the entire organization would
operate more efficiently.
 28

▫One purchasing officer commented, "companies are

only aware of the importance of purchasing when they
have fallen on their job. When their job is well done, it
is taken for granted, but perhaps that is as it should be,
for purchasing is a service function, and service is best
when it does not force itself upon another."
 29

Three Approaches
to the Purchasing
Pyramid
 30

▫Procurement is vital because of the following reasons:

▫1. The proper utilization of money is extremely
important to the survival of every individual and
company.
▫2. Purchased materials and services include the
biggest part of expenditure in most companies.
▫3. The investment in raw materials, parts, and
supplies inventory in some companies is essential, and
the efficient management of such inventory can
contribute to profit.
FINANCIAL MANAGEMENT
 32

▫Financial management is the process of planning,

organizing, staffing, directing, and controlling the
financial activities. It is the management-level
responsibility for capital procurement, funds allocation,
capital structuring, and profit administration. This area
is responsible for the liquidity, solvency profitability,
and financial control of the business. This responsibility
involves: financial planning, analysis of financial
condition; and supervision of financial operations.
 33
▫To perform these functions, the finance manager uses the following tools;
▫1. Operating statements to measure income, expenses, and profits.
▫2. Operating margins to identify the components of gross sales and
percentage of sales.
▫3. Comparative operating statements to compare results for the current
period against those earlier periods and the company's results against those
of others in the same line of business.
▫4. Balance sheet analysis (comparative studies, ratios).
▫5. Operations budget to forecast sales, costs, expenses, and profits.
▫6. Cash budget to forecast short-run cash flows from operations and short-
run working capital requirements.
▫7. Capital budget to forecast capital expenditures.
 Financial Planning
The objective of financial planning is to appropriate the
needs and capacities of the business through a projection of
the availability- funds for a short-term period (working capital
cashflow, operating budgets, and sources of working capital)
and-for a long-range period (investment cashflow, capital
and conditions of the capital market).
 Acquisition of Funds
There are two basic types of funds: (1) personal equity; and
(2) borrowed funds (fixed claims by outsiders). The selection
between the two would be based on the following:
1. Period of the obligation agreement.
2. Priority of claim or preference on income.
3. Priority of claim or preference on assets.
4. Participation or voice in management.
 36
▫The following are the general rules to consider in the
acquisition of funds:
▫1. The maturity of the obligation should be well within the
earning life of the asset or project being financed.
▫2. Projected regular capital requirements should be desired
from long-term investors or reliable sources which can
ordinarily be depended upon for loan renewals or
extensions, while short-term requirements should be
covered through short-term borrowings from commercial
banks or the money market.
▫3. The use of the funds should generate income which is
greater than the cost of the funds.
HUMAN RESOURCE
MANAGEMENT
 38

Human Resource The Human Resource

management is the
process of planning,
organizing, directing,
and controlling of
personnel activities.
department has the main
responsibility for personnel
activities, but all managers
should perform personnel
functions.

The scope of control which the Human Resource department

exercises over the total personnel function is determined by the
order it receives from top management.
 39
▫Human resource management has the
responsibility of planning, organizing, directing,
coordinating, and controlling all activities . that
concern employees: selecting, developing
compensating, and meeting their needs in a
number of respects. It is a goal of Human resource
management to utilize effectively each employee's
talents so that company objectives are attained
efficiently and economically. This implies that each
employee is able to use his competence, interests,
and opportunities to his and the company's benefit.
OFFICE MANAGEMENT
 41

▫Office management is the process of planning,

organizing, staffing, directing, and controlling office
activities and those performing them in order to
achieve determined objectives. Office management
is not routinary as some people view it. Office
management requires ingenuity, decisiveness, and
creativity.
 42

▫It is inevitable that the supervisor, wherever he is

located in the company, will have to perform office
management functions. In general, the supervisor's
operational activities may be divided into two
groups: those that contribute directly to the creation
of his group's production unit (line activities); and
those that provide auxiliary support to the line
activities (office work).
 43

▫Supervisors’ involvement in these activities will

depend on several factors, such as:
▫1. The nature of the business, whether it is
manufacturing, merchandising, or service.
▫2. The size of the business and the organizational
level where the supervisor is located.
▫3. The kind of operational function and selection in
performing line or staff functions.
The Challenges of Office
Management
1. Careful analysis and involvement of remedial actions for
coping with mounting office cost.
2. Preparation for the "electronic function'' or electronic
office.
3. Extent of specialization in individual office jobs.
4. Reduction in the amount of unnecessary paper work
performed.
5. Development of better means of motivating office
employees.
The Challenges of Office
Management
6. Greater delegation of authority by the office manager.
7. Attracting and acquiring the better graduates from schools
to office jobs.
8. Simplification of office practices and operations.
9. Establishment of more and better office work standards
 46

A. The activities in office management include,

among others, the following:
1. Seeing to it that the correspondent or
correspondence work - stenography and typing - is
performed.
2. Filing records and reports.
3. Handling incoming and outgoing mail.
4. Supplying reception and messengerial services.
 47

B. Determining the complete course of action to

accomplish the work involves:
1. Being informed of latest developments in performing
office work.
2. Selecting office methods and procedures.
3. Coordinating the work of the office with non-office work.
4. Maintaining power balance among the various office
activities.
 48

B. Determining the complete course of action to

accomplish the work involves:
5. Specifying, supporting, and purchasing office furniture,
machines, and supplies.
6. Selecting the office location.
7. Arranging the office lay-out, location of office furniture
and machines.
8. Determining what would be needed for an effective work
environment - adequate lighting, elimination of noise, and
proper ventilation.
 49

C. Providing an effective office organization includes:

1. Apportioning the work among the organizational units.
2. Identifying the organizational units.
3. Establishing definite and known relationships among
organizational units.
4. Knowing the individual jobs in the office.
5. Assigning proper personnel to organizational units.
6. Delegating authority.
7. Fixing responsibility among personnel.
8. Providing for proper work facilities.
 50

D. Inspiring the office personnel to do their best,

involves:
1. Motivating office employees
2. Giving adequate supervision