Management a Factor of Production and Also an Economic Resources
Management a Factor of Production and Also an Economic Resources
Management can be defined in various ways. In the words of Pride et al, management is the process of coordinating the resources of the organization to achieve the primary goals of the organization. It is also defined as the organization and coordination of the activities of an enterprise in accordance with certain policies and in achievement of defined objectives. Taylor defined management as knowing exactly what men do, and the seeing that they do it in the best and cheapest way. Today, however, management is obviously a much more complex problem than the above definition portrays. Griffins(1996) defines it as the process of planning, organizing, leading and controlling an organization’s human financial, physical and information resources to achieve organizational goals in an efficient and effective manner. Management is a dynamic process of getting things done with and through the co-operative effort of others. It involves utilizing the various resources of an organization and combining them in such a way that the organization’s goals are attained.
Effective management is crucial to an organization’s overall success. Individuals who are responsible for helping organizations achieve their goals are designated MANAGERS. A MANAGER is someone whose primary activities are of the management process. Specifically, a manager is someone who plans, organize, leads and control human, financial, and physical and information resources (Griffin 1996). In order words, he or she is responsible for allocating human and material resources and directing the operations of an organization. Thus, managers are fully responsible for the realization of results through the concerted efforts of other people. Today’s managers face complex, difficult and exciting quality of work life, increased diversity of the workplace, more social and ethical responsibilities, environmental protection and other legal requirements. They plan for the future, explore avenues of motivating employees and strive to increase their company’s overall efficiency, effectiveness and productivity. The managerial function is one of the approaches to understanding the dynamic and complex process called management.
The managerial functions are general administrative duties that need to be carried out in virtually all productive organization. The most popular approach has been to describe what managers do, which is considered the functional view. It specifies the management process as a sequence of logical and rational steps. The manager’s functions are interrelated and are often performed simultaneously to achieve desired objectives. Fayol (1949) identified five of these functions as: planning, organization, command, coordination and control. Over the years, Fayol’s list of five managerial functions has been updated and expanded by management scholars to include decision- making, staffing, communication, leading and motivating. These functions are briefly explained as follows: a.Planning: This is a dynamic process of deciding today what actions should be taken at sometime in the future and how best to tackle them. Developing a strategy for guiding an organization to a desired position at a given time in the future is referred to as STRATEGIC PLANNING. Planning helps maintain managerial effectiveness by guiding future activities
b.Organizing: Once a workable plan has been established or developed, the next phase is to arrange and allocate work, authority and resources among an organization’s members in order to achieve the organization’s goals. Other basic concepts of organizing include departmentalization, chain of command, division of labour, spans of control, coordination and specialization. Proper organizing helps ensure the efficient utilization of human resources. c.Leading: The leading function involves directing, influencing and motivating employees to perform assigned tasks. Managers try to create the atmosphere and peaceful organizational climate, inspire their subordinates by serving as role models and adapt their management style to the demands of the situation. d.Decision-making: Decision making involves choosing from among alternative courses of action. It connects the organization’s present circumstances to actions that will move the organization into the future. Past experiences plays a major role in determining the choices that managers take.
e.Staffing: This is an integral part of the management process. It includes human resources planning, recruitment, selection, orientation/socialization, training and development, performance appraisal and compensation. It is believed that organizations are as good as the people in them. f.Motivating: The term motivation refers to the psychological process that gives behavior purpose and direction. Through motivation, managers try to get people to willingly channel their efforts towards the attainment of organizational goals. g.Communicating: This is the transfer of information and understanding from one individual to another by means of meaningful symbols. It is a process that requires both a sender –who initiates the process and a receiver-who completes the communication link. Managers use the communication process to carry out their functions and roles. For instance, no decision can be implemented until the managers effectively communicate it to the relevant individuals.
h.Controlling: The final phase of management process. It involves the following key elements: establishing standards of performance, measuring current performance, comparing this performance to the established standards and taking corrective actions if deviations are detected. The controlling function helps keep the organization on track. Having discussed and defined management and its functions, we look at management as a factor of production. Production is the action of manufacturing, growing, extracting things especially in large quantities. In economics, production means creation or an addition of utility. While factors of production means inputs and finished goods means output. Output depends upon input. Input is the starting point and output is the end point of the production process.
The input – output relationship is called production function. Factors of production (or productive inputs or resources) are any commodities or service used to produce goods and services. Factors of production may also refer specifically to the primary factors which are including land, labour (the ability to work) and capital goods applied to production. The primary factors facilitate production but neither become part of the product (as with raw materials) nor become significantly transformed by the production process (as fuel used to power machinery). The requirements or rather the factors of production are usually classified as the following: a.Land: Land is the natural resources available for production. It includes the natural resources within the land such as mineral deposits like coal and iron-ore. Some nations are endowed with natural resources and exploit this by specializing in extraction and production of these resources.
For example: the development of the North Sea oil and gas. This is an important factor of production as modern factories extend on one level and require space for storage and parking. The returns or payments to land are called RENT. Land is not only the site of production but also natural above or below the soil. b.Labour: This is the human effort, whether manual or mental that contributes to production. This also includes all human resources; it may be skilled, semi-skilled or unskilled. Local labour markets vary in size and nature of the pool of labour. Cheap, unskilled and semi-skilled labour may be an important location factor for multinational companies while skilled labour is significant in high technology industries. For example, most products are manufactured in China because they offer cheap labour. Industries may be capital-or-labour intensive.
Not all labour is of the same quality. Some workers are more productive than others because of the education, training and experience they have received. The reward or payments for labour is called WAGES. c.Capital: To an economist, capital has several meanings – including the finance raised to operate a business. But normally the term capital means investment in goods that can produce other goods in the future. This is also denoted as machinery or tools which are used in combination with labour for the purpose of making goods. It covers all man- made aids to future production. There can be fixed or circulating capital. The former relates to goods such as buildings or machinery while the latter refers to the stock of goods a firm has ready for use in the future, raw materials and components. Capital is the only factor of production which itself is created in the production process. Increases to the capital stock of a nation are called investment. Investment is important if the economy is to achieve economic growth in the long run. INTEREST is the returns for capital.
d. Entrepreneurship: This is sometimes referred to as Management. Entrepreneurs are people who organize other productive resources to make goods and services. Some economists regard entrepreneurs as a specialist form of labour input. Others believe that they deserve recognition as a separate factor of production in their own right. The success or failure of a business often depends critically on the quality of entrepreneurship. Entrepreneurship can also be referred to as the managerial, innovative and risk taking qualities which an individual displays when combining the other factors of production in order to generate output. Management skills are a vital factor of labour and production under the heading of entrepreneurship. Management is often included as a factor of production along with machines, materials and money. According to the management guru Peter Drucker (1909 – 2005), the basic task of management is of two folds: marketing and innovation.
Innovation in the sense of creation of new products, ideas or services and marketing in the sense that management not only combines the available resources and other factors of production in the most suitable techniques of production in order to produce goods and services but it also ensures that these goods and services get to their final consumers in a perfect shape thereby maximizing profit which is the returns for entrepreneurship. Quite often the term management is used to refer to both the persons who occupy managerial positions as well as activities which managers perform. Management as a discipline consist of the interlocking of functions of formulating corporate policy and organizing, planning, controlling and directing an organization’s resources to achieve the policy’s objectives.
Management can be said to be the chief or main factor of production because it controls and directs the other factors of production through various ways: land- it is management that decides the best and most suitable site for production and it also knows and organizes for the expansion of the industry’s production site if need be. Management also sources for capital or funds to run a business, it also sources for raw materials and machines needed for the effective production of goods and services. Management also influences the human behavior which is essential factor of production. Every worker is individually different from the other workers as regards to his ability, knowledge, skills, socio-economic status, attitudes and ideologies.
Management is concerned with the integration of individual efforts and how to decentralize them towards achieving the desired goal or result. Most workers tend to perform better when they are being supervised; this supervision is also carried out by management or manager. Finally, having enumerated the role of management in the production process, you will strongly believe the assertion that management is a factor of production and also plays a vital role in an organization. In fact, without management, there will be no production and organization. Management is the chief head of all the factors of production because it is the only factor that assembles and integrates the other factors of production
MANAGEMENT AS AN ECONOMIC RESOURCE
Economic resources can be defined as the commodities that include goods, services, properties, merchandises and supplies that produce and generate income in the country. These are the assets (things of value) which an economy or business may have available to supply and produce goods and services to meet the ever changing needs and wants of individuals (as in the case of business) and society (in the case of society as a whole) Economic resources are scarce relative to the infinite needs and wants of people and businesses operating in the economy. It is important to use these resources efficiently in order to maximize the output that can be produced from them. According to an economist, management is one of the factors of production, the other factors of production being land, labour, and capital. In a small enterprise, the owner may act as the manager. But in large corporations, there is a divorce between ownership and management. Management is the most active factor of production because it assembles the other factors. The efficient use of land and capital depends upon labour which is in turn governed by management.
Management coordinates the other Ms (manpower, methods, markets, materials, machinery and money) of an organization and therefore, it occupies a unique place among the productive factors as can be seen. The efficiency of management factor can be improved through training and development of executives. The importance of management increases with the tempo of industrialization. The economic and social development of mankind since the 2nd world war has occurred as a result of systematic and purposeful work on developing managers. The directors and managers have the power and responsibility to make decisions to manage enterprise. The size of management can range from one person in a small organization to hundreds or thousands of managers in multinational companies.
In large organizations, the board of directors formulates the policy which is then implemented by the chief executive officers. Some business analyst and financiers accord the highest importance to the quality and experience of the managers in evaluating an organizations current and future worth. As an economic factor of resources, management makes a productive enterprise out of physical and human resources. Efficient management is the most important input in the success of an organization. The inputs of manpower, materials, machinery and money do not by themselves ensure growth; they become productive through the catalyst of management.
Finally, having defined management and discussed management and also economic resources, it is obvious that management is a multipurpose organ that manages a business and manages managers and manages worker and work. Without management, there will be no organization and vice versa. Entrepreneur should ensure that the management team in their organization is effective and efficient in carrying out their duties as managers. The entrepreneur can also engage the management team in on the job training, seminars and other forms of training in order to improve their knowledge and at the long run improve the company productivity. The success and failure of a business often depends on the quality of the management team.
University/College: University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
Date: 28 December 2016
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