Category: Commerce Notes PPT

Investment is an essential financial activity that contributes to the expansion of business operations of a company. In addition, it is also a marker of growth in a country’s economy. Investment is usually undertaken by governments and business entities to enhance transactions and boost employment. 

Investment assumes an important position in any economic and business activity. Therefore, it is necessary for students to understand the meaning of investment. 

What is Investment? 

The financial aspect of the term ‘investment’ has several features. First of all, investment involves the purchase of an asset for long-term financial advantages. Therefore, an individual has the option to invest money in a company’s resources. These resources are financial in nature and typically include bonds, stocks, and equities. 

Investment is thus the act of channelling one’s capital to any business project or government activity. In addition, the invested funds are exposed to the money market as well. Therefore, investors are eligible to receive periodic dividends from their financial investments. 

All these characteristics make investment a process to generate wealth. For instance, investors anticipate that the monetary value of an asset will increase over time. As a result, they can sell their assets after a stipulated time to gather profit. 

For example, suppose that an investor channels Rs.5,000 to buy stocks at a company with a high growth performance. Therefore, after a period of time, the investor expects the value of the stocks to be Rs.6,000. Therefore, the asset that he/she has invested in experiences appreciation, making his/her investment profitable. 

Investment and Consumption

Experts define investment differently from consumption. It is mainly because consumption does not create additional value for a product. Whereas, investment is subject to time constraints and usually generates returns after a point of time. 

Investment meaning also includes infrastructural activities undertaken by the government. It is often seen that municipal authorities and government bodies invest in bridges, roadways, and railways to improve connectivity and infrastructure. Consequently, these organizations can increase the scale of their business processes, thus raking in higher profit. Therefore, their initial investment enables the appreciation of the value of an asset. 

What are the Risk Factors in Investment? 

Individuals invest only when there is an assurance of appreciation in an asset’s value. Therefore, the investment definition also includes the risk factors that investments are exposed to. 

For instance, different investment instruments have distinct risk factors. However, risk and return on investment have a directly proportional relationship. When an investment option is riskier, the return on such investment or the appreciation of the assets value is higher. 

On the other hand, when an investment avenue is considerably safer, investors receive lower returns. As a result, risk-prone investors tend to invest their money in risky assets for higher profit. Whereas, individuals who do not want exposure to market risks typically purchase low-risk assets. Thus, the definition of investment actively takes into account the risk factors that individuals have to deal with.

In addition, scale and volume of investment depends largely upon the return expectations of an individual. Therefore, some of the well known avenues for safe investment are land, real estate, and gold. It is because investors expect the appreciation in their value with the passage of time. As a result, when the market prices of these assets reach the highest, they can sell these off to generate profit. 

What are the Types of Investment? 

Investment can be classified into several categories. These types of investment options are available to individuals looking to bring about profit on their capital commitment.

However, the prevailing types of investment are as follows – 

Stocks – Stocks are one of the most prominent investment avenues available in the market. Individuals invest in a publicly traded company’s stock to own a percentage of the company. Therefore, stockholders buy stocks to directly become a part of the company’s financial consequence. 

For instance, when an organization gathers higher revenue in a particular business timeframe, these are passed on to stockholders as dividends. As a result, investors have the option to make profit from stocks. 

However, the performance of stocks in the stock market is directly influenced by its financial performance. Therefore, investors commit their capital to the stock of a company that shows financial promise in future. 

Bonds – Bonds are among the most secure investment types that have garnered an investor’s confidence. This investment option can be equated to a type of loan that investors offer to a company. In this particular case, investors are referred to as creditors. 

Creditors usually have to invest a principal amount into bonds for a maturity period. After the stipulated maturity period ends, investors receive the principal amount along with the predetermined rate of interest. Therefore, individuals can appreciate the value of their investment with a secure avenue such as bonds.

In addition, the return on investment (ROI) on bonds is lower than stocks. It is because bonds are exposed to less market risks than stocks. On top of that, companies that offer bonds to creditors are under legal obligations to return the principal and interest amount after the maturity period. 

Mutual funds – Financial institutions offer the option of mutual funds as one of the most popular types of investment. With this investment tool, these institutions create a pool of money with the funds collected from multiple investors. This pool of money is then offered as an aggregate investment to various companies.

As a result, the risk factor gets distributed among the companies, thus offering low risk to investors. 

Since mutual funds have a diversified investment meaning and portfolio, it has emerged as a dependable investment option among several categories of investors.

Induced Investment – This type of investment covers a wide range of financial instruments. Primarily, investments that are directly influenced by an alteration in national income or rate of interest fall under induced investment. 

Factors such as the cost of raw materials, changes in transaction rates and customer preferences have an impact on this kind of investment. As a result, an organization with a high profit margin becomes more likely to attract higher volume of investment from prospective investors.

Test your knowledge

• Consider that an investor Mr. Rahul purchases 50 shares of Spencers on 24th May @ Rs.1,000 per share. When the price rises to Rs.1200, Mr. Rahul decides to sell 50 shares at the market price. Calculate the profit from the sale of these shares. 

• Let’s suppose that creditor Mr. Jones buys a bond with its principal value set at Rs.5,000 for a maturity period of 5 years. The rate of interest (i.e. coupon rate) is 6% per year. Find out the value of the bond at the end of the period. 

In case you want a detailed look into the meaning of investment, do visit the official website of . 

The study of Karl Pearson Coefficient is an inevitable part of Statistics. Statistics is majorly dependent on Karl Pearson Coefficient Correlation method. The Karl Pearson coefficient is defined as a linear correlation that falls in the numeric range of -1 to +1.

This is a quantitative method that offers the numeric value to form the intensity of the linear relationship between the X and Y variable. But is it really useful for any economic calculation? Let, us find and delve into this topic to get more detailed information on the subject matter – Karl Pearson Coefficient of Correlation.

What do You mean by Correlation Coefficient?

Before delving into details about Karl Pearson Coefficient of Correlation, it is vital to brush up on fundamental concepts about correlation and its coefficient in general.

The correlation coefficient can be defined as a measure of the relationship between two quantitative or qualitative variables, i.e., X and Y. It serves as a statistical tool that helps to analyze and in turn, measure the degree of the linear relationship between the variables.

For example, a change in the monthly income (X) of a person leads to a change in their monthly expenditure (Y). With the help of correlation, you can measure the degree up to which such a change can impact the other variables.

Types of Correlation Coefficient

Depending on the direction of the relationship between variables, correlation can be of three types, namely –

Positive Correlation (0 to +1)

In this case, the direction of change between X and Y is the same. For instance, an increase in the duration of a workout leads to an increase in the number of calories one burns.

Negative Correlation (0 to -1)

Here, the direction of change between X and Y variables is opposite. For example, when the price of a commodity increases its demand decreases.

Zero Correlation (0)

There is no relationship between the variables in this case. For instance, an increase in height has no impact on one’s intelligence.

Now that we have refreshed our memory of these basics, let’s move on to Karl Pearson Coefficient of Correlation.

What is Karl Pearson’s Coefficient of Correlation?

This method is also known as the Product Moment Correlation Coefficient and was developed by Karl Pearson. It is one of the three most potent and extensively used methods to measure the level of correlation, besides the Scatter Diagram and Spearman’s Rank Correlation.

The Karl Pearson correlation coefficient method is quantitative and offers numerical value to establish the intensity of the linear relationship between X and Y. Such a coefficient correlation is represented as ‘r’.

The Karl Pearson Coefficient of Correlation formula is expressed as 

r = [frac{nleft ( sum xy right )-left ( sum x right )left ( sum y right )}{sqrt{left [ nsum x^{2}-left (sum x  right )^{2} right ]left [ nsum y^{2}-left (sum y  right )^{2} right ]}}]

In this formula,

[X-bar{X}]

is mean of the X variable.

[Y-bar{Y}]

is the mean of the Y variable.

What Methods are Used to Calculate Karl Pearson’s Coefficient of Correlation?

The Karl Pearson coefficient can be obtained using various methods, which are mentioned below.

Actual Mean Method Which is Expressed as

Actual Mean Method Which is Expressed as –

r = [frac{sum left ( X-bar{X} right )left ( Y-bar{Y} right )}{sqrt{sum left ( X-bar{X} right )^{2}sqrt{left ( Y-bar{Y} right )^{2}}}}]

Where, [bar{X}] = mean of X variable

  [bar{Y}] = mean of Y variable

In this Karl Pearson formula,

x = [X-bar{X}]

y = [X-bar{Y}]

Assumed Mean Method Which is Expressed as

Assume Mean Method

d[_{x}] = X – A

d[_{y}] = Y – A

r = [frac{Nsum d_{x}d_{y}-left ( sum d_{x} right )left ( sum d_{y} right )}{sqrt{Nsum d_{x}^{2}-left ( sum d_{x} right )^{2}}-sqrt{Nsum d_{y}^{2}-left ( sum d_{y} right )^{2}}}]

In this Karl Pearson Correlation formula,

• dx = x-series’ deviation from assumed mean, wherein (X – A)

• dy = Y-series’ deviation from assumed mean = ( Y – A)

• Σdx.dy implies summation of multiple dx and dy.

• Σdx2 is the summation of the square of dx.

• Σdy2 is the summation of the square of dy.

• Σdx is the summation of X-series’ deviation.

• Σdy is a summation of the Y-series.

N is the number of observations in pairs.

Step Deviation Method Which is Expressed as

r = [frac{dX’dY’-frac{sum d’Xsum dY’}{N}}{sqrt{left ( sum dx^{1} right )^{2}}-frac{left (sum dx^{1}  right )^{2}}{N}.left ( sum dy’ right )^{2}frac{left ( sum dy’ right )^{2}}{N}}]

In this particular Karl Pearson Method,

dx′=dxC1dx′=dxC1

dy′=dyC2dy′=dyC2

C1 = Common factor for series -x

C2 = Common factor for series -y

dx is x-series’ deviation from the assumed mean, where (X – A)

dy is Y-series’ deviation from the assumed mean, where ( Y – A)

Σdx.dy implies summation of multiple dx and dy.

Σdx2 is the summation of the square of dx.

Σdy2 is the summation of the square of dy.

Σdx is the summation of X-series’ deviation.

Σdy is the summation of the Y-series.

N is the number of observations in pairs.

Solving a Few Karl Pearson Coefficient of Correlation Questions

Task 1: Refer to the table below and find out ‘r’ with the help of the provided data. Use the Actual Mean Method to solve it.

Task 2: With the help of this table below, find out ‘r’ using Karl Pearson Coefficient of Correlation Direct Method Formula.

Pro Tip: Try to solve one or two Karl Pearson coefficient of correlation problems using all the methods to figure out which is the easiest and shortest method of the lot. However, make sure to be thorough with all the formulas of the Karl Pearson coefficient of correlation, so that you can attempt them in your exams with greater confidence.

Once you have solved the Karl Pearson Coefficient of Correlation sums, you will be able to understand the degree of relationship between discussed variables and relate it with reality better.

Overview of the Properties of the Coefficient of Correlation

Since we gained a fair idea about Pearson’s correlation of coefficient and have also become familiar with its question format, let’s learn about its properties as well.

In case you are wondering, “Why should I check out the properties of coefficient of correlation?” – Note that a clear idea about correlation coefficient will come in handy both during exam preparation and while solving Karl Pearson Coefficient of Correlation sums. It will help you retain every minute yet vital pointer about this ratio and would further prevent you from making any silly mistake.

That being said, let’s glance through these significant properties in brief –

• The Correlation Coefficient (r) does not have any unit.

• r with a positive value signifies that both X and Y move along the same direction.

• r with a negative value indicates an inverse relation between X and Y.

• X and Y are said to be not correlated if the value of r is 0.

• r with a high value signifies a strong linear relationship between two variables.

• r with a low value signifies a weak relationship between two variables.

• Correlation between two variables is said to be perfect if the value of r is either +1 or -1.

Assumptions of Karl Pearson Coefficient Correlation

When we calculate the Karl Pearson Correlation, we are required to make a few assumptions in mind.

Following are the two main assumptions:

Outliers are data that contrasts drastically with the rest of the data. It might signify many extreme data which actually does not fit in the set. You can spot an outlier by plotting the data in a graph paper and looking for any extreme study.

Use of Karl Pearson Coefficient in Real Life 

We see that the Karl Pearson Coefficient Correlation is used extensively in mathematical procedures. In the calculation of any economic problem, this gains great vitality by estimating the variables for X and Y and thereby sorting to find the intensity between them. 

To logically and accurately understand the effect of one change in regard to another we can use this method. For example, a shoe manufacturer in order to understand the varied sizes of shoes he first needs to assimilate the common foot sizes, after placing them in the Karl Pearson Coefficient Correlation formula he can estimate the requirement accordingly.

Did You Know?

• The correlation was developed in 1885 by Francis Galton! 

• Karl Pearson was actually a British statistician who was known as the leading founder of modern statistics.  

• It is regarded as the best method of measuring the association between two variables of interest as it is based on another popular method called covariance. 

• Karl Pearson’s method gets highly affected by extreme value items, so we cannot draw any immediate conclusion using this method.

A partnership firm undergoes reconstitution of the partnership in the event of the admission of a new partner, retirement of a partner or the insolvency of a partner. Sections 31 to 35 of the Indian Partnership Act, 1932 include the guidelines that govern the legal consequences of the retirement or admission of a partner. Let’s understand in detail the legal consequences of retirement or admission of a partner.

Admission or Introduction of a Partner Section 31

Before introducing a new partner in a partnership, it is important to obtain the consent of the existing partners. The new partner is not liable for any actions committed before his admission into the partnership.  If the new partner is a minor, the provisions of Section 30 of the Partnership Act will apply. 

Rights and Liabilities of a New Partner

The liabilities of a new partner commence from his date of admission into the partnership as a partner. He agrees to accept the liability for any obligations incurred by the firm before his admission into the firm.

The new firm may agree to take over the liability for the debts of the old firm and the creditors may accept the new firm as their debtor. This transition is possible only with the consent of the creditors. This substituted liability is called Novation and the consent of the creditors along with an agreement is needed for it. 

The Retirement of a Partner Section 32

When a partner retires, he ceases to be a member of a partnership firm without ending the relationship between the other partners and the relationship between the firm and outside parties. The retirement of a partner does not mean that the partnership firm needs to dissolve. In case of dissolution, the withdrawing partner dissolves the firm.

A Partner in a Partnership Firm May Retire:

• With the consent of the other partners

• In accordance with an express agreement with the other partners

• If the partnership is at will, a partner can retire by giving notice to other partners

Liabilities of a Retiring Partner

• A retiring partner is liable to third parties until he or the other members of the firm give public notice of his retirement. In case the third party was not aware that the retiring partner was a partner of the firm, he is not liable to the third party.

• The retiring partner continues to be liable to the third parties for any acts of the firm for the period when he was a partner at the firm. He can be absolved from such liability if there is an agreement to the contrary between him, partners of the reconstituted firm and the concerned third party. Such an agreement can be express or implied by the conduct post the retirement announcement of the partner.

• In case of a partnership at will, the retiring partner can be relieved by giving notice to other partners, informing them about his intention to retire. Public notice is not mandatory in this case. 

Expulsion of a Partner Section 33

A partner can be expelled from the partnership firm by other partners: 

• If the partners hold the power of expulsion through a contract between the partners

• The power is exercised by a majority of partners

• The power of expulsion is used in good faith by the partners

Expulsion of the partner does not lead to the dissolution of the firm. In the absence of the above conditions, the expulsion is not considered to be in the interest of the business. 

For the Expulsion of the Partner to be in Good Faith:

• The expulsion should be in the interest of the partnership

• The firm must serve a notice to the partner before the expulsion

• The partner being expelled must be allowed to present his side of the argument regarding the events that led to the expulsion

If the above conditions are not met, then the expulsion is not considered to be in good faith and is deemed null and void. 

Insolvency of a Partner Section 34

When a partner is adjudged insolvent:

• He ceases to be a partner from the date of being adjudged insolvent

• His estate ceases to be liable for any acts of the firm from the said date

• The firm is not liable for any acts of the insolvent partner

In business studies, what is a Limited Liability Partnership is a common question. It is a broad concept that forms a crucial part of partnership norms. LLP or Limited Liability Partnership is an alternative form of corporate business that offers benefits of limited liability to partners at minimal compliance costs. It is a newer concept in a business where partners have lesser financial obligations and limited personal liability in the firm.

What is the Meaning of LLP?

LLP, better known as Limited Liability Partnership, requires every partner to contribute to daily business operations while having limited responsibilities. In usual partnership firms, partners have unlimited liability towards the overall debts and legal concerns of business. Assets of these partners are also liable to be utilized for meeting any debt or liability of the firm. However, in LLP, partners are free from such huge liabilities.

Separate legal existence with a lesser extent of liabilities is what Limited Liability Partnership all about. Other than this, it has all the features that a regular partnership has.

What is the Limited Liability Partnership Act 2008?

The concept of LLP was introduced through the Limited Liability Partnership Act of 2008 by the Parliament of India. As mentioned in Section 3 of the LLP Act, a Limited Liability Partnership is a corporate body that is formed and incorporated under this act. A partnership is a legal entity separate from the partners.

What is an LLP Agreement?

LLP agreement is the mutual deal between all partners which decides the rights and duties of partners. In some firms, a partner can also modify the agreement if he wishes. If any such agreement has not been made by partners, mutual rights and duties in the partnership will be governed by the LLP Act of 2008.

What is Meant by the Limited Liability Partnership and Mutual Agency?

One of the significant differences between an LLP and a regular partnership firm is the presence of mutual agency. In a Limited Liability Partnership, independent actions taken by one of the partners does not hold other partners responsible for it. Just like other liabilities, liability for sharing the responsibility of each other’s actions is also limited.

All partners involved in it are agents of LLP, and their individual actions are not binding on one another. This is what is Limited Liability Partnership in business and partnership firms. 

Salient Features of Limited Liability Partnership

LLP is characterized by some unique features and norms, which the partners have to abide by. Here are some of the salient features of Limited Liability Partnership.

Perpetual Succession

LLP differs from a general partnership on aspects of succession. Unlike a general partnership, LLP firms can continue to exist even after retirement, death, withdrawal, or insolvency of any of the partners. It can also hold property rights and sign contracts in its name.

Separate Legal Entity 

Just like any other company, entity, or corporation, LLP is a separate legal entity. While an LLP is entirely liable for its assets, partners involved in it hold limited liability when it comes to their contribution in the LLP. Creditors of an LLP are not the creditors of partners taking part in it.

Artificial Legal Person 

In order to address various legal aspects, LLP is turned into an artificial legal person. This is done through a proper legal procedure, after which an LLP holds all rights of an individual. It is intangible yet has equal significance in dealing with legal complications.

Common Seal 

The understanding of what is Limited Liability Partnership Act 2008 remains incomplete without being aware of the common seal under Section 14(c). It is mentioned that an LLP can have a common seal if it wishes to. The Act does not mandate it. However, if a firm decides to have a common seal, it is mandatory that the seal remains under the custody of a responsible authority. At least two LLP partners have to be present during the affixation of the common seal of an LLP.  

Minimum and Maximum Number of Partners in an LLP 

An LLP must include at least 2 partners. Out of two designated partners, at least one has to be a resident of India. When it comes to the maximum number of partners in an LLP, there is no specified number.

Investigation 

The Central Government of India holds sole power to investigate matters related to LLP firms and disputes. The authority can also appoint a competent authority to investigate the matter if they feel necessary.

Profit Motive 

An LLP partnership cannot be formed for charitable work or non-profit purposes. Every LLP firm must carry on a lawful business with the motive of earning returns in the form of profit.

Business Management and Business Structure 

Partners included in an LLP firm hold the right to manage a business. However, the right to deal with legal issues lies only with designated partners of the firm.

Conversion into LLP 

The Limited Liability Partnership Act gives the right to any private firm, start-up, or unlisted company to convert into an LLP firm.

Compromise or Arrangement 

Compromises or arrangements related to the merging or amalgamation of partners have to be done in accordance with the LLP Act.

More about Limited Liability Partnerships – LLP

Learning might seem like an easy day-to-day routine process however, it stands unique for everyone. Each individual has their respective learning style. 

While preparing for any exam, it is essential to identify what suits your mental capacity the best.

This again might seem to be a difficult thing to do. But, the ones who can crack it, have no limits and can always push themselves forward. 

The following points are certain ways that can help ease out the learning process and also make retrieval efficient.

Students shall be following them if they wish to kick off the limiting beliefs and ace learning. 

Let’s get started and learn some of them ahead of time. 

• Visualize along with Reading

If you are someone for whom imagination, pictures and art seem appealing then this is the method for you. Visualizing what one is reading makes comprehension easy and saves time. Individuals can remember easily when they are able to associate a picture with the given data. Techniques like mind mapping can help visualize better. Mind mapping is a method where one uses flowcharts, statistical diagrams, Venn diagrams etc. as a tool to represent theoretical information. A classic example of this is the food chain. Often colour coding is also used to increase association with these mind maps.

• Practice by Writing to Score Good Marks in Theory

Practicing, also called maintenance rehearsal in psychology, is another way to enhance the learning process. Writing down what we read gives it a double-check and also one is tangibly able to recognise what they just read/learnt. Writing down the text not only helps one revise but also helps in identifying the missing links. One can add more to the given as well. You can also write and read aloud simultaneously to aid auditory learning as well.

• Practice as if you are Sitting in an Examination Center

Attempting an exam while in the comfort of your home is quite different from when one sits in the examination center. The environment then is steady but full of stress, there is a clock ticking on the head, an uncomfortable bench and a desktop in front of you. To be able to manage the pressure of that setting, it is crucial to try and practice giving exams in that environment. One can create this easily at home by giving mock tests while sitting on a chair and table, using a stopped clock with minimal noise, just a glass of water beside. The results are more effective when one practice gives mocks in the same time slot as the actual exam. This will help train the brain to work effectively at the time of the real examination.  

• Create Hurdles for Yourself

Often practicing for an exam can get monotonous. It is the same syllabus with the same type of questions. Students tend to get bored and even the brain stops registering the information after a point. Challenging one’s brain with brainteasers, different kinds of questions, abstract thinking concepts, puzzles, subjective questions, etc. can help learn better. These things help the mind go on. Apart from the subject-related tricks, individuals can also play mind-challenging games like Chess and Sudoku that not only help increase concentration but also teach strategies to see things differently. Students who use these methods are known as kinaesthetic learners.

• Make Short Notes which will help Score Good Marks in Theory

Making notes while studying is a very helpful tool in learning better. However, note-making, though underrated, is a very important skill. Notes are a comprehensive understanding of what one reads. Short notes can be made beside the actual text using sticky notes or adding extra paper along the text to ease revision later. Colour coding these notes help enhance the retrieval process. These notes can also contain some extra things that are absent in the given data. For instance, one can attach reference links, page numbers of books, other anecdotes that one is reminded of while revising.

Quality managers really discover how to master the five basic functions: planning, organizing, staffing, leading, controlling. And this step literally fits into other various departments of an organization. Human Resource like for example too follows the similar steps to execute their functions.    

In this article, we will discuss managerial functions of human resource management i.e. planning, organizing, staffing, directing, coordinating, controlling in addition to reporting and budgeting in detail.

 

Define of Human Resource

The term “manpower” is highly associated with this definition of Human Resource. Manpower means the human power (workforce) present in an organization. 

 

Human resources are the combined set of the people who together form the workforce of a particular organization. Hyman capital is embodied as a narrower concept merely meaning the knowledge possessed by the individual working, while Human Resource is a much-widened concept. Similar terms are manpower, labour, personnel, associates or simply people all are related to the term Human Resource. 

 

A human-resources department of an organization functions with the Human Resource Management. The department checks various aspects of employment, such as working in compliance with the labour law and following the employment standards, taking care of the benefits of the employees and other aspects of recruitment and employee off boarding.

 

Define Human Resource Management

Human Resource management defines the process of recruiting, selecting, induction processing, orientation conducting, training and development process assuring, appraising the employees, deciding their pay scale, ensuring the safety of the employees, healthy relations with the employees, motivating the workforce, complying with all the standards, also maintain good terms with the trade unions are all included here in the definition.

 

Human Resource Management also involves the five basic management functions, further we sum up the role in the following points- 

1.  This involves procurement, development and all maintenance of human resource

2.    HRM helps to achieve the individual, organizational and other social objectives

3. Human Resource Management is a multidisciplinary facet and thus includes the study of management, psychology.

4.    The department also involves team spirit and teamwork.

5.    HRM is a continuous process.

Functions of Human Resource Management

The functions of HRM are heavy role, the whole organization is somewhat dependent on this department as they connect with the workforce, the lifeblood of the business. 

1. Recruitment and Selection

Recruitment is the process of inviting, screening, and selecting the required, potential and qualified candidates based on the job vacancy.  

2. Orientation

Orientation is the fundamental step to guide a new employee to adjust himself to the work environment of the business. Here an employee is introduced with objectives and goals of the organization and how he can serve to achieve the long-term and short-term goals of the organization.

3. Maintaining Good Working Conditions

Human resource management provides good and healthy working conditions for the employee so that they are inclined to like the workplace and the environment. 

4. Managing Employee Relations

Employees are the supporting pillars of any successful organization hence their relationship is a crucial function of human resource management. 

5. Training and Development

Training always goes hand in hand with development, they are the indispensable functions of human resource management. They attempt to improve the current and future performance of an employee by enhancing their skills.

Importance of Human Resource Management 

HR management bridges the gap between the employees’ performance and the organisation’s strategic objectives, whether long or short term. Human resource management contributes to the remarkable success of an organisation. Thus, human resource management has emerged as a popular course to study. The importance is summed down as under –

• Strategy management development

• Benefits analysis done

• Training and development conducted

• Interactivity within the employees

• Conflict management

• Establish a healthy work culture

Evolution of Human Resource Management

Human resource management was foremostly evolved for the Personnel management which was the former management system that was used to manage the working of the employees. Great psychologists on human behaviour and their receptive power were analyzed and experimented with by a famous psychologist Elton Mayo, he did many experiments on human behaviour in varied situations in the year 1924. His belief is based on work-life balance for improving the productivity of workers and this emphasis on human relations, that influences the productivity of the workers. He was regarded as the father of Human resources management.

Human Resource Management- Functions

Human resource management is the process of selecting, hiring and managing the employees of an organisation. It is abbreviated as HRM or is referred to as Human Resources or HR. The department of HR of an organisation or firm is responsible for creating and supervising the policies that govern the employees and also oversees the relationship of the firm with the workers working in the firm. The HR term was used for the first time in the 1900s. It became more widely used during the 1960s and was used to describe the workers of an organisation or firm. Human resources management emphasises the workers and the business. In this field, the workers are sometimes called human capital and are called the company’s assets. The aim is to make effective use of the workers, less risk and have maximum return on investment or ROI. A new term called human capital management or HCM has become more frequent in use currently. The HRM conducts orientation programs, has training and development of the employees, decides the pay scale or salary and also ensures the safety of the workers. They aim to build healthy relations between the company and its employees and also motivate the workforce.

They have 5 basic roles which are stated as follows:

1. Procuring, developing and maintaining the human resources

2. HRM aims to help the individual objectives as well the organisational objectives.

3. It is a multidisciplinary area and has the involvement of psychology and management studies.

4. This area of the company involves teamwork and motivation.

5. The area is a continuous process.

Workplace conflict is described as a state of disagreement or misunderstanding resulting from a communication gap or dissent of needs, beliefs, resources, and relationships between the members of the organization.

Being humans, conflicts occur when there is no balance between the opinions of both parties. Organizational conflicts occur when there is human interaction. It starts when one member of the organization discusses his/her goal towards the organization and plans to execute it. The disbalance of opinion can come into being within a member, between two members, or also a group of members working in the same organization.

Sources and Causes of Conflicts in an Organization

There are a number of factors that influence organizational conflicts under certain circumstances. These are as follows:

1. Task Interdependencies: It is referred to as when accomplishing an organizational goal, a team sums up and works together for that goal to achieve. This results in the interdependence of tasks allotted and often creates confusion in the workplace as people collaborate to accomplish a goal. High interdependence heightens the intensity of relationships and often small disagreements lead to major issues further on.

2. Status Inconsistencies: This is the second most factor involved as say, for instance, managers get the time off for other errands to take place. This is not allowed to nonmanagers of the organization. It leads to the unfairness of the organizational policies which non-managers usually perceive.

3. Communication Problem: Various communication problems in an organization among people facilitate conflicts. This communication problem occurs when tasks are being shifted from one person to another.

4. Roles and Expectations: Each employee in the organization plays one or more roles in the organization. These roles are defined through a combination of job titles, descriptions of duties. Manager-subordinate conflict arises when the role of a subordinate is not clearly defined by the manager.

5. Authority Relationships: There is always an underlying conflict among seniors and subordinates. It is because most people do not like being told about the tasks and what to do next. This problem is faced by the managers who are overly strict towards their subordinates and eventually they fail to create a harmonious relationship. 

6. Specialization: Employees tend to become experts at a particular task or obtain general knowledge about the work they are performing. When the majority of people get specialization, they tend to implement their ideas and in turn, result in conflicts among people. Conflicts also arise when workers have little knowledge of each other’s job responsibilities.

The above are various sources of organizational conflicts within an organization where disputes occur between members. This is not only about any organization. Conflicts occur in businesses too. Various factors or sources of conflicts in business take place with the communication gap among employees.

There are also subtler conflicts that involve conflicts, jealousy, personality clash, role definitions, power, and favor. The conflict between individuals between competing needs and demands to which individuals respond differently.

 

Consequences of Organizational Conflicts

The major cause of unresolved conflict is the communication gap among individuals. This results in confusion, or refusal to cooperate, missed deadlines or delays, and increased stress among employees, disruption in the workflow, decreased customer satisfaction, and gossip.

The conflict in the organization may have some of the following negative effects. The pointers are discussed below:

1. Diversion of time and energy from the main issue

2. Creates deadlocks

3. Delays decision

4. Interferes listening

5. Hinders exploration of more and more alternatives

6. Destroys sensitivity

7. Disruption in a meeting and arouses anger

8. Provoke personal abuse

9. Causes defensiveness

Stress

Interpersonal conflict among people at work is the most common and noted stressors for the environment. It further relates other stressors that may co-occur such as role conflict, an overload of work, ambiguity. It also creates strain such as anxiety, depression, and low levels of job satisfaction.

Positive Outcome

Group conflicts are not always categorized as negative. This may sometimes lead to a positive outcome as well. Conflicts lead to subgroups among the group and promote a creative solution to the problem. This is because there is more human resource to solve the existing problem. The group must know how to deal with the problems arising. These conflicts are sometimes necessary as it promotes creative tensions and effective contributions to the organizational goal. It is destructive when the conflict is of win-lose nature. This win-lose conflict leads to compromises and a less than sufficient outcome.

Importance of the Meaning and Causes of Conflicts – Causes, Consequences and Positive Outcome 

Studying the Meaning and Causes of Conflicts – Causes, Consequences and Positive Outcome are important for all management students. This concept tells about the different problems that arise within an organization and how they affect the operations of a business. It also tells you the causes of such conflicts and their impact on personal relationships. Every student who wants to work in an organization must have a clear understanding of the Meaning and Causes of Conflicts – Causes, Consequences and Positive Outcomes. It will help you prevent these conflicts in your organization and also solve the problems between two or more employees.

 

With the Meaning and Causes of Conflicts – Causes, Consequences and Positive Outcome, you will also get to learn how to resolve interpersonal issues and improve communication between your team. Conflict brings positive change in the organization as well. So, you can understand how conflict impacts an organization positively.

 

Whenever a conflict arises in your team, you will get an opportunity to turn it into a team-building activity. You can bring all your teammates together and let them brainstorm ideas to solve the common problem. It will also improve communication between employees, leading to increased efficiency and better results. Besides this, while resolving a conflict with your team members, you will get to interact with the silent employees of your team who do not contribute much during such interactions. 

 

How to learn the Meaning and Causes of Conflicts – Causes, Consequences and Positive Outcome?   

Learning the Meaning and Causes of Conflicts – Causes, Consequences and Positive Outcome will not be difficult, especially when you are studying with . Here are some tips to start learning this concept: 

• Make your notes while studying the Meaning and Causes of Conflicts– Causes, Consequences and Positive Outcome and create a summary of the topic. This summary will prove to be a significant help during your exam preparations. 

• When you go through the Meaning and Causes of Conflicts– Causes, Consequences and Positive Outcome, give an ample amount of time to every topic to gain a better understanding. 

• After you are done with the Meaning and Causes of Conflicts– Causes, Consequences and Positive Outcome, go through different questions based on real situations to understand the concept of conflict more deeply. 

• Use different reference books to study the Meaning and Causes of Conflicts– Causes, Consequences and Positive Outcome and collect more information on the topic to understand it better. 

• You can visit ’s online learning platform to learn the Meaning and Causes of Conflicts– Causes, Consequences and Positive Outcomes. Our platform will make the learning process a lot easier by providing you with explanations of conflict and its causes in simple and understandable language.

• Try to solve the exercise questions in your textbook once you have thoroughly studied the Meaning and Causes of Conflicts – Causes, Consequences and Positive Outcome.