Management company: Difference between revisions
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'''[[Management]] [[company]]''' is an separate entity in organizational and financial sense, created by group of investors to manage some common assets. Typically such company manages capital [[investment]] funds, but it also can manage hotels, resorts, office complexes, start-ups, other companies. Profits obtained from investment by management company is split between shareholders. Such arrangement provides better [[efficiency]] and [[risk]] sharing and is commonly used on financial markets. | |||
'''[[Management]] [[company]]''' is an separate entity in organizational and financial sense, created by group of investors to manage some common assets. Typically such company manages capital investment funds, but it also can manage hotels, resorts, office complexes, start-ups, other companies. Profits obtained from investment by management company is split between shareholders. Such arrangement provides better [[efficiency]] and [[risk]] sharing and is commonly used on financial markets. | |||
'''Management''' is a set of activities [[targeting]] the resources of [[organization]] and performed with the intention of achieving [[organizational goals]] in an efficient and effective manner. We can define management as all the processes and actions taken to maintain the company's operations for the most effective achievement of its goals. | '''Management''' is a set of activities [[targeting]] the resources of [[organization]] and performed with the intention of achieving [[organizational goals]] in an efficient and effective manner. We can define management as all the processes and actions taken to maintain the company's operations for the most effective achievement of its goals. | ||
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==Management Process== | ==Management Process== | ||
In management [[process]] we can distinguish four basic types of activities<ref>M.Ranganatham,(2006)</ref>: | In management [[process]] we can distinguish four basic types of activities<ref>M.Ranganatham,(2006)</ref>: | ||
* [[Planning]] includes a whole range of activities related to setting the company's goals - both short- and long-term. In addition to setting goals, planning also determines the most optimal ways to achieve them. Its mean that during [[planning process]] for example: increase in company revenues by 20% annually, we should also consider how we want to achieve this growth | * [[Planning]] includes a whole range of activities related to setting the company's goals - both short - and long-term. In addition to setting goals, planning also determines the most optimal ways to achieve them. Its mean that during [[planning process]] for example: increase in company revenues by 20% annually, we should also consider how we want to achieve this growth | ||
* [[Organizing]] means grouping activities and resources, which in turn should lead to the achievement of the planned goals. Therefore, it is about translating the strategies developed at the planning stage into specific activities assigned to specific persons possessing specific resources. For example, if we are planning a 20% increase in revenues by acquiring new customers, at the stage of organizing, we should, for example, specify new monthly sales plans, the number of recipients acquired, new sales routes or cars for employees | * [[Organizing]] means grouping activities and resources, which in turn should lead to the achievement of the planned goals. Therefore, it is about translating the strategies developed at the planning stage into specific activities assigned to specific persons possessing specific resources. For example, if we are planning a 20% increase in revenues by acquiring new customers, at the stage of organizing, we should, for example, specify new monthly sales plans, the number of recipients acquired, new sales routes or cars for employees | ||
* Leadership is the management of people who will be [[motivating]] and encouraging for them to increase their productivity and to [[work]] better for the organization. It's a different set of processes that are supposed to encourage its members to cooperate in the interest of the company. For example: getting new customers and a 20% increase in revenue can not be achieved without motivated and motivated employees by your boss. | * Leadership is the management of people who will be [[motivating]] and encouraging for them to increase their productivity and to [[work]] better for the organization. It's a different set of processes that are supposed to encourage its members to cooperate in the [[interest]] of the company. For example: getting new customers and a 20% increase in revenue can not be achieved without motivated and motivated employees by your boss. | ||
* [[Controlling]] means observing the progress and emerging barriers in the organization in the implementation of the planned goals. It is a process of constantly monitoring the current situation and analyzing how it affects the achievement of desired results. When planning a 20% increase in revenue, controlling will concern, for example, the assessment of the extent to which the increase is achieved, what are the results of the work of traders and what type of risk may cause that the goal will not be achieved. | * [[Controlling]] means observing the progress and emerging barriers in the organization in the implementation of the planned goals. It is a process of constantly monitoring the current situation and analyzing how it affects the achievement of desired results. When planning a 20% increase in revenue, controlling will concern, for example, the assessment of the extent to which the increase is achieved, what are the results of the work of traders and what type of risk may cause that the goal will not be achieved. | ||
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* time | * time | ||
* intangible assets (licenses, copyrights) | * intangible assets (licenses, copyrights) | ||
==Examples of Management company== | ==Examples of Management company== | ||
* '''BlackRock''': BlackRock is a global investment management corporation headquartered in New York City. It is one of the world's largest asset managers with $7.4 trillion in assets under management as of 2019. It offers a range of investment products and services to institutional and retail clients, including mutual funds, ETFs, alternative investments, insurance products and fiduciary services. | * '''BlackRock''': BlackRock is a global investment management corporation headquartered in New York City. It is one of the world's largest asset managers with $7.4 trillion in assets under management as of 2019. It offers a range of investment products and services to institutional and retail clients, including mutual funds, ETFs, alternative [[investments]], [[insurance]] products and fiduciary services. | ||
* '''Vanguard''': Vanguard is an American investment management company based in Pennsylvania. It is the second-largest provider of mutual funds and the largest provider of ETFs in the world. Vanguard provides services to individual investors, financial advisors, and institutional investors. It offers a range of products, including mutual funds, ETFs, and separately managed accounts. | * '''Vanguard''': Vanguard is an American investment management company based in Pennsylvania. It is the second-largest provider of mutual funds and the largest provider of ETFs in the world. Vanguard provides services to individual investors, financial advisors, and institutional investors. It offers a [[range of products]], including mutual funds, ETFs, and separately managed accounts. | ||
* '''Fidelity Investments''': Fidelity Investments is a global financial services company based in Boston, Massachusetts. It is one of the largest asset managers in the world, with more than $2.6 trillion in assets under management. Fidelity provides a range of services, including brokerage, retirement planning, wealth management, and mutual funds. It also offers financial advice and a range of banking services. | * '''Fidelity Investments''': Fidelity Investments is a global financial services company based in Boston, Massachusetts. It is one of the largest asset managers in the world, with more than $2.6 trillion in assets under management. Fidelity provides a range of services, including brokerage, retirement planning, wealth management, and mutual funds. It also offers financial advice and a range of banking services. | ||
==Advantages of Management company== | ==Advantages of Management company== | ||
A management company provides many advantages to investors, including: | A management company provides many advantages to investors, including: | ||
* Professional asset management | * Professional asset management - a management company provides professional management of financial assets, allowing investors to benefit from their expertise and professional guidance. | ||
* Risk diversification | * Risk [[diversification]] - the management company pools together investor funds and spreads them across different investments, which helps to reduce risk. | ||
* Cost savings | * [[Cost]] savings - a management company is often more cost effective than managing the investments yourself, as they can reduce costs through [[economies of scale]]. | ||
* Access to more investment opportunities | * Access to more investment opportunities - management companies often have access to a variety of investments that may not be available to individual investors. | ||
* Tax efficiency | * Tax efficiency - management companies can help investors to maximize their tax efficiency, by taking advantage of tax breaks and other incentives. | ||
==Limitations of Management company== | ==Limitations of Management company== | ||
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* Complexity of activities - Management companies are responsible for a wide range of activities and functions, such as managing investments, setting up contracts and agreements, analyzing financial data, and making decisions on behalf of investors. This complexity can lead to confusion and costly mistakes when the company is not well-managed. | * Complexity of activities - Management companies are responsible for a wide range of activities and functions, such as managing investments, setting up contracts and agreements, analyzing financial data, and making decisions on behalf of investors. This complexity can lead to confusion and costly mistakes when the company is not well-managed. | ||
* Cost of fees - Management companies are typically paid fees for their services, and these fees can be costly for investors. This cost can be particularly burdensome for small investors. | * Cost of fees - Management companies are typically paid fees for their services, and these fees can be costly for investors. This cost can be particularly burdensome for small investors. | ||
* Limited resources - Management companies often have limited resources, such as personnel, technology, and capital, which can limit their ability to manage investments effectively. | * Limited resources - Management companies often have limited resources, such as personnel, [[technology]], and capital, which can limit their ability to manage investments effectively. | ||
* Conflict of interest - Management companies may have conflicts of interest that can lead to decisions that are not in the best interest of the investors. For example, they may choose investments that will benefit them rather than the investors. | * [[Conflict of interest]] - Management companies may have [[conflicts of interest]] that can lead to decisions that are not in the best interest of the investors. For example, they may choose investments that will benefit them rather than the investors. | ||
* Lack of transparency - Management companies may not be transparent about their activities and decisions, which can lead to mistrust from investors. | * [[Lack of transparency]] - Management companies may not be transparent about their activities and decisions, which can lead to mistrust from investors. | ||
==Other approaches related to Management company== | ==Other approaches related to Management company== | ||
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* Identifying and evaluating potential investments, as well as monitoring existing investments. | * Identifying and evaluating potential investments, as well as monitoring existing investments. | ||
* Negotiating and structuring transactions and agreements. | * Negotiating and structuring transactions and agreements. | ||
* Performing due diligence and risk management activities. | * Performing [[due diligence]] and [[risk management]] activities. | ||
* Developing and maintaining relationships with external parties, such as vendors and creditors. | * Developing and maintaining relationships with external parties, such as vendors and creditors. | ||
* Ensuring compliance with relevant laws and regulations. | * Ensuring compliance with relevant laws and regulations. | ||
* Providing advice and guidance to the board of directors. | * Providing advice and guidance to the [[board]] of directors. | ||
In summary, management companies can provide a range of services to businesses, from developing strategies and evaluating investments, to negotiating deals and managing risk. They can also assist with the compliance of relevant laws and regulations. | In summary, management companies can provide a range of services to businesses, from developing strategies and evaluating investments, to negotiating deals and managing risk. They can also assist with the compliance of relevant laws and regulations. | ||
{{infobox5|list1={{i5link|a=[[Revenue center]]}} — {{i5link|a=[[Transformational outsourcing]]}} — {{i5link|a=[[Functional strategy]]}} — {{i5link|a=[[Corporate agent]]}} — {{i5link|a=[[Controlled company]]}} — {{i5link|a=[[Friendly takeover]]}} — {{i5link|a=[[Large organizations]]}} — {{i5link|a=[[Organizational strategy]]}} — {{i5link|a=[[Types of stakeholders]]}} }} | |||
==References== | ==References== | ||
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{{a|Anna Klisiewicz}} | {{a|Anna Klisiewicz}} | ||
[[Category:Financial management]] | [[Category:Financial management]] | ||
Latest revision as of 00:17, 18 November 2023
Management company is an separate entity in organizational and financial sense, created by group of investors to manage some common assets. Typically such company manages capital investment funds, but it also can manage hotels, resorts, office complexes, start-ups, other companies. Profits obtained from investment by management company is split between shareholders. Such arrangement provides better efficiency and risk sharing and is commonly used on financial markets.
Management is a set of activities targeting the resources of organization and performed with the intention of achieving organizational goals in an efficient and effective manner. We can define management as all the processes and actions taken to maintain the company's operations for the most effective achievement of its goals.
Management Process
In management process we can distinguish four basic types of activities[1]:
- Planning includes a whole range of activities related to setting the company's goals - both short - and long-term. In addition to setting goals, planning also determines the most optimal ways to achieve them. Its mean that during planning process for example: increase in company revenues by 20% annually, we should also consider how we want to achieve this growth
- Organizing means grouping activities and resources, which in turn should lead to the achievement of the planned goals. Therefore, it is about translating the strategies developed at the planning stage into specific activities assigned to specific persons possessing specific resources. For example, if we are planning a 20% increase in revenues by acquiring new customers, at the stage of organizing, we should, for example, specify new monthly sales plans, the number of recipients acquired, new sales routes or cars for employees
- Leadership is the management of people who will be motivating and encouraging for them to increase their productivity and to work better for the organization. It's a different set of processes that are supposed to encourage its members to cooperate in the interest of the company. For example: getting new customers and a 20% increase in revenue can not be achieved without motivated and motivated employees by your boss.
- Controlling means observing the progress and emerging barriers in the organization in the implementation of the planned goals. It is a process of constantly monitoring the current situation and analyzing how it affects the achievement of desired results. When planning a 20% increase in revenue, controlling will concern, for example, the assessment of the extent to which the increase is achieved, what are the results of the work of traders and what type of risk may cause that the goal will not be achieved.
Managers
In every company managers are responsible for making decisions. Its means that intentionally or not they take action that affect how functioning of the company.
The responsibilities of managers are[2]:
- supervising decision routines
- shaping decision practices
- providing decision resources
Managers are making decision and they manage human resources, but the owner of the company must be watching over everything.
Resources
Every organization uses resources in its operation. Resources are main subject to management which we can distinguish[3]:
- human resources (workforce and its qualifications)
- financial resources
- tangible assets (fixed assets)
- time
- intangible assets (licenses, copyrights)
Examples of Management company
- BlackRock: BlackRock is a global investment management corporation headquartered in New York City. It is one of the world's largest asset managers with $7.4 trillion in assets under management as of 2019. It offers a range of investment products and services to institutional and retail clients, including mutual funds, ETFs, alternative investments, insurance products and fiduciary services.
- Vanguard: Vanguard is an American investment management company based in Pennsylvania. It is the second-largest provider of mutual funds and the largest provider of ETFs in the world. Vanguard provides services to individual investors, financial advisors, and institutional investors. It offers a range of products, including mutual funds, ETFs, and separately managed accounts.
- Fidelity Investments: Fidelity Investments is a global financial services company based in Boston, Massachusetts. It is one of the largest asset managers in the world, with more than $2.6 trillion in assets under management. Fidelity provides a range of services, including brokerage, retirement planning, wealth management, and mutual funds. It also offers financial advice and a range of banking services.
Advantages of Management company
A management company provides many advantages to investors, including:
- Professional asset management - a management company provides professional management of financial assets, allowing investors to benefit from their expertise and professional guidance.
- Risk diversification - the management company pools together investor funds and spreads them across different investments, which helps to reduce risk.
- Cost savings - a management company is often more cost effective than managing the investments yourself, as they can reduce costs through economies of scale.
- Access to more investment opportunities - management companies often have access to a variety of investments that may not be available to individual investors.
- Tax efficiency - management companies can help investors to maximize their tax efficiency, by taking advantage of tax breaks and other incentives.
Limitations of Management company
A management company can present a variety of limitations to its users:
- Complexity of activities - Management companies are responsible for a wide range of activities and functions, such as managing investments, setting up contracts and agreements, analyzing financial data, and making decisions on behalf of investors. This complexity can lead to confusion and costly mistakes when the company is not well-managed.
- Cost of fees - Management companies are typically paid fees for their services, and these fees can be costly for investors. This cost can be particularly burdensome for small investors.
- Limited resources - Management companies often have limited resources, such as personnel, technology, and capital, which can limit their ability to manage investments effectively.
- Conflict of interest - Management companies may have conflicts of interest that can lead to decisions that are not in the best interest of the investors. For example, they may choose investments that will benefit them rather than the investors.
- Lack of transparency - Management companies may not be transparent about their activities and decisions, which can lead to mistrust from investors.
In addition to managing capital investments funds, management companies can also take on a number of other roles. These include:
- Developing strategies and policies to direct the business operations of the company they manage.
- Identifying and evaluating potential investments, as well as monitoring existing investments.
- Negotiating and structuring transactions and agreements.
- Performing due diligence and risk management activities.
- Developing and maintaining relationships with external parties, such as vendors and creditors.
- Ensuring compliance with relevant laws and regulations.
- Providing advice and guidance to the board of directors.
In summary, management companies can provide a range of services to businesses, from developing strategies and evaluating investments, to negotiating deals and managing risk. They can also assist with the compliance of relevant laws and regulations.
| Management company — recommended articles |
| Revenue center — Transformational outsourcing — Functional strategy — Corporate agent — Controlled company — Friendly takeover — Large organizations — Organizational strategy — Types of stakeholders |
References
- Xiaojuan, J. (2002). Foreign Investment, Market Structure and Competitive Behavior of Foreign Investment Company [J]. Economic Research Journal, 9, 31-38.
- Pompian, M. M. (2011). Behavioral finance and wealth management: how to build investment strategies that account for investor biases (Vol. 667). John Wiley & Sons.
- Merton, R. C. (2003). Thoughts on the future: theory and practice in investment management. Financial Analysts Journal, 59(1), 17-23.
- Yates, F.J. (2003). Decision Management: How to Assure Better Decisions in Your Company, John Wiley & Sons.
- Ranganatham, M. (2006). Investment Analysis and Portfolio Management, Pearson Education India.
Footnotes
Author: Anna Klisiewicz
