The 5 Ms of Management: Key Components of Every Business

Know how the key factors of production revolve around management.

Cooking is an art and science at the same time. Even though two people are cooking the same dish with the same ingredients, the taste of both might be different. It is because the way the ingredients were used and the way the food was cooked has a personal individual touch to the dish. Management systems across organisations may function like that. Every organisation has access to a set of standard resources, the outcome of which depends upon how effectively they are managed. Management is the catalyst that plans, organises and directs all resources to achieve the company’s goal. It is the centre around which the factors of production revolve. The key factors of production that revolve around management are known as the 5 Ms of Management. They include – Manpower, Money, Materials, Machinery and Methods.


If I have one skill as a manager, I can make things extremely clear.

- Ben Horowitz

The 5 Ms of Management


Be it modern-day corporate high-rise or an ancient monument like the Taj Mahal, neither would be complete without the aid of manpower. To make the raw materials into a structure, an effective team of workers is needed. Similarly, an organisation can have the best of raw materials but without any manpower those fancy materials are useless.

Management is often referred to as the art of getting things done by people. Manpower is a vital component of any organisation as no other resource can function without it. Managerial and non-managerial people who are part of the organisation fall under this category. Having a qualified and competent workforce drives the success of any organisation.

A manager must ensure that his team is functioning smoothly by resolving conflicts promptly. Fair remuneration, work-life balance, sustainable working environment and adequate resources helps in gaining an employee’s loyalty in the long-run.


Money is an all-purpose resource. A business needs capital to manufacture products or provide services. It is required for procuring raw materials, hiring staff, buying machines and the several other expenses that a business incurs. Availability of funds ensures smooth functioning of a business. A business requires adequate working capital and fixed capital.

Having inadequate capital can hamper the functioning of a business or in some worst cases, shut it down completely. Having enough money ensures that you can hire the best people, the finest quality raw materials and well-functioning machines. This, in turn, will ensure that your end-product or service meets the quality standards and offers value for money.

Several people quit their jobs when they are paid inadequately. Factories lose their orders if the machinery they have is outdated compared to its competitors. Lack of quality raw materials can cause a reduction in sales. For any start-up, it usually takes around two-three years to start making money. It is essential that a start-up has enough capital to cover all the expenses for at least two years.


The materials are those products which are utilised for creating the final product. Materials can be raw or even semi-finished products that are used for making the end-product that the company sells. In cotton mills, cotton is considered as raw materials. Yarn or cloth sheets derived from these factories are then sent to the clothing factories. These sheets of cotton are viewed as raw materials in the clothing factory. The cotton is sewed, tailored and altered to make a desirable outfit. A final product for one factory can be the raw material for another. 

Raw materials are the primary building blocks of any production process. The management has to ensure that the quality and quantity is enough to meet the demand. They also have to note the transportation and conversion expenses of these raw materials. Quality and inventory checks determine if the company has an adequate amount and desired quality of raw materials.

Raw materials can be direct or indirect. Direct raw materials are the ones that are a part of the finished product. While, indirect raw materials are those who were a part of the process but not directly included in the final product. The steel used for manufacturing kitchen units is an example of direct raw materials. While the oil used in machines from which the steel cabinets are made is considered as an indirect material.


Machines are used for converting raw materials into finished goods. There can be several machines involved in the production process depending on the products the company is selling.

Purchasing modern machines helps in improving the process of manufacturing. The upcoming technology in machines plays a key role in production. Having well-functioning machines leads to quick production and may offer a competitive advantage over others.


The method, being a way of getting things done, definitely does revolve around management. Method is all about the time efficiency. There are several methods a manager can use to get the same thing done. Getting from point A to point B may have ten different routes, it is a challenge here for a manager to choose the best one. The best method usually is the one that is cost-efficient while meeting the quality standards.

Also, different methods require different time for the completion of the same tasks. Two managers can be given the same raw materials, machines, staff and budget but still, the result produced might be different. This is because every manager has his own way of getting things done.

For the smooth functioning of your business, you need to ensure that the best resources are hired or bought across all the 5 Ms of Management. These 5 Ms of Management are interlinked and dependent on each other. In order to make a business successful, all the five components are needed to be utilised to their maximum potential. That’s what a manager does.

Management does have its set of theories that back it up as a science but still, the execution varies from person-to-person which makes it an art as well. To ensure that the factors of production above are well-curated and established, management systems are set in place. These management systems monitor the entire process and conduct evaluations accordingly. To know more about it, read our article on the ‘Management Systems’.

Tanisha Achrekar
Tanisha Achrekar
Tanisha is a Business Writer at Dutch Uncles, she writes on personal finance, management and financial concepts. Her stint includes JP Morgan and

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