 This module explains why there is, most of the times, a distinction between the management of a business and the ownership of a business. So basically, when we invest in a business or when we start a business, sometimes we do not consider ourselves as an expert in a certain field, as a naive or a beginner. So for that purpose, what most of the people do is that they hire a professional manager. So when you are hiring a professional manager, it means you are trying to cut down the risk that is associated with running a new business. So if you have started a new business or you are already established and you want to start running it with a smooth flow, or you are expanding, then it is always better and safer also that you demarcate ownership and management. So in all the successful business ventures, we see that there are success stories in which the ownership did not manage the proper business and it turned out to be a success. But in most of the times, we see that owners hire an expert to run their business smoothly as a manager and they handle all the decision making, allocation of funds, capital budgeting, etc. So what is the benefit of this? The benefit is that, for example, if you are a beginner and you do not have much experience to run a particular business, then you hire an expert manager and he will have experience. If you want to work in any business, then you can take advantage of his experience, he will do the decision making, after considering his experience, he will run your business. Another important thing is that when you are trying to hire a manager, it is beneficial that he can use all the different resources with his skills to efficiently use them. The next important thing is that when we are going to hire a manager, the advantage for a business would be that the manager can nicely contribute in diversifying the various types of resources or the various types of funds by allocating them in different ways. There is a risk that you will not get a loss when you diversify your funds or the risk of different types of funds. Your return will not have a lot of effect on that or you will not get a loss. For example, if you work in the same way and put all the money, then it is possible that if there is any problem, then you have the intention of getting a loss. Therefore, if you will diversify that you have put some money in one thing, some money in another thing or initially you run a business, but also you have bought some bonds. So when the bond returns and you have a loss in your business, then you will not have to take a big loss. So this is how you can diversify by considering the various types of risks that are associated with your business. The next important thing is that when you are hiring a manager or an expert who has an experience of running the type of business which you are running, then it can also help you in saving in terms of the cost that is involved in gathering various types of information because they have got links in different areas in different types of businesses and through those links they can gather the information. But if you start collecting all the information yourself or for example, you have to fill in manpower in your house and you do not know what kind of skill sets are available in the market and what salary to give them and how to handle them, so again a manager can help you in saving from all these kinds of problems. Another important element which we differentiate or distinguish, separate management from ownership is that there is this concept of learning curve. So learning curve basically tells us that overall when you continuously keep on doing a certain task if you keep on doing a task repeatedly, then eventually a stage comes when you have to use less time and resources to do the same work. So if you hire an experienced manager to do your work, then it is possible that he sits on a higher level of the learning curve and you get an advantage from that. So basically why are you doing all this work? The objective is to maximize the shareholders wealth. If you are working for a corporation or a shareholder of a corporation and if you are running an individual company, then again the objective would be to maximize your profits. The maximization of the profit or the maximization of the wealth is basically the objective of any firm. So if you are dealing with a corporation, then again the objective of doing all the various types of activities is to maximize the shareholders wealth or its benefit is the objective. If you feel that an expert manager can do this, then you will hire a manager or you will hire the experts that are having a good experience of running the various types of things or matters that are relevant to that particular area for which you have to perform any activity. So it is better to segregate the ownership from the management of a business entity in order to meet the objective of the organization which is to maximize the wealth or to maximize the shareholder wealth in the context of a corporation.