what is business management

what is business management

Understanding the Fundamentals of Business Management

1. Introduction to Business Management

1.3. Characteristics of Business: Business has certain specific characteristics that distinguish it from other economic activities. The characteristics mentioned below are a few of them. The list is illustrative and not exhaustive.

1.2. Economic aspects of business: From the definition of business, it becomes clear that it consists of economic activities that are related to the production and distribution of goods and services with the objective of earning profits. Thus, business acquires an economic character that serves human motives.

1.1. Concept of Business: The pressure of necessity passes you through the arc of business. If you notice the surroundings of your home, one or the other member is always busy putting some activity into practice. Everybody is striving to gain the facilities, make the family members more comfortable, and most importantly, have the desired status in society.

Objective: The objective of this lesson is to introduce you to the subject “Business Management & its various aspects” for setting up a business successfully.

2. Key Concepts and Theories in Business Management

Virtually all organizations have multiple levels in their management hierarchy. Administrative management theory – also called classical management theory – is a vision of management that emphasizes rationality and making organizations and work procedures more efficient. Between the work of the classical pioneers and the birth of the behavioral school, Henry Gantt and Harrington Emerson made important contributions to management theory. Gantt is best known for developing the Gantt Chart as a tool for planning and controlling work projects. Harrington Emerson developed the concept of propinquity – managers located in the same general area should develop standardized methods for activities. Frederick Taylor and Frank and Lillian Gilbreth followed up Gantt and Emerson’s thoughts with work in the field of scientific management. Scientific management emphasizes careful selection and training of workers, and supervisory support. It focuses on work testing, measuring productivity, and job design for individual efficiency. Both Gantt and Emerson developed concepts of costing and efficiency, programs on productivity improvement, and inventions and the ways in which people could make better use of their potential. They emphasized the increase in production and the potential efficiency gains and real-time estimated efforts.

Planning is the function that consists of defining goals for future organizational performance and deciding on the tasks and use of resources needed to attain them. Organizing is the function that involves the allocation of tasks, resources, and the coordination of activities with respect to the units and levels responsible for their execution. Staffing is the function that includes recruiting, training, and compensation of employees and managing their performance and relationship. Directing is the function that deals with initiating action in the organization. Motivating and guiding employees to achieve goals is most important. Controlling is the function that includes the initiation of strategic and operational performance performances and repeating and following up the activities linked to the planning and controlling.

Management is the process of getting work done effectively and efficiently through people and resources. The whole of management is about taking decisions. Traditionally, the functions of management are classified into the following: Planning, Organizing, Staffing, Directing, and Controlling.

3. Functions and Roles of Managers in Organizations

Management can be defined as the set of activities directed at achieving success in an organization. It comprises business management practices directed toward accomplishing one’s work in an organization by using one’s own and others’ efforts. Some of these activities include: seeing that products and services contribute to organizational performance, uphold norms reflecting social ethics, follow-up, and solve problems as they arise using troubleshooting skills.

Let’s explore managers or people in organizations who are responsible for business management functions. This discussion takes on more relevance as some practitioners and researchers suggest that because of increased requirements for information, organizational structure in business firms is changing from hierarchical to flat. There are fewer supervisors or none at all, and organizations have become more dependent on self-managing work teams. These authors further suggest that the phenomena related to the changed organization structure may redefine or marginalize the role of the supervisor as it currently is and will not require it at all. Advocates of this view describe organizations such as Ben and Jerry’s Ice Cream, Chambers Development, and Midori and Friends, where front-line managers and supervisors have been eliminated, but where the organization is still doing very well.

4. Strategic Planning and Decision Making in Business Management

Strategic planning starts with the mission and vision of the company. The mission and vision help set the overall direction of the firm, from which a particular company strategy can be formulated. Remember, not all businesses have the same mission or vision. A successful company strategy should help the firm develop and maintain a competitive advantage. A competitive advantage exists when a company’s strategies result in better performance than competitors’ strategies. A company should develop and implement a strategy that recognizes changes in the business environment. Effective strategic planning and strategy formulation emphasize the company being proactive rather than reactive. Effective strategic planning and strategy formulation are also proactive. Proactive strategic planning helps companies develop a strategic advantage, where a company can maximize its position within the competitive environment and become the most competitive in the industry. A company takes a long-run view and bases its decisions on its preferences, recognizing the potential impact of the inevitable future changing environment.

Strategic planning starts with the vision and mission of a company. The company’s vision outlines what the company hopes to be someday. The company’s mission outlines what the company is in business to do. A company’s mission statement should include the following important features. Implementation of strategic plans comes by the way of managers and employees making a sequence of decisions. A decision is a choice with regard to some course of action. The direct influence on decision quality occurs when managers or employees evaluate and choose among the alternative courses of action. The indirect influence is on the quality of the criteria that managers and employees use in making these evaluations and decisions.

5. The Importance of Effective Leadership in Business Management

There are several approaches to leadership in the corporate field. Typically, we often distinguish between three leadership categories: 1) autocratic (or authoritarian) leadership, in which the leader takes all the decisions without consulting the members of the group; 2) democratic (or participative) leadership, in which the leader takes the decision after having consulted the members of the team; 3) laissez-faire (or indifferent) leadership, in which the team is largely abandoned to its fate: the leader acts in the sense of leaving his subordinates complete autonomy in their work. The most common approach is usually the first. This does not mean that laissez-faire or democratic leadership should always be avoided. Sometimes, leadership alone is simply not a matter of choosing between one option and another. The essence of everything is to know what type of leadership is suitable (or potentially effective) in each different situation. The following circumstances should guide the decision-making process. 1) When speed and coherence in decision-making are one of the most putting at stake, autocratic leadership is necessarily called for. 2) When the members of the group (business, team) have more experience about a problem than the leader, then democratic leadership, which has the advantage of giving everyone the opportunity to express their opinion, is privileged. 3) Finally, when the members of the group (business, team) work under continuous observation, it is possible to use laissez-faire leadership. This method is interesting in that it knows how to promote creativity and personal fulfillment.

Leadership is the most complex and difficult task of the manager. This is not only due to the fact that the manager is almost permanently involved in dealing with people (whether with subordinates, colleagues or managers), but also because of the very nature of the organization itself, the very purpose of which is to allow a group of people to achieve objectives that are set collectively. We have already seen that the business game is comparable to a sort of vehicle race where the efficiency of the vehicle is based on four main factors: the performance of the engine (money), the robustness of the chassis (physical assets), the security of the driver (technical systems), and the intelligence of the driver (decision-making). At the end of the day, the results (money, profit, growth) simply depend on the power of the engine, the solidity of the chassis, the well-being of the driver, and the intelligence of the driver’s decisions. The quality of the driver is therefore an essential factor in corporate success. At this level, the manager must imperatively play an active role. It is not enough to simply identify and motivate the right people to engage in the race. The course of the race and the pilot’s decisions during the race will also determine the ultimate success of the operation.