Nature of Management in Business

Effective Management

• Effective management is vital to the success of a business, making the right decisions at the right time to achieve business goals.
• The 4 basic functions of managers are:
  • Planning: setting up strategic, tactical, and operational plans and establishing plans and objectives.
  • Organising: turning plans into reality by deciding what resources to use and how to use them.
  • Leading: setting standards to work towards and motivating employees to work harder.
  • Controlling: monitoring and evaluating performance to make necessary adjustments.

Importance of Effective Management

• Effective management achieves business goals by making the right decisions at the right time.
• Goals concern:
  • Profitability
  • Sales and market share
  • Growth of the business
  • Share value
  • Community involvement
  • Environmental management

Key Concepts

• Objectives: more detailed, short-term, and specific than goals.
• Efficiency: management decisions that minimize expenses, waste, and costs of operating the business.
• Outputs: goods and/or services produced by a firm using inputs.
• Inputs: resources available to the firm, such as materials, facilities, and equipment.
• Productivity: a measure of how efficiently goods and services are produced.

Features of Effective Management

• Planning that anticipates changes in the business environment.
• Organising resources in the most efficient manner.
• Skills to lead and inspire staff.
• Controlling the business to stick to its business plan for success.
• Effective information management.
• A range of skills used appropriately for a given situation.

The 4 Functions of Management

• Planning: keeping up to date with changes in consumer tastes, technological innovations, and legal reforms.
• Organising: considering options to solve problems or take advantage of new opportunities.
• Leading: communicating effectively to all employees at every level of the organisation.
• Controlling: ensuring the business achieves its goals and objectives using input, concurrent, and feedback controls.

Skills of Management

• A range of appropriate skills to use at the right time.
• Recognising one's own strengths and weaknesses.
• Interpersonal skills: communicating and dealing with different types of people effectively.
• Participative and collaborative style of leadership.

Strategic Planning

• Long-term planning for a business as a whole developed by senior management.
• Strategic thinking: thinking long-term, considering the total business environment, and understanding interdependence between departments.

Vision

• Clear, shared sense of direction that allows people to attain a common goal.
• Managers should give others vision and the ability to perform.
• Without vision, there is no sense of cooperation and commitment, making achieving goals impossible.

Problem-Solving and Decision-Making

• Problem-solving involves finding solutions to problems.
• Managers need to identify the nature of the problem, assess and choose the most appropriate strategy, and implement and monitor results.

Flexibility and Adaptability to Change

• Managers must be flexible and adaptable to changes in the external business environment.
• Successful managers anticipate and adjust to changing circumstances.

Reconciling Conflicting Interests of Stakeholders

• Stakeholders: individuals or groups with a vested interest in a business.
• Businesses must accept responsibility and accountability towards all stakeholders for the promotion and management of change.
• Responsibilities of management towards stakeholders include change management, social justice, ecological sustainability, compliance with law, and codes of practice.

Achieving Business Goals

• Goals should be defined in the early stages of developing a business strategy.
• Goals should be strategic, meaningful, clear, concise, and achievable.
• Most businesses establish goals that deal with financial goals and social and environmental goals.

Financial Goals

• Profits: maximizing revenue and minimizing costs.
• Market share: percentage of total sales a business has compared to its competitors.
• Growth: increasing profitability through expansion.
• Share price: maintaining a high share price to make the business less vulnerable to corporate raiding or hostile takeover.

Social Goals

• Improving the quality of life for employees.
• Supporting cultural diversity.
• Promoting human rights and equal opportunities.
• Supporting charities and community-based organizations.

Environmental Goals

• Using production methods that do not limit the ability of future generations to satisfy their needs and wants.
• Reducing reliance on non-renewable resources.