Organization Management Fundamentals

Introduction to Entrepreneurship - Chapter 4: Organization Management for Business Start-ups

• Synopsis: This chapter introduces the basics of organization management for new businesses, covering organizing, planning, leading, and controlling resources to meet objectives.

Objectives

• Introduction to Management and Organization: The chapter aims to teach students about managing and organizing start-up and small businesses.
• Critical Questions for Entrepreneurs: It discusses essential questions entrepreneurs must address regarding business mission, vision, objectives, and strategy.

Learning Outcomes

• Understanding Core Business Elements: Students will be able to discuss the importance of mission, vision, objectives, strategies, and organizational structure.
• Planning, Leading, and Controlling: Students will also be able to discuss issues related to planning, leading, organizing, and controlling in a business.

List of Topics

• Organization Mission and Vision
• Organization Objectives
• Organization Structure
• Planning
• Leading
• Controlling
• Business Start-up Risk

Introduction

• Objective Formation: An organization's goals, or objectives, stem from its overall mission, vision, and strategy, considering external opportunities and potential resources.
• Organization Management: This process encompasses organizing, planning, directing, and controlling an organization’s resources to meet its stated objectives.

Organization Mission and Vision

• Defining the "Why": The organization's mission is the “why” behind its activities, outlining its purpose and long-term direction.
• Mark Zuckerberg's Perspective: In 2015, Mark Zuckerberg emphasized the importance of a strong mission to create significant change.
• Collins and Porras (1994) Key Themes: Their work highlights mission elements like deeply held beliefs, forward-thinking, and significance within a company's aim. Examples include improving human life (Merck), providing happiness (Walt Disney), and advancing human welfare (HP).
• Following Up the "Why": Subsequent questions an entrepreneur must ask after defining the "why": What to do?, How to do?, When to do?, and Where to do?, to formulate basic strategies.

"What" of Strategy

• Vision as a Time-Bound Change Agenda: This section focuses on the entrepreneur’s vision for the business, considering its timeframe. This is crucial for identifying core values.
• Vision Statements: Crisp, precise statements that articulate aspirations, guide long-term choices, and set objectives. They often outline qualitative goals.
• Vision as a Quantifiable Gap: Strategic planning emphasizes defining a realisable gap between the current and targeted states, ideally with measurable goals within a timeframe, often three years.
• Operational Specifications: Business strategies involve selecting the business sector, products/services, customers, capabilities, operational methods, and financial approaches, especially for new ventures.

"What" of Strategy (cont.)

• SWOT Analysis: A fundamental analysis considering internal strengths and weaknesses, alongside external opportunities and threats, is vital in identifying suitable strategies.
• Matching Strengths to Opportunities: The method to analyze how existing strengths support new opportunities, helping businesses strategise for development.

Organization Objectives

• SMART Objectives: Objectives are short-term goals (typically one to three years) aiming to reach targets, like sales targets, profit goals, geographical reach, and more. They must be Specific, Measurable, Achievable, Realistic, and Time-bound (SMART).

Organization Structure

• Task Division: Organizations typically divide tasks into smaller, manageable units assigned to specific personnel, forming an organizational structure.
• Functional or Geographic Segmentation: Departments or teams organized by function (marketing, finance, operations), location (zones), or product (product lines).
• Example of Organizational Chart (Figure 4.5): Illustrates task distribution in a group project (e.g., a defined task assigned to project members.)

Planning

• Long-Term Strategic Planning: An entrepreneur needs a long-term strategic plan, often using the Business Model Canvas to craft business strategies, as detailed in Chapter 11.
• Gantt Chart: For start-up businesses, a Gantt chart is useful for planning main activities, defining timelines, durations, and completion schedules.

Planning (cont.)

• Gantt Chart Example (Figure 4.6): A sample chart displays durations, activities, responsibility assignments and resource requirements (budget) in the form of a table.

Leading

• Leadership in Teamwork: A leader is essential in motivating, guiding, controlling, and correcting the team in an organization, ensuring harmony and effective teamwork to achieve goals.
• Delegation: Leading often involves delegating tasks to subordinates for efficiency.

Controlling

• Guiding and Monitoring Progress: Controlling involves the management of tasks, execution, monitoring work progress, and ensuring timely execution.
• Controlling Instruments: Utilizing methodologies, procedures, and documentation (mission, vision, objectives, strategies, schedules, operation manuals) to track and monitor progress.

Business Start-up Risk

• Evaluation Initial Risks: The first step in assessing risk for starting a new business.
• Management Knowledge, Financial Literacy and Experiences: The importance of business, financial and market understanding, alongside expertise.
• Contacts and Links: Established contacts with potential clients, suppliers, and within the industry help mitigate risks.
• Personal Qualities/Fits: Entrepreneurs should have personal characteristics suitable for the chosen field (e.g., patience, diligence, positive attitude)
• Detailed Planning and Analysis: Creating detailed business strategies and plans, such as using the business canvas, for successful venture execution and a solid project implementation.
• Breakeven Analysis: Recognizing and analyzing the capital investment, including the break-even point (e.g. RM20,000 in sales) in relation to fixed monthly costs (e.g. salaries, rental).

Business Start-up Risk (cont.)

• Examples of Fixed Costs (Figure 4.7): Tables illustrate types of fixed costs in a business (e.g. salaries, rent) and their total value. A calculation of the breakeven sales (e.g., RM20,000 per month.)

Summary

• Essential Plan: An entrepreneur should develop a viable business plan, establish and structure responsibilities to execute these plans to achieve set business objectives.