Chapter 1: Introduction to Business Management PDF

Introduction Arpan Shrestha  Definition of Management “Management is a distinct process, consisting of planning, organizing, actuating and controlling, performed to determine and accomplish stated goals by the use of human beings and other resources.” George R Terry (1877 - 1955) "Managem...

Introduction Arpan Shrestha  Definition of Management “Management is a distinct process, consisting of planning, organizing, actuating and controlling, performed to determine and accomplish stated goals by the use of human beings and other resources.” George R Terry (1877 - 1955) "Management is the art of getting things done through others and with formally organized groups.” Harold Koontz(1909-1984) According to Ricky W. Griffin- “ Management is the set of activities (including planning, organization, leading and controlling) directed at an organization’s resources (human, financial, physical, and information), with the aim of achieving organizational goals effectively and efficiently in a changing environment.  Business Management Business management is the process of planning, organizing, directing, and controlling the activities of a business or organization to achieve its goals and objectives. The concept of business management involves the systematic planning, organizing, directing, and controlling of various resources, including human, financial, and operational, to achieve the goals and objectives of a business efficiently and effectively. "Business Management is the art of knowing what you want to do and than seeing that it is done in the best and cheapest way."-By Taylor. "Business Management means to manage is to forecast and to plan, to organize, to co- ordinate, to control."-By Henry Fayol Management Process Controlling Leading and Coordinating Staffing Organizing Planning Types of Managers on the basis of levels of Management Types of Managers on the basis of Nature or Area of Managerial Job Generals Managers Functional Managers Line Managers Hierarchy / Levels of Management Managerial Skills Managerial Roles Changing Jobs of Managers Focus on the Customer Focus on the Focus on Employee Technology Changing Jobs of Managers Focus on Focus on Sustainability Social Media Focus on Innovation Emerging Management Challenges 1. Globalization 2. Ethics and Social responsibility 3. Workforce diversity 4. Empowerment 5. Technology 6. Building a Competitive Advantage 7. Development of the environment 8. Quality and productivity 9. Innovation and change 10. Knowledge management 11. Multicultural effects  Concept of Business Environment The business environment encompasses all the factors, both internal and external, that directly or indirectly impact a company’s operations. In other words, the business environment is where the business organizations operate. It constitutes employees, customer needs, supply and demand, management, clients, suppliers, government activities, technological innovations, social and market trends, and economic changes. These elements directly or indirectly influence how a company functions and the overall situation it faces. The business environment creates an ecosystem where resources, people, and strategies unite to manage operations and deliver solutions to clients. By understanding this environment, businesses can identify new revenue opportunities, enhance planning, and improve performance and profitability. However, it is crucial for companies to adapt to the dynamic business environment to thrive in the long term.  Internal Environment The internal environment of a company comprises its own controllable factors, shaping the organization’s inner workings and overall culture. Let’s delve into the components that form this vital aspect: 1. Organizational Structure: This defines how the company’s activities are directed, clarifying roles and responsibilities. It outlines the hierarchy, how tasks are assigned, and how information flows across different levels. 2. Corporate Culture: The powerful fabric of shared values and norms among employees that sets the tone for the company. It shapes behaviors, attitudes, and the overall work atmosphere, fostering a sense of unity. 3. Human Resources: The heart of the organization, consisting of employees and personnel. Their skills, dedication, and effectiveness drive the company’s success and determine its competitive edge. 4. Vision, Mission, and Objectives: The guiding compass that defines the company’s purpose, aspirations, and future goals. It helps align efforts toward a common direction. 5. Physical Resources and Technology: Tangible assets like facilities and equipment, coupled with technical capabilities, influence the company’s competitive capacity and its ability to adapt to changing demands. External Environment External environment refers to the environment outside of the organization. And, the factors of the external environment are uncontrollable to the management. The external environment also consists of two – macro and micro environment. Micro Environment: The micro environment of a company encompasses the immediate external factors that directly impact its day-to-day operations and performance. These factors are closely related to the company and can be influenced to some extent. Let’s explore its components: 1. Customers: The lifeblood of any business, customers are at the heart of the microenvironment. Understanding their needs, preferences, and expectations is crucial for crafting products and services that resonate with their desires. 2. Competitors: Rival players in the market who target a similar customer base and offer similar products or services. Analyzing competitor strategies and strengths helps companies fine-tune their own approach and gain a competitive edge. 3. Suppliers: Vital partners providing the necessary resources for the company’s operations. Building strong supplier relationships ensures a steady supply of goods and services, impacting the company’s efficiency and reliability. 4. Intermediaries: Entities facilitating the distribution and delivery of the company’s offerings to the end customers. Collaborating with effective intermediaries streamlines the distribution process and enhances market reach. 5. Partners: External entities like advertising agencies, market research organizations, and consultants who engage in business transactions and cater to customer needs. Partnering with the right entities can add value to the company’s offerings and expand its capabilities. 6. Public: Groups with a vested interest in the company’s operations or those who can influence its ability to serve customers. Public perception and sentiment can impact the company’s reputation and brand image. Macro Environment: The macro environment of a company encompasses the broader external factors that influence its overall business landscape. The macro environment is also called PESTLE analysis. Let’s explore its components: 1. Political Factors: The impact of government policies, stability, and regulations on the business. Political decisions can influence market conditions, trade relations, and business operations. 2. Economic Factors: The overall economic conditions of the country or region in which the company operates. This includes factors like economic growth, inflation rates, exchange rates, and consumer spending patterns. 3. Social Factors: The demographic and societal aspects that shape consumer behavior and preferences. These factors include population trends, cultural attitudes, lifestyle choices, and social values. 4. Technological Factors: The advancements and innovations in technology that affect the industry and the company’s operations. Keeping up with technological changes is crucial for staying competitive. 5. Legal Factors: The legal framework governing business operations, including industry- specific regulations, labor laws, and intellectual property rights. 6. Environmental Factors: The impact of the natural environment and societal concerns about sustainability and eco-friendliness. This includes climate change, environmental regulations, and consumer demand for environmentally responsible products. Analysis of Task Environment by using Porter Model Analysis of Task Environment by using Porter Model 1. Competitive Rivalry Diversity in competitors High Exit Barriers Equal Size of Competitors Lack of Product Differentiation Slow Growth Rate of Industry Low Brand Identity Easily Substitute Products Analysis of Task Environment by using Porter Model 2. Bargaining Power of Suppliers Number of Suppliers Size and Network of Suppliers Concentration of Suppliers Availability of Substitute Switching Cost Differentiation of Products Maintaining Quantity and Quality Analysis of Task Environment by using Porter Model 3. Bargaining Power of Buyer Number of Buyers Size of Order Concentration of Buyers Availability of substitutes Switching Cost of Buyers Price Sensitivity Sufficient information Analysis of Task Environment by using Porter Model 4. Threats of New Entrants Capital Requirement Brand Image Size and Scale of Business Network of Distribution Access of New Technology Retaliation From Competitors Competitive Strengths Government Policy Analysis of Task Environment by using Porter Model 5. Threats of Substitute Products or Services Substitute Product Availability Price of Substitute Products Performance of Substitute Products Cost of Switching of New Products Product Differentiation