Managing The Enterprise PDF

10.0 Managing the Enterprise Lecture Objectives To learn about managing the small business To understand important aspects of small business management To learn about things to do to make the small business become successful 1  Understanding Small Business...

10.0 Managing the Enterprise Lecture Objectives To learn about managing the small business To understand important aspects of small business management To learn about things to do to make the small business become successful 1  Understanding Small Business Management Management is planning, organizing, staffing, directing and controlling resources of organization to achieve stated goals Managing is : (a) Getting work done through people (b) Delegation of tasks (c) Motivating and influencing of employees (d) Making and ensuring decisions are implemented * The implementation of the conceptualized idea 2  Planning  Planning is setting objectives and determining steps to be carried out to achieve the objectives Planning process: 1. Being aware of opportunities/problems 2. Set objectives 3. Forecast the environment (SWOT) 4. Develop alternative courses of actions 5. Evaluate the alternatives 6. Select and implement the best alternative 7. Formulate support plans 8. Budget the plan 3  Setting Objectives Based on problem/opportunity set objectives Objectives provides direction to the business Objectives must be quantified and within certain time frame Strategies formulated, procedures classified and budgets drawn up to achieve objectives Example: To make gross profit of K150,000.00 and a net profit of K15,000.00 next year 4  Forecast the Environment  Get specific information and identify changes most likely to occur in the environment (PEST)  Indication of economic forecasts provide an idea of changes likely to take place in the economy Determining Alternative Courses of Actions  Search for and examine alternative courses of actions  List most likely alternative actions 5  Evaluate Alternative Courses of Actions  Determine the benefits and draw backs associated with each course of action Alternative Probability Potential of Success Total Sales 1 10% 250,000 2 15% 200,000 3 15% 190,000 4 60% 175,000 6  Select a Course of Action and Implement  Determine the best expected pay off given the probability of success Alternative Probability Potential Expected of Success Total Sales Payoff 1 1o% 250,000 50,000 2 15% 200,000 30,000 3 15% 190,000 28,000 4 60% 175,000 195,000 7  Formulate Support Plans  Once courses of action determined, develop/formulate support plans  As the plan is being implemented, check periodically to ensure everything is going according to expectation  Make appropriate adjustments to match the condition 8  Organizing  Organizing is the process of assigning duties and coordinating efforts to ensure maximum efficiency in the attainment of objectives Basic Organizing Steps 1. Job defining: job description and job specification 2. Departmentalization: grouping of related activities 3. Span of Control: number of persons reporting to superior 4. Delegation of authority - Size - Cost - Trust in subordinate - Nature of work 9  Principles of Organizing 1. Span of Management principle 2. Scalar principle: clear lines of authority 3. Principle of functional definition: jobs defined 4. Principle of authority level: decision making 5. Principle of delegation: authority delegation 6. Principle of unity of command: one boss 10  Staffing  Recruiting, selecting, indoctrinating, training, development and compensation  Examine current operations and foreseeable work requirements including people turnover rate 1. Assess short and long term needs 2. Write job description and job specification 3. Organize recruitment 4. Be aware of government regulations 11  Training To get greater efficiency from employees, develop a training program 1. Establish training needs and goals 2. Choose most practical training methods 3. Evaluate the results 12 Approaches to Identifying Training Needs 1. Break job into various components 2. Demonstration 3. Application: trainee allowed to perform 4. Inspection: assess and evaluate performance 13  Compensation  Compensation be appropriate for employees  Employees paid on the basis of time  Compensation be guided by equal employment opportunity regulations 14  Incentive wages  Incentive wages are both practical and effective only when the following conditions exist 1. Unit output measurable and readily distinguishable 2. Clear relationship exists between output and workers efforts 3. Quality is less important than quantity 4. Supervisors do not have sufficient time to devote much attention 5. Advance knowledge regarding cost per unit to estimate incentive rate 15  Directing  Directing involves communication and leading - Communication is used to give directions and get feedback from subordinates - Leading entails manager/owner to know how to influence employees to direct their attention to achieving organizational goals 16  Communication  Communication is a process of conveying meaning from sender to receiver  Communication break down must be prevented at all costs 1. Perception can impede communication: perception and what is conveyed may not be the same. 2. Interference: making assumptions about what is being communicated 3. Language: specific words can get people into trouble “hate” 17 Achieving Effective Communication 1. Attention: stop and direct attention to the speaker 2. Understanding: restate the statement 3. Acceptance: sender remain sensitive to receiver (feedback) 4. Action: carrying out directions are expected 18  Leadership  Leadership is often described in terms of amount of authority held by manager and amount given to subordinates 1. Authoritarian Leadership: task oriented 2. Participative Leadership: 3. Laissez faire leadership: uninvolved in affairs of business: assume staff know what they are doing 19  Control  Entails establishing standards, comparing performance against standards and correcting deviations - System must provide timely feedback - Provide information useful for decision making - Information received must be easily understood - Systems developed should worth the cost - System should help identify problem areas 20  Budgeting  Commonly used control technique is the budget  Common ones are sales and cash budgets  Budgets tie all parts of the organization  Budgets constructed for a given level of activity and then adjusted accordingly  Budgets should be flexible to allow for any unexpected developments 21  Breakeven Point  Organization’s sales revenue equals cost of production  BE = Total Fixed Cost Selling Price – Variable Costs  Marginal cost (producing next unit) equals marginal revenue , profit is maximized 22  Job Satisfaction  Way employees view their work (satisfaction)  Should remain alert to common signs of dissatisfaction Job dissatisfaction indicators 1. Labor turnover 2. Productivity- rising unit costs 3. Waste and scrape 4. Production quality 5. Tardiness and absenteeism 6. Accidents 7. Complaints and grievances 23 Approaches to Uncovering Employee Dissatisfaction 1. Suggestion boxes provided 2. Exit interviews 3. Monthly meetings 4. Customer feedback 24  Developing Teamwork  Teamwork occurs when everyone works in a cooperative manner  Reward team players and reprimanding those who refuse to cooperate  Money and work climate are both important 25  Management By Objectives MBO Process 1. Manager identifies goals 2. Manager considers what everyone is doing 3. Manager sits with subordinate and reviews objectives for subordinate 4. Subordinate takes the objectives and decides how to effectively achieve them 5. Manager evaluates the subordinate’s performance 6. Compare results against goals set 26  Benefits of MBO 1. Easy to understand 2. Emphasis qualitative objectives 3. Helps identify organization’s key objectives 4. Number of objectives pursued is limited to four or five 5. Helps manager coordinate activities of various departments 6. Frees manager’s time for more important activities 27  Tutorial Questions Q1. Why is planning an important process in the management of a small business? Q2. What is the purpose of having support plans? Q3. What is the purpose of setting objectives? Q4. Why do we need to forecast the environment vin the management of a small business? Q5. What is the purpose of compensation? Q6. What is the importance of management by objectives? 28