Essential Business Management Concepts & Principles

Chapter 1: Core Management & Business Fundamentals

Key Business Definitions

• Management: A set of activities designed to achieve an organization's goals by using available resources effectively and efficiently within a changing environment.
• Organization: A group of individuals working together to achieve a common goal.
• Resources: People, equipment, finances, and data used by organizations to achieve their common goals.
• Stakeholders: All individuals who can affect or are affected by an organization's goals or its means of reaching those goals.
• Profit: The financial gains collected by a company after achieving its goals.
  • Gross Profit: Total revenue minus the cost of goods sold.
  • Net Profit: Total revenue minus total costs.

Functions of a Manager

• Planning: The process of deciding the common goals of the organization and the strategies for reaching them.
• Organizing: A set of activities involved in designing jobs for employees, grouping these jobs into departments, and fostering a collaborative working environment within the organization.
• Leading: Influencing and motivating others' activities to achieve the common goal.
• Controlling: Ensuring that everything proceeds according to plan to reach the common goal.

Management Roles (Mintzberg's Framework)

A set of related activities that serve a specific purpose within the organization.

• Interpersonal Roles: Involve interacting with others, both inside and outside the organization, to gather information and facilitate decision-making.
  • Figurehead: Attending important events as a symbolic leader.
  • Liaison: Coordinating production schedules and fostering external relationships.
  • Leadership: Maintaining employee morale and work status.
• Informational Roles: Working with collected data and information for implementation within the organization. Activities include reporting, preparing data analysis, briefing, emailing, and managing websites.
  • Monitor: Ensuring all company activities comply with legal standards.
  • Disseminator: Serving as a communication link between employees and the organization.
  • Spokesperson: Representing the organization to external stakeholders, such as consumers.
• Decisional Roles: Dealing with the allocation of resources and making strategic choices.
  • Entrepreneur: Deciding how to achieve organizational goals and initiating new projects.
  • Disturbance Handler: Responding to changes in the external environment and resolving conflicts.
  • Resource Allocator: Distributing available resources to different departments.
  • Negotiator: Reaching agreements with various groups within the organization, as well as with external agencies and partners.

Essential Management Skills

• Interpersonal Skills: Effective communication, active listening, and taking responsibility.
• Technical Skills: Possessing specific knowledge and abilities in areas such as technology, taxation, accounting systems, and human resources.
• Conceptual Skills: Utilizing organizational information to make accurate decisions, ensuring effective and efficient goal attainment.
• Job Knowledge: Similar to technical skills, focusing on specific job-related knowledge.
• Oral Communication: Effective verbal communication skills.
• Persuasiveness: The ability to influence others when dealing with other companies or presenting new ideas for the company.
• Problem Analysis: Ability to analyze problems and propose solutions.
• Cooperativeness: Working effectively with others.
• Stress Tolerance: Ability to manage and cope with workplace stress.
• Negotiation: Skills in reaching mutually acceptable agreements.
• Assertiveness: Ability to express one's point of view clearly and confidently.
• Initiative: Taking the initiative to generate ideas and commence processes.

Basic Economic Principles

• Demand and Supply: As price increases, demand typically decreases, while supply increases, and vice versa.
• Excess Demand and Excess Supply: Refer to a shortage and surplus of goods, respectively.

Case Study: Mrs. Acres Homemade Pie

This example likely illustrates a scenario involving excess demand, the need for external assistance, and potential implications for ownership or control.

Levels of Management

• Upper Managers: Focus on strategic planning and leading the company, making ultimate decisions. Examples: CEO, CFO.
• Middle Managers: Control specific departments, receive directives from upper management, and execute them within their department. Example: Head of HR.
• Lower Managers: Have direct interaction with consumers and focus on executing plans decided by higher management. Example: Store managers.

Functional Areas of Management

• Human Resources: Employee selection, training, and compensation.
• Marketing: Promoting the organization and its products/services.
• Finance: Allocation of financial resources and investment strategies.
• Production and Operations: Production of goods and services, including maintaining product quality and optimizing production procedures.
• Information Technology: Maintains and controls technological applications and infrastructure.
• Sales: Selling the company's products or services.
• Administrative: Overall company administration and coordination.
• Legal: Ensuring the company adheres to all legal regulations and avoids illegal activities.
• Ethics: Ensuring all company processes and practices are ethical.
• Corporate Social Responsibility (CSR): Ensuring the organization has a positive impact on society.

Profit vs. Non-Profit Organizations

• Profit Organization: Its primary purpose is to generate financial profit.
• Non-Profit Organization: Its primary purpose is not to generate financial profit, but to serve a charitable, educational, or literary purpose.

Leadership Profile: Jeff Bezos, Amazon

• Prioritizes consumer needs, reinvesting profits back into the company, fostering a close relationship with customers.
• Despite initial losses, he makes strategic investments necessary for the company's growth, such as acquiring warehouses and mitigating competition.
• By maintaining a close relationship with every department, he ensures optimal performance from each employee.
• Demonstrates the Controlling function by ensuring everything aligns with the plan. If an issue arises, he directly emails the relevant party.