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Summary Chapter 6
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Chapter 6 of Introduction to Business, required course of first year IBA
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Understanding the managementprocess
6.1: What is management?
Management is the process of coordinatng people and other resources to achieve the goals
of an organizaton
4 kinds of resources
o Material: tangible, physical resources. E.g. classrooms, books
o Human: people. The way employees are developed and managed has more impact
than other vital components such as marketng or technology.
o Financial: funds an organizaton uses to meet its obligatons to investors and
creditors.
o Informatonal: External environmental conditons – the economy, technology, etc.
are changing rapidly: a business must adapt to survive. To adapt, they must gather
informaton about compettors and changes to the industry in order to learn from
the failures and success of others
Another way to look at management is in terms of the diferent functons managers perform:
o Planning
o Organising
o Leading/motvatng
o Controlling
6.2: Basic management functions
Management functons do not occur according to some tmetable.
At any given tme, managers may engage in a number of functons simultaneously.
6.2.1: Planning
Planning is establishing organisatonal goal and deciding how to accomplish them.
A mission is a statement of the basic purpose that makes that organisaton diferent from
others.
Strategic planning process
Involves establishing an organisatonns major goals and objectves and allocatng
resources to achieve them.
Top management is responsible for strategic planning, although the rest all factors in the
process.
Internal and external changes may necessitate changes in a companyns goals, mission or
strategy.
Strategic plans should be fexible.
Establishing goals and objectives
, A goal is an end result that an organisaton is expected to achieve over a 1-10 year
period.
An objective is a specifc statement detailing what the organisaton intends to
accomplish over a shorter period of tme.
Goals and objectves can involve a variety of factors: e.g. sales, company growth,
customer satsfacton
Some conficts may arise among levels within the organisaton, but goals must be made
consistent across an organisaton.
As part of goal-setng, the manager responsible for both departments must strike a
balance between the conficts
This is called optimisation: it requires insight and ability. Ofen managers fgure out a
way to fnd a middle-groundn. This compromise is best for the whole organisaton.
Swot analysis
The identfcaton and evaluaton of a frmns strengths, weaknesses, opportunites, and
threats.
Strengths/weaknesses are internal factors that afect a companyns capabilites.
Core competencies are approaches and processes that a company performs well, that
may give it an advantage over compettors.
Core competencies atract fnancial/human resources that increase the frmns producton
capacity and improve customer satsfacton
Weaknesses refer to internal limitaton a company faces in developing or implementng
plans.
External opportunites and threats exist independently of the frm.
Opportunites: favourable conditons that could beneft the organisaton
Threats: conditons or barriers that may prevent the frm from reaching the objectves
Types of plans
A plan is an outline of the actons by which an organisaton intends to accomplish its
goals and objectves.
An organisatonns strategic plan: is its broadest plan, developed as a guide during the
strategic planning process for major policy setng and decision making.
Strategic plan defnes what business the company is in or wants to be in, and the kind of
company it is/wants to be.
A Tactical plan is a smaller scale plan developed to implement a strategy.
May be updated periodically depending on conditons.
An operational plan is a type of plan designed to aid tactcal plans. Deal with how to
accomplish the organisatonns objectves.
A contingency plan: outlines alternatve courses of acton that may be taken if an
organisatonns other plans are disrupted/inefectve. E.g. natural disaster or ethical
misconduct
6.2.2: Organising the enterprise
Organising is the grouping of resources and actvites to accomplish some end result in
an efcient and efectve manner.
When businesses grow, individual acton is not efectve anymore. Hiring of employees is
required for efectve organisaton actvites.
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