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Summary Chapter 6
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Chapter 6 of Introduction to Business: Processes and Context
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Understanding the managementprocess
6.1: What is management?
Management is the process of coordinating people and other resources to achieve the goals
of an organization
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 marketing or technology.
o Financial: funds an organization uses to meet its obligations to investors and
creditors.
o Informational: External environmental conditions – the economy, technology, etc. are
changing rapidly: a business must adapt to survive. To adapt, they must gather
information about competitors 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 different functions managers perform:
o Planning
o Organising
o Leading/motivating
o Controlling
6.2: Basic management functions
Management functions do not occur according to some timetable.
At any given time, managers may engage in a number of functions simultaneously.
6.2.1: Planning
Planning is establishing organisational goal and deciding how to accomplish them.
A mission is a statement of the basic purpose that makes that organisation different from
others.
Strategic planning process
Involves establishing an organisation’s major goals and objectives and allocating
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 company’s goals, mission or
strategy.
Strategic plans should be flexible.
Establishing goals and objectives
, A goal is an end result that an organisation is expected to achieve over a 1-10 year
period.
An objective is a specific statement detailing what the organisation intends to accomplish
over a shorter period of time.
Goals and objectives can involve a variety of factors: e.g. sales, company growth,
customer satisfaction
Some conflicts may arise among levels within the organisation, but goals must be made
consistent across an organisation.
As part of goal-setting, the manager responsible for both departments must strike a
balance between the conflicts
This is called optimisation: it requires insight and ability. Often managers figure out a way
to find a ‘middle-ground’. This compromise is best for the whole organisation.
Swot analysis
The identification and evaluation of a firm’s strengths, weaknesses, opportunities, and
threats.
Strengths/weaknesses are internal factors that affect a company’s capabilities.
Core competencies are approaches and processes that a company performs well, that
may give it an advantage over competitors.
Core competencies attract financial/human resources that increase the firm’s production
capacity and improve customer satisfaction
Weaknesses refer to internal limitation a company faces in developing or implementing
plans.
External opportunities and threats exist independently of the firm.
Opportunities: favourable conditions that could benefit the organisation
Threats: conditions or barriers that may prevent the firm from reaching the objectives
Types of plans
A plan is an outline of the actions by which an organisation intends to accomplish its
goals and objectives.
An organisation’s strategic plan: is its broadest plan, developed as a guide during the
strategic planning process for major policy setting and decision making.
Strategic plan defines 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 conditions.
An operational plan is a type of plan designed to aid tactical plans. Deal with how to
accomplish the organisation’s objectives.
A contingency plan: outlines alternative courses of action that may be taken if an
organisation’s other plans are disrupted/ineffective. E.g. natural disaster or ethical
misconduct
6.2.2: Organising the enterprise
Organising is the grouping of resources and activities to accomplish some end result in an
efficient and effective manner.
When businesses grow, individual action is not effective anymore. Hiring of employees is
required for effective organisation activities.
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