, The Management Environment
COMPOSITION OF THE MANAGEMENT ENVIRONMENT
Learning Outcome 01:
▪ 4 approaches to management: Explain the composition of the
1. Process approaches management environment and
2. Systems approaches depict it diagrammatically
3. Contingency approaches
4. Responsible approaches
• Process approach:
• Planning, organising, leading and controlling
- Circular and continuous
- Focuses on managing the total or overall organisation
• Systems approach:
- Defines a system as: a collection of interconnected & interdependent components that work together to form
a unified whole
- Business is influenced by the industry-specific and the general environments
• Contingency approach:
- Based on the systems approach
- Application of management principles is dependent on a specific situation faced at the time
- Acknowledges that every business, department or unit is unique
○ Each business exists in a unique environment with unique goals and strategies
• Responsible approach:
- Refers to the management of a business built on sustainability, responsibility and ethics
▪ Management process entails:
a. The flow of inputs from the external environment into the business
b. Conversion/transformation of these inputs within the business systems
c. Subsequent outputs/outcomes in the form of products and/or services, profits, relationships, etc.
▪ Examples of inputs: human resources (HR), capital, technology, entrepreneurship, information, etc.
▪ A responsible manager transforms inputs responsibly, and integrates the 3 pillars of responsible management
(sustainability, responsibility and ethics) with the 4 managerial functions (planning, organising, leading and
controlling)
▪ Transformation process transforms inputs into finished products and/or services, and other outputs
▪ The success of an open system is determined by its management's efficiency and effectiveness in planning,
organising, leading, and controlling functions
▪ System's success depends on successful interactions with its environment
○ Environment includes: suppliers, labour unions, financial institutions and customers
• Strengths:
- Areas/elements in a business that describe what it excels at & what separates it from its competition
- E.g. A strong brand, loyal customer base, ethical conduct, etc.
- Business's resilience is a strength
• Weaknesses:
- Elements/areas that need improvement to remain competitive
- E.g. A weak brand, low staff morale, poor ethical values, etc.
• Opportunities:
- Favourable external factors that could give a business a competitive advantage
- E.g. A favourable exchange rate, increasing market share, etc.
• Threats:
- Factors outside the business that can harm it
- E.g. Rising costs of petrol, shortage of skilled labour, etc.
• Competitive advantage:
- A favourable or superior position that a business holds compared to its peers
- Leads to above-average returns on investment for owners/stakeholders
THE MICRO- OR INTERNAL ENVIRONMENT Learning Outcome 02:
▪ Includes: vision, goals, objectives, functions & the resources available to the business Explain the composition of the micro- or
▪ Micro-environment designates the area over which the manager has total/full control internal management environment
