LESSON 6 MANAGERIAL ROLES IN SMALL BUSINESS

Transcription

1 LESSON 6 MANAGERIAL ROLES IN SMALL BUSINESS Sonia Sabharwal STRUCTURE 6.0 Introduction 6.1 Objectives 6.2 Enterprise Management 6.3 Managerial Functions 6.4 Summary 6.5 Glossary 6.6 Self Assessment Questions 6.7 Further Readings 6.0 INTRODUCTION By now you have learnt how to identify a business opportunity, make a feasibility analysis covering marketing, financial and other aspects (legal, environment, etc.).once you take a plunge to start a new venture then the entrepreneurial role will be taken over by the managerial role. In the first unit you have already learnt the functions that an entrepreneur has to perform. Also how entrepreneurship is different from management. Now in this unit we will elaborate the functions that an entrepreneur has to perform as a manager. For a successful entrepreneurial hunt, the individual is required to perform a double role-one that of an entrepreneur and the other that of a successful manager. Entrepreneurs are often achievement oriented who seek challenges and new activities. The management responsibility of an entrepreneur is much more than that of a paid manager and is full of challenges which can be both thrilling and enterprising. 6.1 OBJECTIVES After going through the lesson you should be able to: Develop familiarity with various functions of a manager 83

2 Know exactly what are the tasks, which an entrepreneur has to undertake in the course of managing his enterprise. 6.2 ENTERPRISE MANAGEMENT Operating an enterprise involves performance of a host of functions, be it production, marketing, finance, HR or overall administration and coordination. Entrepreneur in a developing country context typifies the owner-manger stereotype. As such he is the administrative head of his enterprise. Given the smallness of the size it may not be possible for him to appoint specialists in all the areas. He may have to do with some general purpose assistants subject to his direct command and supervision. He may, thus, be the sole manager of his enterprise. Although different products or services require different operations, yet, these operational functions are governed by common management principles. As a manager, one has to forecast the future; find out relationship among different operations and the effect one has over other; find out methods and procedures for reviewing and controlling inadequacy of resources. Because of misunderstanding of such differences between operation and management many a time first generation entrepreneurs fail to manage enterprises and face various problems such as: scarcity of funds shortage of fire fighting operations meager productivity inadequate marketing wastage and inefficiency due to unplanned decisions stagnation or even closure To avoid such situations and to achieve success there may be a need to manage enterprise by acquiring management skills appropriate to perform various managerial functions such as planning, organizing, directing and controlling operations. Check your Progress Mention 5 problems that small entrepreneurs face in managing their enterprise 84

3 6.3 MANAGERIAL FUNCTIONS Small business has its own distinguishing features. The entrepreneur himself often acts as the manager and looks after more than one function. Therefore, managerial practices used successfully in big firms cannot be blindly used in small-scale units. Basic managerial functions in large and small business are the same. But the manner in which these functions should be carried out can be different. Essentially, management implies distinct processes of Planning, Organizing, Directing, and Controlling resources both human and material, to achieve an identified objective PLANNING Managing starts with planning. An entrepreneur with a definite and welldefined plan has more chances of success than another who tries to start an enterprise without planning. According to Killen planning is the process of deciding in advance what is to be done who is to do it how it is to be done and when it is to be done. Planning involves thinking and decision and is, therefore, called a logical process. Planning is a continuous process as changes in plans have to be made from time to time to take care of changing environment. Many a times, a vague approach is adapted to planning in a small firm. There is a false impression that small firms are uncomplicated and do not require planning. The small-scale entrepreneur does not want to engage his employees in the planning process due to the desire to keep the secrets with him. Personal accountability for results, lack of expert staff and not having planning skills are other major obstacles to planning in small firms. The owner or manager of a small enterprise is too involved in day-to-day operation to try planning before commencing actual operation. But they need pre-planning most because small firms have limited resources to conquer their upcoming problem and cannot afford to finance losses that can take place while adjusting to unanticipated happenings/changes. Planning is the process of thinking in advance and drawing a design of activities before actual operations can take place. This helps in predicting obstacles, identifying the resources required for the venture and help to compare the final result of the whole operations with the planned ones. Further, it prevents wastage and optimizes returns from human and financial resources. Steps in Planning: Planning involves seven steps. 1. Setting objectives recognizing and clearly relating the problem. 2. Analysis of situation environment, resources and significant forces. 3. Collecting and linking details and information. 85

4 4. Searching for alternatives to attain the objectives. 5. Evaluating and comparing the alternatives. 6. Choice of alternatives. 7. Preparing the plan of action for execution. A good plan should be able to answer the following questions: (i) (ii) (iii) (iv) (v) (vi) (vii) What is to be done? Why must it be done? When it is to be done? Where it is to be done? Who will do it? How will it be done? How much control should be used? Check your Progress Write the following steps in a logical sequences Finding alternatives, Setting objectives, Choice of alternatives, Analyzing the environment, Setting the plan of action, Collecting, information, Comparison of alternatives ORGANISING An entrepreneur needs an enterprise which can achieve the business objectives. During the function of organising he leads human resources to successful completion of the project, arranging the functions and activities into different levels in the organization structure, thus facilitating the assignments of personnel according to their capabilities, skills and motivation. According to Peter F. Drucker the process of organizing consists of three steps - activities analysis, decisions analysis and relation analysis. (i). Activities Analysis: It consists of the following: a) Determining the main functions for achieving the objectives of the firm. b) Various sub-functions in each major function. c) Amount of work in each major function and its sub-function. d) The position required to perform the activities. (ii) Decisions Analysis: It consists of the following: a) Choosing the basis of departmentalization so that functions could be grouped into specialized units. Generally, functional departmentation is appropriate for small-scale units. Customers, Products and territories are other important base of departmentalization. b) Choosing the type of organization structure so that departments are incorporated into a formal structure. 86

5 (iii) Relations Analysis: The authority, responsibility and accountability of every position and its relationship with other positions are clearly defined. Various positions are manned with persons having the necessary education, training, experience and other qualifications. To obtain best possible benefit from each employee it is necessary to delegate functions as far-down in the organization as possible. Owners of small firms are often reluctant to delegating authority to their employees even though they expect them to do all functions allocated to them that require authority. For effective completion of tasks, it is necessary that responsibility accompanies the necessary authority. Check your Progress Match the following: a) Determination of major functions of the firm Activity Analysis b) Setting authority responsibility relations Decision Analysis c) Grouping the functions into specialised units Relations Analysis DIRECTING In directing a manager has to supervise, guide, lead and motivate people so that they can achieve set targets of performance. In the process of directing his subordinates, a manager ensures that the employees fulfill their tasks according to the set plans. Directing is the executive function of management because it is concerned with the execution of plan and policies. Directing commences organized action and sets the whole organizational machinery into action. It is, therefore, the life giving function of an organization. This is the area where the mastery of the art and science of management is put to test. An entrepreneur s leadership style determines the work atmosphere and culture of the organization. Above all, he must motivate employees by setting a good example, setting practical targets of performance and providing satisfactory monetary and non- monetary benefits. In directing a manager has to perform the following tasks: (a) (b) (c) Issuing orders and instructions Supervising workers Motivating i.e. inspiring to work efficiently for set objectives (d) Communicating with employees regarding plans and their implementation. (e) Leadership or influencing the actions or employees 87

6 Check your Progress Write the meaning of Directing in your own words CONTROLLING Controlling is the process of ensuring that the organization is moving in the desired direction and that progress is being made to wards the achievement of goals. The answer to a profitable organization is the skill of the owner or manager to control operations. He has to establish standards of performance, procedures, goals and budgets. With these guides, he supervises job progress, workers performance and the financial condition of the business. The controlling function of the owner manager includes: Setting of standards: - Control presumes the existence of standards against which actual results are to be evaluated. Standards can not control on their own but they are the targets against which actual performance can be measured. Therefore they should be set clearly and accurately. They should be precise, adequate, and feasible. Measurement of actual performance: - The actual performance is measured and evaluated in comparison with the set standards. Preferably measurement should be such that variation may be identified in advance of occurrence and prevented by suitable action. Where work involved is of quantitative nature measurement of performance is not difficult. But when the work is not quantifiable measurement becomes difficult. Periodical reports test checks and audits are helpful in precise measurement of performance Analysis of variances: - Comparison of actual performance with standards will reveal variation. Variations are analysed to identify their cause and their impact on the organization. Corrective action can be possible only where the causes of the problem spots have been identified. Clarification may be called for sudden variation. Taking corrective action: - Control means action on the basis of measurement and evaluation of results. Wherever possible self- determining device should be used for bringing back actual results in line with the standards. Standards should be revised wherever necessary. Other steps to prevent deviations can be re-organization, improvements in staffing and directions etc. The real meaning of control lies in the commencement and follow-up of remedial action. At this stages control unites with planning. 88

7 Check you Progress Fill in the blanks 1. Actual results are compared against 2. Deviations are analysed to diagnoses their. 3. Standards should be stated and.. 4. Explanations may be called for deviations 5. The remedial action may consist of revision of TIME MANAGEMENT In managing an enterprise time is of essence especially for a small scale entrepreneur who has to perform the dual role of an entrepreneur as well as of a manager in his business. The entrepreneur can bring substantial changes in his firm s performance by managing time more efficiently. Management of time involves the following steps. (i) Time Analysis: First of all a systematic study is made to find out the proportion of total time spent by the entrepreneur and his workers on different activities. (ii) Finding Critical Activities: Critical or vital activities should receive greater time. Activities taking more than the justified time need to be identified. Irrelevant or time wasting activities should be eliminated. (iii) Time Allocation: A time schedule should be prepared. Proper time should be allocated to each activity. The tasks one wants to do but for which he does not have time should be noted. (iv) Stick to Time Schedule: The most difficult step in time management is to complete each activity within the schedule time period. For this purpose, it is necessary to delegate task to subordinates, to organize every workday and to continuously evaluate the time management system 6.4 SUMMARY Business of every size must be managed or they will close down to. though there are many similarities between managing a big business and a small one, major differences are also there. Managing a small business is a difficult job. A manager has to perform many activities well with lesser resources as compared to large competitors. The hopes of consumers, associates, and workers are increasing to the point that small business can hardly exist without understanding the tools and practices of professional management. The functions of management by convention are planning, organizing, directing and controlling a company. To an extent, these are the major functions that a manager performs whether he is in a large business or a small business. These four functions are continuous and interconnected. 89

8 Management do each of them all the time. A manager has to do some planning, some organizing, a lot of directing and some controlling every day. These four functions are interconnected in that there is progressive cycle to their achievement. Planning begins the process as the manger determines what to do. Organizing involves bringing together the resources (financial, human, or material) to achieve the plan. Leading is the process of getting the best possible from these resources. Controlling is comparing what was planned with what was actually accomplished. If a variation exists between what was planned and what was actually accomplished (which is almost always the case), a new plan is needed and the sequence begins again.) 6.5 GLOSSARY Productivity - It is the ratio between the output of goods and services and the input of resources consumed in the process of production. Marketing - Marketing involves the design of the products acceptable to customers and transfer of ownership from the seller to the buyer. Delegation - Delegation is the process of assigning a part of the work to subordinates. Motivation - It is the process of satisfying the needs and motives of an individual in order to inspire him to work efficiently for desired ends is called motivation. Environment - Business environment means those factors which are external to and beyond the control of individual business enterprise. 6.6 SELF-ASSESSMENT QUESTION Q.1 Explain the planning process in small scale enterprises. Q.2 How would you organize small business? Q.3 Explain communication process in small business. Q.4 How can a small scale enterprise manage his time effectively? Q.5 Write a note in controlling in small business. 6.7 FURTHER READINGS AND SOURCES 1. Brown Longenceker, Small Business Management. South Westen Publishing Co. 4 th Ed. 2. Forrest H. Fronts, Successful small Business Management. Prentice Hall Inc. Englewood Cliffs, New Jersey. 90

9 3. Peter F. Drucker. The Practice of Management. Allied publishers Pvt. Ltd. 1 st Ed. 4. Timathy S. Hatten. Small Business, Entrepreneurships and Beyond. Prentice Hall, Upper Saddle River, N.J. 5. Williom H. Newman, C.E. Summer, E.K. Warren, The Process of Management, Concepts, Behaviour and Practice. Prentice Hall of India Pvt. Ltd. New Delhi,