Business Studies - Management Notes. Business Studies Study Notes

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1 Business Studies - Management Notes Business Studies Study Notes The Nature of Management: Definition of Management: The process of working with and through other people to achieve business goals in a changing environment. Crucial to this process is the effective and efficient use of limited recourses. The importance of effective management: Effectiveness is concerned with determining goals and making future decisions, aligning people and recourses to make sure that the goals of the business are achieved. Efficiency refers to the allocation of recourses and output of production. Efficient managers try to achieve maximum output from minimum inputs and costs. Management Roles: The three types of management roles are: Interpersonal Role: The interpersonal role involves the manager to have the ability to relate and interact with people. Leading includes the capacity to communicate and motivate employees towards the organization s goals and objectives. Informational Role: The informational role involves monitoring and sharing knowledge listening to others and acting as the spokesperson for a business. Managers need to gather, progress and pass on information to the relevant people Decisional Role: Involves problem solving and making choices. The four main decisional roles are: (2012) All Rights Reserved 1 of 10 For more info, go to

2 1: Entrepreneur- looks for and implements new ideas that hopefully will make the business more efficient and effective. 2: Disturbance Handler: must make decisions that allow the business to operate under extraordinary circumstances. 3: Recourse Allocator- sharing out the recourses of the business. 4: Negotiator- Settlement of all disputes involving the business Skills Of Management: People Skills: involve managing and motivating people. Strong interpersonal skills allow a manager to build effective relationships with staff. This may be achieved through use of positive and assertive language, active listening, ongoing feedback, empowerment, clarity in expectations, empathy and understanding. Poor people skills in management can lead to an unproductive workplace. Strategic Thinking Skills: is ongoing in nature and involves a manager articulating the vision, goals and objectives of the business, usually through a strategic plan. The plans for the business will be identified and actions will be outlined to achieve these plans. Vision Skills: Without it there can be no sense of cooperation and commitment, which makes achieving goals impossible. Knowing where the business is headed and what it is trying to achieve helps employees understand where the manager wishes to take the business. Flexibility and adaptability to change skills: Regardless of their level of management, successful managers are those who anticipate and adjust to changing circumstances. They must be flexible and adaptable. Self Management Skills: Involves adopting techniques that allow people to manage their own behavior so that less outside control is necessary. Team Work Skills: Layers of management are being removed and replaced by work teams. One obvious change is that managers will have to work more closely with people over whom they have no apparent authority. Complex Problem Solving and decision making skills: Problem Solving- is a broad set of activities involved in searching for, identifying and then implementing a course of action to correct an unworkable situation. Decisional Making- is the process of identifying the options available and then choosing a specific course of action to solve a specific problem. (2012) All Rights Reserved 2 of 10 For more info, go to

3 Understanding Business Organizations with Reference to Management Theories: Classical Scientific: These theories or philosophies outline the main functions of management including planning, organizing and controlling. Management as Planning: Effective planning provides a vision and objectives for a business, strategies to achieve the vision and objectives and future decisions for change. Planning is the preparation of a predetermined course of action for a business. It involves showing how the business will achieve its stated mission and organizational objectives. Levels of planning - Strategic, tactical and operational: Strategic (long term planning)- is planning for the following three to five years. This level of planning will assist in determining where in the market the business wants to be and what the business wants to achieve in relation to its competitors. Tactical (medium term planning)- is flexible, adaptable planning, usually over one or two years, that assists in implementing the strategic plan. Tactical planning allows the business to quickly respond to changes. Operational (short term planning)- provides specific details about the way in which the business will operate in short term. Management controls the day to day operations that contributors to achieving short term actions and objectives. Examples of operational plans are daily and weekly production schedules. Management as Organizing: Organizing: is the structuring of the organization to translate plans and the business objectives into action. The organizational process: 1: Determining the work activities 2: Classifying and grouping activities - similar activities may be grouped together, this improves efficiency by enabling appropriate allocation of recourses. 3: Assigning work delegating authority - the next step is determining who is going to carry out the work, it is also the responsibility of the manager to check the work that the worker has completed. (2012) All Rights Reserved 3 of 10 For more info, go to

4 Management as Controlling: Controlling: is the comparison between what was intent to happen to what actually happened, this allows changes and improvement to occur. The controlling process: 1: establish standards in the line with the firms objectives and influences from employees, management, industry and government. 2: Measure performance and determine how comparisons will be made against standards or benchmarks. 3: Take corrective action - changing activities, processes and personal to ensure objectives of the business have been met. Hierarchical Organizational Structure Based on Division of Labor: Division of labour refers to the degree to which tasks are subdivided into separate jobs. Classical scientific theorists believed that there was only one way to do a job and complex tasks should be broken down into a series of simplified series of tasks. This hierarchical structure has a: limited number of senior managers who dominate decision making eg a board of directors a series of middle managers who coordinate the supervisors through the development of tactical plans Supervisors who put the operational plan into action and get the job done through management. Leadership Styles: Autocratic: An autocratic leader is one who is controlling, rigid in decision making with little or no participation from staff. An often used example for this type of style is the military. Democratic: Authority and power decentralised throughout the organization, encouragement of employee contribution Laissez Faire: Very free management and employees know what they are doing and get it done. Behavioural Management Theory: The behavioural management approach stresses to employees that they are the main focus of the business operations. Management as Leading: Leading: is having a vision of where the business should be in the long and short term and being able to direct and motivate human recourses in an organisation to achieve its objectives. A good leader is someone who: (2012) All Rights Reserved 4 of 10 For more info, go to

5 Sets an example and earns respect of employees Listens to the opinions of others Delegates tasks to suitable employees Conveys the goals of the business to workers and motivates them to achieve those goals Avoids jargon when talking to employees Management as Motivating: Motivation: is the internal process that energises, directs and sustains individual s behaviour. It is the personal force that causes a person to behave in a particular way. Some techniques for motivation include, rewarding, encouragement, enhancing self esteem and employee participation. Management as Communicating: Communication: is the exchange of information between people, the sending and receiving of messages. Without effective communication the most well thought out plans and strategies will probably fail. Flat Organizational Structure: Characteristics of flat organizational structure: De layering of the traditional organisational hierarchical at several levels for example, middle management. Establishment of market focused work cells, with concentration on one product, process or customer. Making each work cell responsible for a wide range of production function, which encourages multiskilling, quality control and maintenance. Political Management Theory: This theory emphasises the formal and informal acknowledgement of power that exists in an organisation. Uses or Power and Influence: Power= the ability to gather together recourses to get something done. Power can be used correctly or incorrectly. If managers understand the nature or power and how it can be used to empower others then they have an advantage when it comes to influencing others and getting things accomplished. Managers have to match the correct source of power to each situation, they are: (2012) All Rights Reserved 5 of 10 For more info, go to

6 Legitimate power: is given because of the status or position of a person within the organization. Expert Power: emerges as a result of a person s skills and expertise eg computer technician. Referent Power: emerges as a result of a person s personal attributes or personality. Reward Power: relates to the rewards or compensation a manager distributes for doing a job. Coercive Power: controls individuals in the organisation by actions or words eg if this isn t done by the deadline you re fired. Management as Negotiating and Bargaining: Negotiating or bargaining is a decision making process among people with different expectations. It attempts to bring about a solution that is agreeable to the greatest number of people. Negotiating or bargaining strategies are crucial communication skills all managers need to develop and practice. Structures as Coalitions: A manager adopting this management theory will be in a better position to view the organisation as a coalition of groups who are, for the most part, pursuing their own sell interest and personal agendas. (2012) All Rights Reserved 6 of 10 For more info, go to

7 Strengths and Weaknesses of the different Management Theories: Management approach Major strenghs Major weaknesses Classical-scientific approach Management as planning, Organising, controlling Hierarchical organisational structure and division of labour Autocratic leadership style Easy to understand and implement concepts Emphasis on the importance of planning;efficient allocation of resources; making judgements based on planned and actual performance Division of labour and specialisation allows increased productivity, targeted training and simple task design Straightforward organisational structure so workers clearly know the chain of command, responsibilities, lines of authority and policies and procedures Too simple for current dynamic business climate; inflexible and bureaucratic with 'red tape' related to policies and procedures Workers treated as machines with little opportunity to be motivated, stimulated ( as work is repetitive and boring) or involved in decision-making Excessive supervision and over-specialisation with little responsibility or opportunities for workers Leadership is rigid and controlling with one way, top down communication and little or no input from workers about ways to improve the process Behaviour approaches Management as leading, motivating, and communicating Flat management structure and teams participative/ democratic leadership style More flexible and adaptable to the changing environment and people's needs Treats people as an important resource rather than a machine Emphasises motivation and the ability to satisfy business goals at the same time as individual needs Developed in a time that was still relatively stable before the impact of globalisation and technological advances Uncertainly in task designs, job clarity and ecpectations due to lack of obvious chain of command Difficult to gauge the link between improved productivity and human motivation (2012) All Rights Reserved 7 of 10 For more info, go to

8 Political approaches Power and influence, management as negotiating and bargaining Allows employees to feel valued and that they belong, take on responsibility, and be empowered and selfdirected so as to reach their potential ( self-actualisation) Communications improved as a twoway process because of flatter management structures and a team approach leaders are able to make more informed decisions as they encourage worker participation and consultation Recognition of the different interests of individuals and groups and the role of power to influence decisions Each person has different motivational needs making it difficult for a manager to adjust to the individual's needs Decision-making is time consuming because of manager's consultation process with the workers Can create a conspiracy theory approach where managers may see coalitions and agendas in places where there are none (2012) All Rights Reserved 8 of 10 For more info, go to

9 Management approach Major strenghs Major weaknesses The use of coalitions Stakeholder view As organisations become more complex and as stakeholders become more assertive, managers who are politically astute and good negotiators are more effective Strong coalitions have greater opportunities to influence and persuade managers to address their interests Can allow consensus and a better allocation of resources to take place through negotiation and bargaining Allows change as more groups are committed Too much time can be spent on analysing office politics, power plays and stakeholder views, leading to lower productivity Less dominant groups, such as female employees, can be disadvantaged Not all interest groups and stakeholders have equal power and there may be inappropriate allocation of scarce resources to the group with the greatest power May be a lack of unity due to the different coalitions in the organisation Often too much information and time spent on negotiation and bargaining Coalitions are constantly changing and this can cause uncertainly (2012) All Rights Reserved 9 of 10 For more info, go to

10 System Management Theories: System: is a set of interrelated parts that operate as a whole in order to achieve a common goal. System management Theory is characterised by: Commitment to a shared purpose and direction, supported by common values. Sensitivity towards the needs of all members within the group Co operation between all groups within the organization. Contingency (Like Plan B) Management Theories: Stresses the need for flexibility and adaption of management practices and ideas to suit changing circumstances. (2012) All Rights Reserved 10 of 10 For more info, go to

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