Chapter 7 Notes

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1


Chapter
7

-

-
Business Management

Section 1:
Management Functions

Introduction to
Management

Entrepreneurs who start and run businesses by themselves do not have to manage other people. They have to manage themselves.

However, if the
firm has employees,

then some ty
pe of management plan is necessary.


Management

includes the processes or functions of planning, organizing, leading and controlling.


Managers help a business by:



supervising

and
directing

employees



focus on
setting and meeting goals

effici
ently and effectively so profits can be made



having a
thorough understanding

of business operations



develop objectives

for a firm or a department and then figure out how to meet those objectives through people,
work processes and equipment

The Four
Functi
ons of
Management

Most managers carry out four different functions of management. These functions are indicated in the order in which they occ
ur:
planning, organizing, leading and controlling.



Planning
: The act or process of creating goals and
objectives as well as the strategies to meet them. Planning also involves
figuring out the resources that are needed and the standards that must be met.



Organizing
: Is getting the resources arranged in an orderly and functional way to accomplish goals
and objectives. A
manager must:



organize people, work processes and equipment

so that the work is well coordinated.



hire and train employees

–

and fire them when necessary.



make sure
employees have all the tools

they need to do their jobs well.


Leading
:
Providing direction and vision. Good management must create a vision of the company to inspire their employees.
Standards for deadlines and sales quotas must be set so managers and workers know their goals. Leaders also must:



delegate

work



enf
orce

policies


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2




oversee

time management



Provide

feedback

on employees’ work.



resolve conflicts

between workers



Controlling
: keeping the company on track and making sure goals are met. Managers must:



keep track

of the budget



the
schedule



the
quality o
f the pr
oducts or services

they provide



monitor

their employees and
review

their performance according to standards



take corrective action

when goals are not met



monitor customer satisfaction



Levels of
Management

Another important part of organizing is determining how different individuals in the firm relate to one another. An
O
rganizational
C
hart

shows how the firm is structured and who is in charge of whom.




Top
-
level M
anager

–

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-
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-
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

Middle Manager

–

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

Operational Manager

–

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Chapter
7

-

-
Business Management

Section
2: Management Structures

Managerial
Structures

There are several ways to organize a management structure.



Line Authority
: an organizational structure in which managers on one level are in charge of those beneath them. An
advantage

of the line authority structure is that
authority is clearly defined
. Each employee knows to whom
she or he reports. A
disadvantage

is that t
he mangers
have few specialists

who help with their responsibilities.



Line and Staff Authority
: organizational chart shows the direct line of authority (indicated by solid lines) as well as
staff who advise the line personnel (indicated by dotted line
s). An
advantage

is that managers
can see who they
can get advice from
. A
disadvantage

is that it
can lead to overstaffing
, which can be costly.



Centralized organization
: puts authority in one place
–

with top management. This helps managers throug
hout
the firm to be consistent in decision making.



Decentralized organization
: gives authority to a number of different managers. They are often evident in
international business. Some U.S. managers working in foreign countries have more decision
-
ma
king power because they know their
markets well.


Formal Structures

are usually departmentalized.



Departmentalization

divides responsibility among specific units or department. Departments can be organized
many different ways, such as:

o

by geographical
location

o

function

o

customer groups

o

product


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Informal Structure
.
Smaller
businesses can be run informally. If a business does not need a big marketing or distribution
network, it does not need a lot of managers. Employees can be more flexible and share duties.

Is a Manager’s Job
for You?

Most managers
begin their career in

an entry
-

level job. An
entry
-
level job

is a beginner
-
level position. New employees who
gain experience and show certain qualities can be promoted to higher positions, including management.


Skills Needed by Managers:



Be
t
ask oriented

–

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

Work under pressure and solve many small problems
.



Communicate well.

This involves listening as an important part of communication.



Have human relations skills

–

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

Ha
ve knowledge of the technical aspects

of their business.


Advantages of Being a Manager:



Earn more money

than employees in non
-
management jobs.



Managers who are good leaders
are respected

which builds prestige.



Have more
influence and authority

than other
employees because they plan, organize, direct and control
company resources.



Have
greater control over their time
.


Disadvantages of Being a Manager:



Managers are
often blamed

when things go wrong, even if they did not cause the problem.



Mistakes can be ve
ry costly to the company, so they are
under a lot of pressure

to make the right decisions.