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 4
Chapter

BASICS OF BUSINESS
MANAGEMENT
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 BASICS OF BUSINESS
MANAGEMENT
 AT THE END OF THIS CHAPTER, YOU WILL BE
ABLE TO:
– Define management.
– Describe management as a process.
– Specify the skills needed by managers.
– Explain the differences between efficiency and
effectiveness.
– Explain the major roles of managers in organizations.
– Identify the characteristics of successful managers.
– Describe the five types of organizational structure.

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 4.1 DEFINITION OF MANAGEMENT

 Management can be defined as a set of

functions and activities that must be
accomplished by managers in order to achieve
organizational goals effectively and efficiently

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 MANAGERIAL LEVELS

Levels of Management

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  Top-level managers set the goals and provide
the strategic directions for organizations.
 Middle-level managers are responsible for
carrying out the goals set by the top
management.
 First-level managers are responsible for
directing and supervising the actual day-to-day
work of the organization at the operating level

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 4.2 PROCESS OF MANAGEMENT

Process of Management

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 PROCESS OF MANAGEMENT

 Management is fundamentally the process and

activities involved in pursuing organizational
goals efficiently and effectively by planning,
organizing, leading and controlling the
organization’s resources.

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 PLANNING

 Planning involves setting appropriate and clear

goals and objectives, and establishing
appropriate strategies to accomplish them.
 Clear goals will provide the framework within
which the organization’s strategies are
formulated.
 For example, when a company aims to expand
its market share (the goal), its managers should
develop the appropriate strategies in order to
achieve the goal set.
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 The Types of Planning at Different Levels of an Organization

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 TYPES OF PLANNING

 Strategic planning involves setting long-term

goals and objectives. It is usually conducted for
a period of five years or more.
 Tactical planning is also known as mid-term
planning. This type of planning is usually
conducted for a period between one to five
years.
 Operational planning is also known as short-
term planning. It is performed for a duration of
one year or less.
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 ORGANIZING

 The process of arranging and coordinating

organizational resources (particularly human
resources) to carry out the organizational plan.
 Determines the tasks to be done, how the tasks are to
be grouped, who is in charge of what, and who
reports to whom.
 Allows cooperation between organizational members
and motivates members to work together to achieve
organizational goals.

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 LEADING / DIRECTING

 Leading is the process of motivating

subordinates and inspiring others towards
achieving organizational goals.
 Managers need to be leaders in order to get
others to do their best in fulfilling plans and
achieving objectives.
 A good manager who leads well can inspire
people to work hard.

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 CONTROLLING

 Controlling is the final link in the chain of

management functions.
 Managers evaluate and monitor individuals, groups,
departments and their respective organizations as a
whole to see how well each level is on target towards
achieving its goals.
 Effective control systems allow managers to know
how well plans are being implemented.
 If the standard is not met, necessary corrective
actions or changes need to be carried out.

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 4.3 MANAGEMENT SKILLS

Management Skills at Different Managerial Levels

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 MANAGEMENT SKILLS

 Technical skills are the ability to understand and

demonstrate knowledge and proficiency in a
specialized field.
 Human skills are the ability to interact and work well
with other people. Managers with good human skills
develop good relationships with all levels of
employees.
 Conceptual skills are the ability to think of situations
analytically from a broad perspective. These skills
include analyzing complex situations, solving
problems and thinking creatively.
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 4.4 EFFECTIVE COMMUNICATION

AS A MANAGEMENT TOOL

The Communication Process

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 EFFICIENCY AND EFFECTIVENESS

Effectiveness: The degree to which an organization

achieves its goals. It is about doing the right things,
typically in terms of quantity as well as quality.
Managers are effective when they select the right or
appropriate things to be done and achieve them well.

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  Efficiency: The degree of how well resources
are used to achieve a goal. It is about doing
things right. Managers are efficient when they
can minimize the amount of resources (such as
people and money) used to attain their goals.

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 Relationship between effectiveness, efficiency and performance in
organizations

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 4.5 MANAGERIAL ROLES

 Interpersonal Roles: Interpersonal roles are

primarily concerned with relationships with other
people.
 Informational Roles: Managers obtain information
and must communicate information to people inside
and outside the organization.
 Decisional Roles: Decisional roles require managers
to plan strategy and utilize resources. Managers use
information to make decisions or solve problems.

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 4.6 CHARACTERISTICS OF
SUCCESSFUL MANAGERS
 Practise open communication
 Set clear directions
 Establish objective recognition
 Provide guidance and support to employees
 Design and monitor a control system

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 4.7 TYPES OF ORGANIZATIONAL
STRUCTURE

 Functional structure
 Product structure
 Geographical structure
 Customer structure
 Matrix structure

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 A Functional Structure

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 A Product Structure

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 A Geographical Structure

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 A Customer Structure

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 A Matrix Structure

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 SUMMARY

 Management is a set of functions and activities that must be

accomplished by managers in order to achieve organizational goals
effectively and efficiently.
 A manager is a person who is responsible for the work activities of the
organization towards achieving organizational goals. In most
organizations, there are typically three levels of management—the top,
middle and first levels.
 Organizational goals can be achieved efficiently and effectively by
planning, organizing, leading and controlling the organization’s resources.
  Managers need three important skills—technical, human and conceptual
skills.
 The five types of organizational structure commonly adopted by
organizations are the functional, product, geographical, customer and
matrix structures.

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 Tutorial 4

1. Explain the differences between efficiency and

effectiveness.
2. Explain the major roles of managers in
organizations.
3. Identify the characteristics of successful managers.
4. Describe the five types of organizational structure

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