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EDBABUS 150

INTRODUCTION TO BUSINESS ADMINISTRATION

MAZLOMI INURUL AKMAR BT. MOHD. NOR

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CHAPTER 1THE NATURE OF BUSINESS

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WHAT IS BUSINESS?• An individual or organization that provides

goods, ideas and services to others who want or need them

• The outcome are products: tangible intangible

• The product provides satisfaction and benefits

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BASIC CONCEPTS OF BUSINESS

• Profit

• Entrepreneurship

• Risk taking

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GOAL OF BUSINESS

• To maximize profits

• Balance the needs of stakeholders

• Not all organizations are business

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PURPOSE OF BUSINESS

• To supply goods and services to customers, rather than to supply jobs to workers and managers, or even dividends to stockholders

• To have healthy and growing sales• New product development or new services• Cost control or lowering of costs• To create wealth for shareholders,

employees, customers and society at large

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RATIONALE OF BUSINESS

• Make or provide good and quality goods, ideas and services

• Make or provide reasonably-price goods, ideas and services

• To fulfill the needs of consumers

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BUSINESS FIRM

• An organization under one management

• Set up for earning profit

• Providing goods, ideas and services

• Sale in market

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BUSINESS ENVIRONMENT

• Economics condition• Legislation• Technological process• Socio-cultural environment• Competition• Globalization

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CHAPTER 2THE ROLE OF PROFIT IN BUSINESS

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DEFINITION OF PROFIT

• The difference between what it costs to make and sell a product and what a customer pays for it

• The reward for the risks they take in providing products

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THE IMPORTANCE OF PROFIT

• To earn profit, an organization needs:– Management skills– Marketing expertise– Financial resources

• Business must produce quality products, operates efficiently

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CHAPTER 3CONTRIBUTIONS OF BUSINESS

TO SOCIETY

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CONTRIBUTION OF BUSINESS TO SOCIETY

• Employment creation

• Economic growth (GDP)– GDP measures both the total income earned

in the economy and the total expenditure on the economy’s output of goods and services

– Level of real GDP is a good gauge of economic prosperity

– Growth of real GDP is a good gauge of economic progress

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CONTRIBUTION OF BUSINESS TO SOCIETY

• Improved standard of living– The amount of goods and services people can

buy with the money they have• Improved quality of life

– The general well-being of a society in terms of political freedom, a clean natural environment, education, health care, safety, free time and many others that leads to one’s happiness and satisfaction

• Peace and prosperity

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CHAPTER 4EXPLOITATION OF SOCIETY

BY BUSINESS

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BUSINESS ETHICS• Principles and standards that determine

acceptable conduct in business organization

• Acceptability of behaviour in business is determined by customers, government, interest group, competitors

• The organizational culture must be strong• Relates to an individual’s or work group• Relates to the culture in which a business

operates

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SOCIAL RESPONSIBILITY

• Business’s obligation to maximize its positive impact and minimize its negative impact on society

• Concerns the impact of the entire business’s activities

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STAKEHOLDERS OF BUSINESS

• People or parties that stand to gain or lose by the policies and activities of a business– Shareholders– Customers– Suppliers– Bankers– Government agencies– Competitors

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ETHICAL ISSUES IN BUSINESS

• Ethical issue is an identifiable problem, situation or opportunity that requires a person to choose from among several actions that may be evaluate as right or wrong, ethical or unethical

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ETHICAL ISSUES IN BUSINESS

• Abusive and intimidating behaviour– Physical threats, insults, profanity, yelling

• Conflict of interest– Whether to advance a person’s personal

interests or those of others– Separate personal financial interests from

business dealings– Example: bribes

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ETHICAL ISSUES IN BUSINESS• Fairness and honesty

– Relate to the general values of decision makers

– Not to harm customers, clients or competitors• Communications

– False and misleading advertising– Truthfulness about product safety

• Business relationship– Behaviour of businesspersons toward

customer, suppliers and other in workplace

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IMPROVING ETHICAL BEHAVIOURIN BUSINESS

• Code of ethics

• Policies on ethics

• Ethics training programs

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NATURE OF SOCIAL RESPONSIBILITY

• Economics– Earning profits

• Legal– Obeying the law

• Ethical – Doing what is right, just and fair

• Voluntary– Being a good citizen

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SOCIAL RESPONSIBILITY ISSUES• Relations with owners and stockholders

• Employee relation

• Consumer relation

• Environmental issues

• Community relations

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CHAPTER 5TYPES OF BUSINESS

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SOLE PROPRIETORSHIP

• Owned by one person

• Advantages:– Total independence in making decisions– Sole ownership of profits– Pay only personal income tax and not

business tax– Low set-up cost

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SOLE PROPRIETORSHIP

• Disadvantages:– Entirely responsible for debts and risks– Unlimited personal liability– Limited access of capital– Limited skills and capabilities– Feeling of isolation– Short life of business

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PARTNERSHIP

• Owned by two or more persons• Partners are joint owners of the business

and share profits, loses and risks• Not a separate legal entity from its owner• Types of partners:

– Limited partner– General partner

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PARTNERSHIP

• Advantages:– Easy and cheap set-up cost– Able to raise more capital– Tax advantage

• Disadvantages:– At least one partner has unlimited liability– Lack of continuity– Difficulty to raise large sum of capital– Bound by the act of one partner

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CORPORATION• Legal entity separate from its constituent

members• Formed by several persons who are able

to own property, draw contracts and employ people

• Three types of corporation:– Limited by shares– Limited by guarantee– Unlimited corporation

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CORPORATION• Advantages:

– Limited liability– Easy to raise capital through sale of shares– Able to transfer ownership– Relative permanence of existence– Increase expertise and skills– Able to delegate authority

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CORPORATION• Disadvantages:

– Activities limited by law– Costly incorporation process– Double taxation– Loss of control by the founder– Regulation

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SMALL BUSINESS• Independently owned and operated

business that is not dominant in its competitive area and does not employ more than 500 people

• Advantages:– Independence– Costs– Flexibility– Focus– Reputation

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SMALL BUSINESS

• Disadvantages:– High stress level– High failure rate

• Undercapitalization• Managerial inexperience or incompetence• Inability to cope with growth

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MULTINATIONAL CORPORATION• Firms having operations in more than one

country, international sales and a nationality mix of managers and owners

• Examples: – International computer goods– Electronics goods– Consumer goods

• Depends on the international market for a large percentage of their total revenue

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CONGLOMERATES• A company that consists of multiple

distinct businesses

• Unrelated businesses

• Large and can be formed by merging more than three businesses together

• • The term may also refer to a multi-industry

company

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CONGLOMERATES• Advantages:

– Allow capital to be allocated in a more efficient way

– More efficient allocation of capital

• Disadvantages: – Lack of focus and inability to manage

unrelated businesses equally – Stocks are usually penalized by the market

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CO-OPERATIVES

• Composed of individuals or small businesses that have banded together

• The set-up is not to make money • The creation is to create enough profit to

maintain the organization• It can help distribute the products of its

members

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CHAPTER 6THE BASIC BUSINESS PROCESS

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INPUT-OUTPUT MODEL

• Inputs

• Transformation or conversion

• Outputs

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INPUTS

• Labour

• Money

• Materials

• Energy

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CONVERSION PROCESS

• Combines inputs in predetermined ways using different equipment, administrative procedures and technology to create products

• To ensure that the process generates quality products, control must be made

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CONVERSION PROCESS

• Take measurements at various points

• Take actions for any deviation

• Different types of transformation process take place in different organizations

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OUTPUTS

• Final products differ from each other

• Human and technological elements associated with a service

• Customer services

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MANAGING THE BUSINESS PROCESS

• Process focus

• Product focus

• Repetitive focus

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CHAPTER 7MANAGING THE OPERATIONS

OF BUSINESS

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OPERATIONS MANAGEMENT

• Sets of activities that creates goods and services through the transformation of inputs into outputs

• Deals with the design, direction, control, integration and improvement of the processes

• The main goal is to ensure the efficient transformation of production

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OPERATIONS MANAGEMENT

• Doing of work for things like superior quality, speed-to-market, low costs

• Excellence in operations can become a competitive advantage

• Closely coordinated with inventory control

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GOALS OF OM• Productivity

• Quality

• Innovation

• Customer satisfaction

• Profitability

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TECHNOLOGY IN OM• To meet customer requirements, lower

costs and higher quality

• Machines without computer memory but controlled by magnetic tape which called numerical control machines

• Robots

• Flexible manufacturing system

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QUALITY IN OM

• What is quality?

• Why is it important?

• Two ways quality can improve profitability– Market gains– Reduced costs

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QUALITY MANAGEMENT

• Reflects the degree to which a good or service meets the demands and requirements of customers

• Quality control refers to the processes an organization uses to maintain its established quality standards

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QUALITY MANAGEMENT• TQM involves coordinating efforts to:

– Improve customer satisfaction– Increase employee participation and

empowerment– Form and strengthen supplier partnerships– Foster an organizational culture of continuous

quality improvement• TQM should be incorporated throughout

the transformation process

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POINTS FOR IMPLEMENTING QUALITY IMPROVEMENT

• Create consistency of purpose• Lead to promote change• Build quality into the produce• Build long-term relationships• Continuously improve • Start training• Emphasize leadership• Drive out fear

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POINTS FOR IMPLEMENTING QUALITY IMPROVEMENT

• Break down barriers between departments• Stop haranguing workers• Support, help and improve• Remove barriers to pride in work• Institute a vigorous program• Work on the transformation

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QUALITY MANAGEMENT• Establishing standards – ISO

• Inspection

• Sampling

• Benchmarking

• Continuous improvement

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BUSINESS PROCESS REENGINEERING

• Time-function mapping

• Work-flow analysis– Request– Negotiation– Performance– Acceptance

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HIGH-TECH MANUFACTURING

• Computer-aided design

• Computer-aided manufacturing

• Computer-integrated manufacturing

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BENEFITS OF CAD/CAM

• Product quality

• Shorter design time

• Database availability

• New range of capabilities

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JUST-IN-TIME

• Eliminates manufacturing wastes

• Also known as lean production or stockless

• Can be implemented with high level of commitments

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INVENTORY MANAGEMENT• Functions of inventory:

– Provide a stock of goods– To permit operations to continue smoothly– To take advantages of quantity discounts– To protect against shortages

• Types of inventory:– Raw material inventory– Work-in-process inventory– Maintenance/Repair/Operating supply– Finished goods inventory

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SUPPLY CHAIN MANAGEMENT

• A supply function of operations• Connecting and integrating all parties /

members of the distribution system, to satisfy customers

• Also known as logistics• Includes all activities and get them to

customers• Integrates firms into seamless flow of

information and products

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SUPPLY CHAIN MANAGEMENT• To control inventory by managing the

flows of materials• Involves overseeing and controlling

materials, information and finances• Involves coordinating and integrating the

flows both within and among companies• Material suppliers manufacturer

distributors wholesaler retailer customers

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SUPPLY CHAIN MANAGEMENT

• Purchasing

• Managing inventory

• Outsourcing

• Routing and Scheduling

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PURCHASING

• Buying all materials needed by organization

• Materials of desired quality, right quantities, lowest cost

• Either make some components, purchase or lease

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PURCHASING STRATEGIES• Many suppliers

• Few suppliers

• Vertical integration

• Keiretsu networks

• Virtual companies

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MANAGING INVENTORY

• Every raw material, component, completed or partially completed product, must be accounted

• Three basic types of inventory:– Finished-goods inventory– Work-in-process inventory– Raw materials inventory

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MANAGING INVENTORY• Inventory control:

– Process of determining how many supplies and goods needed

– Keeping track of quantities on hand– Where each item is– Who is responsible for it

• Economic Order Quantity Model• Just-in-Time Inventory Management• Material-requirements Planning

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OUTSOURCING• Contracting of manufacturing or tasks to

independent companies

• Cost-cutting tactic

• Allows organizations to boost productivity and remain competitive

• May create conflict

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ROUTING AND SCHEDULING• Routing is the sequence of operations

through which the product must pass

• Scheduling assigns the tasks to be done to departments or specific machines, workers or teams

• Approaches to scheduling:– Trial and error– PERT

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CHAPTER 8BUSINESS STRATEGY

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WHAT IS STRATEGY

• Ideas, plans and support that an organizations employ to compete successfully against their rivals

• To help organizations achieve competitive advantage

STRATEGY CONCEPT• Distinctive competence

– Enable a firm to distinguish itself from its rival– Examples: special capabilities, skills,

technologies

• Terrain– Environmental setting in which an

engagement with an adversary takes place– Targeting market segments and to win

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FACTORS THAT SHAPE A FIRM’S STRATEGY

• Societal, Political, Regulatory, Citizenship Considerations

• Competitive Conditions and Overall Industry Attractiveness

• Firm’s market opportunities and external threats

• Personal ambitions, business philosophies and ethical beliefs of managers

• Influence of shared values and company culture on strategy

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LEVELS OF STRATEGY

• Corporate strategy

• Business strategy

• Functional strategy

• Operating strategy

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CORPORATE STRATEGY• The moves made to establish business

positions in different industries• The approaches used to manage the

company’s group of businesses• Involves four kinds of initiatives:

– Establish positions– Initiating actions– Capture cross-business strategic fits– Establishing investment priorities

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BUSINESS STRATEGY

• Also known as business-level strategy• Managerial plan for a single business• Core elements:

– R&D strategy– SCM strategy– Manufacturing strategy– Financial strategy– Human Resources strategy

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FUNCTIONAL STRATEGY

• Managerial plan for a particular functional activity, business process or key department within a business

• Support the business strategy• The manager of a particular business

function works closely with key subordinates

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OPERATING STRATEGY• Strategic initiatives and approaches for

managing key operating units and handling daily operating tasks

• The bottom of the strategy-making pyramid

• Support the higher-level strategies

STRATEGIC MANAGEMENT PROCESS

• A management process designed to achieve firm’s vision and mission

• Consists of four steps:– Analysis– Formulation– Implementation– Adjustment/Evaluation

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ANALYSIS OF BUSINESS STRATEGY

• PEST Analysis

• Porter’s Five Forces Model

• SWOT Analysis

• Value Chain Analysis

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PEST ANALYSIS

• Stands for Political, Economic, Social, and Technological analysis

• Strategic tool for understanding market growth or decline, business position, potential and direction for operations

• The model's factors will vary in importance to a given company based on its industry and the goods it produces

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PORTER’S FIVE FORCES MODEL• Potential entrants

• Competitors

• Buyers

• Suppliers

• Substitutes84

SWOT ANALYSIS

• Strengths

• Weaknesses

• Opportunities

• Threats

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VALUE CHAIN ANALYSIS• Primary activities

– Inbound logistics– Operations– Outbound– Marketing/Sales– Services

• Support activities – Infrastructure– Human Resources Management– Technology development– Procurement 86

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GENERIC BUSINESS STRATEGIES

• Low-cost leadership strategies

• Differentiation strategies

• Focus strategies

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LOW-COST LEADERSHIP STRATEGIES

• Firm’s ability to provide a product or service at a lower cost than its rival

• To acquire a substantial cost advantage over other competitors that can be passed on to consumers to gain a large market share

• The products or services are standardized and not customized to an individual customer’s tastes, needs or desires

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LOW-COST LEADERSHIP STRATEGIES

• Advantages:– Strong relationship between high market

share and high profitability• Risk avoidance by customers• Strong market presence

• Disadvantages:– High level of asset commitment– Cost reduction methods are easily imitated or

copied by other firms

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DIFFERENTIATION STRATEGIES

• Based on providing buyers with something different or unique

• Customers are willing to pay higher price for a product that is distinct

• Customers more loyal• Products more innovative design,

produced using advanced materials or quality process

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DIFFERENTIATION STRATEGIES

• Advantages:– Allows firms to insulate themselves from

competitive rivalry in the industry– Customers are less sensitive to prices

• Disadvantages:– Other firms may attempt by providing a similar

or better product– Difficulty in sustaining a price minimum

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FOCUS STRATEGIES

• To help a firm target a specific niche within an industry– Particular buyer group– Narrow segment of a given product line – Geographic market

• To specialize the firm’s activities in ways that other broader-line firms cannot perform as well

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FOCUS STRATEGIES• Advantages:

– Able to carve market niche against larger, broader-line competitors

– Improve other sources of value-adding activities that contribute to cost or differentiation

• Disadvantages:– Risk that the market niche may shift more

toward characteristics of broader market

CORE COMPETENCIES

• Something that a company does well relative to other internal activities

• Can relate to any of several aspects of its business

• Gives a company competitive capability

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OTHER BUSINESS STRATEGIES

• Process-based strategy

• Portfolio management

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GROWTH STRATEGIES• Focus on better customers

• Superior new product development

• Channel management

• New markets

• Acquisitions96

CHAPTER 9INFORMATION TECHNOLOGYFOR BUSINESS OPERATIONS

AND DECISION MAKING

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WHAT IS TECHNOLOGY?

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• The process by which humans modify nature to meet their needs and wants

• Includes all of the infrastructure necessary

• A product of engineering and science

INFORMATION TECHNOLOGY

• The collection of computer systems used by an organization

• Includes hardware, databases, software, networks and other devices

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ADVANTAGES OF IT

• Communication flows• Sharing knowledge and building ideas• Digital process• Route customer complaints immediately• Decrease cycle-time• Delivery of sales and services

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NEGATIVES OF IT

• Illegal copying of software programs• Surveillance of employees’ e-mails files• Information anxiety• Job stress• Dehumanization

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CHAPTER 10MARKETING

GOODS AND SERVICES

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WHAT IS MARKETING• A group of activities designed to expedite

transactions by creating, distributing, pricing and promoting goods, services and ideas

• An organizational function for creating, communicating and delivering value to customers

• To manage customer relationships

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WHAT IS MARKETING• Art of selling products

• Peter Drucker:– To know and understand the customer so well

that the product or service fits him and sells itself

– Customer is ready to buy– To make the product / service available

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MARKETING ORIENTATION

• Requires organizations:– To gather information about customer needs– Share information throughout entire

organization– Use the information to help build long-term

relationships with customers• Top Executives, Marketing Managers,

Non-marketing Managers, Customers

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MARKET SEGMENTATION• Dividing a big market into smaller groups

of buyers

• Ways of segmenting consumer markets:– Geographic– Demographic– Psychographic– Behavioural– Multiple– Segmenting business market

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MARKETING MIX

• Product

• Price

• Place (distribution channels)

• Promotion

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PRODUCT

• Anything that a person receives in an exchange between marketer and customer

• Classification of consumer products:– Convenience products– Shopping products– Speciality products– Unsought products

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PRODUCT• Product items, lines and mixes:

– Product item– Product lines– Product line depth– Product mix– Product mixed width

• Branding:– Benefits of branding– Branding strategies

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PRODUCT• Packaging:

– Functions of packaging

• Product life cycle:– Introduction stage– Growth stage– Maturity stage– Decline stage

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PRICE• Amount of money charged for a product or

service• Factors to consider when setting prices:

– Internal factors:• Objectives of marketing• Marketing mix• Operation cost• Size of organization

– External factors:• Nature of market• Competition• Other factors

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PLACE• Also known as distribution channel

• Products and services are available to final customers

• Number of channel levels

• Channel conflict

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PLACE• Conventional distribution channels

• Vertical marketing system

• Channel design decisions

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PROMOTION• Marketing communication programmes

• Promotion tools:– Advertising

• Information advertising• Persuasive advertising• Comparative advertising• Reminder advertising

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PROMOTION– Sales promotion

• Consumer promotions• Trade promotions• Sales force promotions

– Public relations• Speeches• Buzz marketing• Corporate identity materials• Mobile marketing

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PROMOTION– Personal selling

• Identifying and qualifying potential customers• Gathering information• Approaching customer• Presenting and demonstrating• Closing• Follow-up

– Direct marketing• Benefits for buyers• Benefits for sellers• Forms of marketing

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MARKETING STRATEGY• Plan of action for developing, pricing,

distributing and promoting products that meets the needs of specific customers

• Understanding external environment• Selecting target market• Developing marketing mix• Creating a competitive advantage

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MARKETING ENVIRONMENT• Micro environment

– Company– Suppliers– Marketing intermediaries– Customers– Competitors– Publics

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MARKETING ENVIRONMENT• Macro environment

– Demographic– Economic– Natural– Technological – Political– Cultural

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TARGET MARKET

• Set of customers sharing the same needs and wants

• Selecting target market segments:– Undifferentiated marketing– Differentiated marketing– Concentrated marketing– Micromarketing

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MARKETING PROCESS• Understand customers

• Design the marketing strategy

• Construct marketing program

• Build strong relationship

• Create customer value

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CUSTOMER AND MARKETPLACE CONCEPT

• Customer needs, wants and demands

• Products, services and experiences

• Customer value and satisfaction

• Exchanges and relationships

• Markets

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EVOLUTION OF MARKETING• Production concept

• Product concept

• Selling concept

• Marketing concept

• Societal marketing concept

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CONSUMER MARKET• Individuals, groups and households who

buy goods or services for own use

• Buyer decision process– Recognize the need– Search for information– Evaluation alternatives– Purchase– Post purchase behaviour

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DIRECT MARKETING

• The use of consumer-direct channels• One of the fastest growing avenues for

serving customers• Sales have been growing rapidly• Sales to consumer market, B2B, fund-

raising by charitable institutions

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E-MARKETING

• Application of marketing principles and techniques via electronic media

• Also known as internet marketing and online marketing

• The process of marketing a brand using the Internet

• Give businesses access to the mass market at an affordable price

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CHAPTER 11DOING GLOBAL BUSINES

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WHY GO INTERNATIONAL• No country can produce all goods and

services that its society needs

• Resources vary among nations

• Goods that cannot be produced by a country may be made available for consumption by importing from another producing country

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WHY GO INTERNATIONAL• Increasing competition• New markets for profits• Reducing cost• Enabling factors

– Transportation– ICT– Globalization– WTO– Government intensive– Trading blocks

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FACTORS TO CONSIDER WHEN GOING GLOBAL

• Politics and government policies

• Business potential

• Culture

• Business infrastructure

• Foreign exchange risks

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STRATEGIES FOR ENTERING FOREIGN MARKETS

• Exporting

• Joint ventures

• Licensing

• Franchising

• Wholly owned foreign subsidiary

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TYPES OF COMPANIES

• Multinational

• Global

• International

• Transnational

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CHAPTER 12FINANCING BUSINESS AND

MANAGING MONEY

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CAPITAL

• The money the organization uses to fund the business activities or expenditures

• Sources of capital:– The owners– The creditors

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CAPITAL• Long-term funds of the firm• One of the most complex areas of financial

decision making• Financial manager must be able to assess

the firm’s capital structure• Poor capital structure decisions can result

in a high cost of capital• Effective decisions can lower the cost of

capital

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TYPES OF CAPITAL

• Debt capital– Long-term borrowing incurred by the firm

• Equity capital– Long-term funds provided by the firm’s owner

• Debt-equity ratio– The relationship between long-term funds

provided by creditors and firm’s owners

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SHORT-TERM FUNDS

• Bank loans

• Trade credits

• Commercial paper

• Factoring

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LONG-TERM FUNDS• Common stock• Preferred stock• Bonds• Retained earnings• Venture capital• Leasing• Writing a Business Plan to raise capital

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WORKING CAPITAL• Current liability

• Current assets

• Managing working capital

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CAPITAL STRUCTURE

• Proportion of equity and debt that makes up the capital of the organization

• Risky to have a high proportion of debt instrument

• Equity will not be paid back

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CAPITAL STRUCTURE

• Types of debt instrument:– Bond– Bank term loan– Inter-company loan

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COST OF CAPITAL

• It acts as a major link between the firm’s long-term investment decision and the wealth of the owners as determined by investors in the marketplace

• Can be used to decide whether a proposed corporate investment will increase or decrease the firm’s stock price

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COST OF CAPITAL

• The rate of return that a firm must earn on its project investments to maintain the market value of its stock

• Basic structure of cost of capital:– Business risk– Financial risk– After-tax costs

INVESTMENT CONSIDERATIONS

• Return

• Risk

• Liquidity

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INVESTMENT ANALYSIS TOOLS• Simple interest

• Compound interest

• Pay-back period

• Net Present Value

• Internal Rate of Return145

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TIME VALUE OF MONEY

• Future value:– Measured at the end of a project’s life– Cash you will receive at a given future date

• Present value:– Measured at the start of a project’s life– Cash you have in hand today

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TIME VALUE OF MONEY

• Concept of future value:– Compound interest– Principal

• Concept of present value:– Discounting cash flows– Rate of return

FINANCIAL CONTROLS

• Budget

• Audit

• Policies and Procedures

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CHAPTER 11MANAGING

THE BUSINESS ENTERPRISE

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WHAT IS MANAGEMENT?

• Mary Parker Follet– Art of getting things done through other

people

• George R. Terry– A process consisting of planning, organizing,

actuating and controlling, performed to determine and accomplish the objectives by the use of people and resources.

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WHAT IS MANAGEMENT?• Donnelly

– A process undertaken by one or more individuals to coordinate the activities of others to achieve results not achievable by one individual acting alone

• What managers do

• Ensuring that work activities are completed efficiently and effectively by people responsible for doing them

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WHAT IS MANAGEMENT?

• A continuous, ongoing process

• A goal-directed activity

• Uses of various organizational resources

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WHY IS MANAGEMENT IMPORTANT?

• Critical element in the economic growth of the country

• Essential in all organized effort• Dynamic, life giving element in every

organization• The reality of work• Rewards and challenges of being a

manager

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TYPES OF MANAGERS

• Top-Level Managers

• Middle-Level Managers

• First-Level Managers

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MANAGERIAL SKILLS

• Technical Skills

• Human Skills

• Conceptual Skills

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MANAGERIAL ROLES

• Interpersonal Roles

• Informational Roles

• Decisional Roles

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MANAGEMENT FUNCTIONS

• Newman and Summer – Planning, Organizing, Leading, Controlling

• Luther Gullick– Planning, Organizing, Staffing, Directing,

Coordinating, Reporting, Budgeting

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MANAGEMENT FUNCTIONS• Warren Haynes and Joseph Massie

– Decision making, Organizing, Staffing, Planning, Controlling, Communicating, Directing

• Henri Fayol– Planning, Organizing, Commanding,

Coordinating, Controlling

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MANAGEMENT FUNCTIONS• Planning

– Setting objectives and strategies to accomplish them

– Guide employees’ behaviour and actions– Managers at different levels are involved– Must support organization’s mission

• Organizing– Process of arranging and coordinating

organizational resources– Allows cooperation between members and

motivates members to work together

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MANAGEMENT FUNCTIONS• Leading

– Process of motivating and inspiring subordinates

– Good leaders can lead, guide and inspire people

• Control– Final link in management function– Effective control systems allow managers to

know how well plans being implemented

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MOTIVATING EMPLOYEES• Driving force that is capable of bringing out

the best in people

• A highly motivated person always strive to work harder than an unmotivated person

• Two theories:– Hierarchy of Needs Theory– Motivator-Hygiene Theory

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MASLOW’S HIERARCHY NEEDS• Physiological needs

• Safety needs

• Social needs

• Esteem needs

• Self-actualization needs

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MOTIVATOR-HYGIENE THEORY

• Also known as two-factor theory

• Intrinsic factors are related to job satisfaction (motivators)

• Extrinsic factors are related to job dissatisfaction (hygiene factors)