UNIT ONE

INTRODUCTION TO BUSINESS MANAGEMENT

Session 1: What Is Management?

OBJECTIVES:

 Define the term management

 Identify the work of management
 Discuss why the study of management is important

Meaning of management

The term management can be given different meaning depending on the context in which it is
used. Thus, it can denote a subject of study i.e., Yumzaa is studying management at school.

It can be used to describe a group of people in an organization i.e. The management of XYZ
is in a meeting.

It can also be used to describe the profession/career/ occupation. i.e., Anamzooya is a

management consultant.

Management can again mean an economic resource, thus combining all factors of production
(F.O.P.) through the process of management.

Definition

Mary Parker Follet defined management as the art of getting things done through and with
other people. Every organization sets for itself objectives which are achieved by using the
resources available in the most effective and efficient manner.

Henri Fayol (1916) argues that to manage is to forecast and plan, to organize, to command,
to co-ordinate and to control.

The process is carried out by people called managers. The process of using available
resources to achieve the stated objectives of an entity is called management. The process of
management is not limited to business organizations. It takes place in every entity because
every organization has goals to achieve.

From the definition it is clear that management can only achieve result if they have
employee’s involvement and participation scheme in the organizations. That is a system that
allows for participatory decision making, good communication, delegation, conducive
environment for employees to motivate themselves etc.

Fayol’s 14 Principles of Management

Fayol described the practice of management as something distinct from accounting, finance,
production, distribution, and other typical business functions. His belief that management was
an activity common to all business endeavours, government, and even the home led him to
develop 14 principles of management—fundamental rules of management that could be
applied to all organizational situations and taught in schools. These principles are outlined.
1. Division of Work. Specialization increases output by making employees more efficient.
2. Authority. Managers must be able to give orders, and authority gives them this right.
3. Discipline. Employees must obey and respect the rules that govern the organization.
4. Unity of command. Every employee should receive orders from only one superior.
5. Unity of direction. The organization should have a single plan of action to guide managers
and workers.
6. Subordination of individual interests to the general interest. The interests of any one
employee or group of employees should not take precedence over the interests of the
organization as a whole.
7. Remuneration. Workers must be paid a fair wage for their services.
8. Centralization. This term refers to the degree to which subordinates are involved in
decision making.
9. Scalar chain. The line of authority from top management to the lowest ranks is the scalar
chain.
10. Order. People and materials should be in the right place at the right time.
11. Equity. Managers should be kind and fair to their subordinates.
12. Stability of tenure of personnel. Management should provide orderly personnel
planning and ensure that replacements are available to fill vacancies.
13. Initiative. Employees who are allowed to originate and carry out plans will exert high
levels of effort.
14. Esprit de corps. Promoting team spirit will build harmony and unity within the
organization.
Who is a Manager?

The changing nature of organizations and work often requires employees in formerly non-
managerial jobs to perform managerial activities. Students who are preparing for careers on
any organizational level can benefit from acquiring management skills. Today’s employees
need to be cross-trained and multi-skilled.

How do we define a manager? A manager is someone who coordinates and oversees the
work of other people so that organizational goals can be accomplished. However, keep in
mind that managers may have additional work duties not related to coordinating the work of
others.

Managers can be classified by their level in the organization, particularly in traditionally

structured organizations.

What is an Organisation

An organization is a deliberate arrangement of people to accomplish some specific purpose.

Your university is an organization; so are fraternities and sororities, government departments,
churches, Facebook, your neighbourhood grocery store, the Sunyani Technical University
football team, and the Sunyani Regional Hospital.

Organizations share three common characteristics: (1) each has a distinct purpose; (2)
each is composed of people; and (3) each develops some deliberate structure so members can
do their work.

Although these three characteristics are important in defining what an organization is, the
concept of an organization is changing. These changes include: flexible work arrangements,
employee work teams, open communication systems, and supplier alliances. Organizations
are becoming more open, flexible, and responsive to changes.

Many of today’s organizations are structured more like Google, with flexible work
arrangements, employee work teams, open communication systems, and supplier alliances. In
these organizations, work is defined in terms of tasks to be done. And workdays have no time
boundaries since work can—and is—done anywhere, anytime.

What Do Managers Do?

Management involves coordinating and overseeing the work activities of others so that their
activities are completed efficiently and effectively. Coordinating and overseeing the work of
others is what distinguishes a managerial position from a non-managerial one. However, this
does not mean that managers can do what they want anytime, anywhere, or in any way.
Instead, management involves ensuring that work activities are completed efficiently and
effectively by the people responsible for doing them, or at least that’s what managers aspire
to do.

a. Efficiency refers to getting the most output from the least amount of input. Because
managers deal with scarce inputs: including resources such as people, money, and equipment;
they are concerned with the efficient use of resources. It is often referred to as "doing things
right"—that is, not wasting resources. For instance, efficient manufacturing techniques can be
implemented by doing things such as cutting inventory levels, decreasing the amount of time
to manufacture products, and lowering product reject rates.
b. Effectiveness is often described as "doing the right things"–that is, doing those work
activities that will help the organization reach its goals. For instance, goals can include
meeting customers' rigorous demands, executing world-class manufacturing strategies, and
making employee jobs easier and safer. Through various work initiatives these goals can be
pursued and achieved. Whereas efficiency is concerned with the means of getting things
done, effectiveness is concerned with the ends, or attainment of organizational goals.
Why study Management

1. The industrial revolution: The creation of industry and the employment of people to
work in those industries come along with challenges. In the area of wages
administration, employee’s motivation, industrial relations etc. This called for the
study of management to deal with the challenges in the factories.
2. The growth in population: The expansion in population contributes to migration to the
towns and cities. This movement put a lot of pressure on government and local
authorities to provide social services such as hospitals, schools, roads. Etc. to cater for
the people. These institutions will require qualified people to manage or to deliver the
services to the citizenry.
3. Individual often find themselves in management positions. For them to be effective,
they need training in management,
4. Society of dynamic and competitive. To survive in the changing environment, an in-
depth knowledge in management is required.
Session 2: The Management Process

Objectives:

 List the steps in management process.

 Explain the steps in the management process.

The management process is also known as the primary or the basic functions of management.
They include

Planning: Planning is the process of setting goals and objectives and deciding on the ways
and means of achieving them. This includes analysing the present situation, anticipating the
future and what steps or activities to engage in. Thus, managers will set goals for sub-division
and establish policies and methods to guide workers. Programs and strategies are put in place
to avoid deviations.

Organising: organising is a management process which identifies and assigns task to

different people in an organization and co-ordinate their efforts to achieve stated objectives.
Here managers decide on how to do the work. Organizing also means establishing order and
functions and designing the unit to achieve the stated goals. It involves assigning task to
different people and coordinating their efforts to get work done, while at the same time trying
to build a social structure that helps in meeting the needs of people at work.

Staffing: this function involves the recruitment, selection, placement, training, development
and appraisal of the members of the firm. It is an important function because the success or
failure of a firm depends on it human resources.

Leading (Directing): is the process of providing the motivation and leadership that are
necessary to achieve organizational goals. In leading, the managers try to integrate the needs
of the employee with the welfare of the organization, thus maintaining a good balance
between individual motivation and cooperative efficiency.
Controlling: is the process of monitoring and adjusting organizational activities towards
goals attainment. This involves measuring process, comparing with plans and taking
corrective actions. Here management enforces that actual performance are in line with
intended performance.

Session 3: Level and Roles of Management

Objective:

 Identify the levels of management

 Explain the task for the different level of management,
 Identify the various roles managers must perform

Top Level Management: this consists of the Chief Executive Officer, Managing Directors
and Senior Executive (Functional heads). It is the strategic level of management which
formulate policies and coordinate activities of the firm, monitor economic trends, and lobby
government for favourable laws.

Middle Level Management: This consists of the senior executives. It includes the branch
managers and departmental managers. It is the tactical level which is responsible for routine
planning, organizing, directing and control in order to achieve the strategic objectives. They
serve as the link between top level management and lower management (supervisor). They
see to the allocation of resources in the right manner.

Lower (Supervisory) Level Management: These are those responsible for getting the work
done on time. They are also responsible for directing non-supervisory employees and
evaluate day-to day performance indicators such as volume produced, quality control and
inventory maintenance.

The level of a manager in an organization determines the amount of time spent on the four
functions of management. Top managers give much time to planning and organizing as these
two are key to organizational success. The lower managers spend much of their time in
directing and controlling.
Roles of Managers:

Managerial roles are defined as an organized set of observable behaviours attributable to a

specific position.
Henry Mintzberg, a management researcher, conducted a precise study of managers at
work. He concluded that managers perform 10 different roles, which are highly
interrelated. The term managerial roles refer to specific actions or behaviours
expected of and exhibited by a manager. (Think of the different roles you play—such
as student, employee, student organization member, volunteer, sibling, and so forth—
and the different things you’re expected to do in these roles.) When describing what
managers do from a role’s perspective, we are not looking at a specific person per se,
but at the expectations and responsibilities that are associated with being the person in
that role. These roles include;
1. Interpersonal roles are when manager engage in interpersonal relationship. They
include
 Figure head roles; Is an activity of ceremonial nature and the manager serves a
symbol that represents the organization.
 Leader roles: The manager motivates, directs, controls and trains subordinates.
 Liaison role: Managers serves as a link between work groups as a coordinator.
2. Information role is when a manager serves as a focal person for gathering, receiving,
transmitting information to employees.
 Monitor: seeking and receiving information from outsiders.
 Disseminators: transmitting information received from outside to members in
the organization.
 Spokesperson: Transmits information to outsiders on organisation’s plans,
policies, actions, and results.
3. Decisional Roles is when a manager makes strategic decisions on the basis of his
status/ authority. It includes;
1. Entrepreneurial role: managers initiating changes and improvement in
products.
2. Disturbance handler: manager reacting to involuntary situations and
unpredictable events.
3. Resource allocators: he decided how to apportion the factors of production.
 4. Negotiator: The manager enters into negotiation with internal and external
parties.

Managerial Skills

Managers need certain skills to perform the challenging duties and activities associated with
being a manager. Robert L. Katz found through his research that managers need three
essential skills.
a. Technical skills are the job specific knowledge and techniques needed to proficiently
perform work tasks. These skills tend to be more important for first-line managers because
they typically manage employees who use tools and techniques to produce the organization's
products or service the organization's customers. Often, employees with excellent technical
skills get promoted to first-line manager.
b. Human skills involve the ability to work well with other people both individually and in a
group. Because all managers deal with people, these skills are equally important to all levels
of management. Managers with good human skills get the best out of their people. They
know how to communicate, motivate, lead, and inspire enthusiasm and trust.
c. Conceptual skills are the skills managers use to think and to conceptualize about abstract
and complex situations. Using these skills, managers see the organization as a whole,
understand the relationships among various subunits, and visualize how the organization fits
into its broader environment. These skills are most important to top managers.

Section 4: Business and Its Environment

OBJECTION:
 Define the environment of business
 Explain the direct forces in the external environment.
 Discuss the indirect forces in the external environment.
The business environment is defined as any forces within or outside the organization which
can have a significant impact on the performance of the organization.
The environment comprises of:
1. Internal Environment, which includes various factors within the company and under
the control of the company. The internal environment consists of organizational
structure, corporate culture, and company resources. They are in control of the company.
Thus, companies can change them to adapt to the external environment and to achieve
goals.
 2. External Environment, which represents various factors outside the company’s control.
It is further classified as: Micro (Task) Environment and Macro (General)
Environment

Micro (Task) Environmental Forces

They are those elements that directly influence an organization. The element includes;
 Customers are those people/ group that patronize organization products and are vital
to the success of the organization existence. They try to force down prices, obtain
more/high quality increases competition among sellers by playing one against the
other. They are obviously important to the organisation since it is they who exchange
money for the organisation’s goods or services.
 Competitors are those organizations that offers similar or alternative product to
customers. Rivalry among competitors produces such strategies as advertising,
promotion or product advancement to try to improve their relative position or respond
to a competitor.
 Suppliers are those organizations that provide material, capital and labour needs of
business. Businesses will take advantage of competition among suppliers to secure
lower prices, high quality and faster delivery. However, the bargaining power of the
supplier determines how much he can raise prices or reduce the quality goods and
services.
 Employees are the human resource who takes up the actual business activities. The
business survival depends on its workers. Changing work force is influence by
demographic factors such as birth rate, age, gender and educational level. Managers
must plan against such variables.
 Labour unions are organized groups of operating employees that collectively bargain
with the organization over issues of wages, hours of work, working condition etc.
 Financial institutions: Various financial institutions, including investment banks and
insurance companies, supply funds to organisation for maintaining and expanding
their activities.

Macro (General) Environmental Forces

They are those external forces that usually affect the general climate in which organization
activities take place but do not directly affect the organization. The elements include:
  Political/Legal Environment are the government and legal system within which a firm
must function. Laws that require firms to operate under competitive conditions and to
protect the consumer rights must be known. A firm must operate within the legal and
the political system in the country. Elements of the political and legal environment are
laws, regulations and political stability.
 Economic forces. The economy within which an organization operates affects its
access to capital, the price it can charge and the demand for its products. Businesses
are affected by economic factors which they have no control over such as inflation,
GDP, unemployment, interest rate, budget deficit, foreign exchange, income, savings,
credit, etc. Managers should constantly monitor the economic environment in order to
minimize the threats and capitalize on opportunities that it presents.
 Socio-culture Environment represents the society and cultures where an organization
operates. It includes the attitude, value, norms, beliefs, perceptions, preferences, and
behaviours. These variables influence consumers taste and preference and the
accepted roles of business in society. Companies must understand these variables for
competitive success.
 Technological forces represent the application of knowledge base on discoveries in
science, inventions and innovations. New technology has influence on the
organization the area of new products, improvement in existing products and cost
efficiency. Managers must be abreast with technological environment as it can make a
firm’s product obsolete.
 International forces comes’ to play when an organization relies on foreign suppliers
for resources or competes with international competitors. Globalization and
internationalization have become one of the significant changes to business
environment. Managers need to understand the global market dynamics such as
protectionist or free trade which either pose threats or offer opportunities.

Session 5: The Social Responsibility of Business

Objectives:
 Explain the term social responsibility
 List specific social responsibility activities
Society has imposed higher standards on business. Companies must therefore go beyond
doing well (i.e., Simple earning profit) and do good (i.e., Live up to their social
responsibility)
Social responsibility can be defined as the obligation of the organization to protect and
enhance the society in which it functions.
Corporate social responsibility is the obligation to take action that protects and improves
the welfare of society as a whole, as well as supports organizational interests.
The Approaches of Social Responsibilities
 Social obligation is when a company pursue a profit within the constraints of laws
imposed by the society.
 Social reaction: it refers to an organisation’s reaction to society’s expectation for
business/corporate behaviour that goes beyond the provision of goods and services.
Thus, being accountable to environmental cost incurred by their actions. Here the
company is willing to respond to appropriate social request e.g., Sponsorship,
donations etc.
 Social responsiveness view recognizes social responsibility as anticipatory and
preventive rather than reactive behaviour. Thus, the business actively seeks other
ways in which to help in public issues by anticipating future needs of society and
moving forwards satisfying them. E.g., Cocoa board scholarship, cosmos educational
fund etc.

Area of Social Responsibility

 Responsibility to customers i.e., Quality, safety, packaging and performance of the
product.
 Responsibility to employees i.e., good relationship between employer and employee
thus providing safety and working conditions, wages, unions.
 Responsibility to shareholders-disclosure of the use of corporate resources and results
of those used under condition of certainty to decision maker knows his/her objectives
and has accurate measurable and reliable information about the outcome of each
alternative being considered. Example if STU wants to buy coastal buses, they could
have alternative suppliers such as Toyota Ghana. They will know the profitable
reliability, cost, delivery time, sales guarantees, etc. for each alternative.
 Responsibility to the government i.e., abiding by the rules governing business
activities and honouring their tax obligation.
  Responsibility to creditors i.e., honours their debt obligation as they fall due.

Arguments In Favour of Business Social Responsibility Include:

a. Public expectations - Public opinion now supports businesses pursuing economic and
social goals.
b. Long-run profits - Socially responsible companies tend to have more secured long-run
profits.
c. Ethical obligation - Businesses should be socially responsible because responsible actions
are the right thing to do.
d. Public image - Businesses can create a favourable public image by pursuing social goals.
e. Better environment - Business involvement can help solve difficult social problems.
f. Discouragement of further governmental regulation - By becoming socially responsible,
businesses can expect less government regulation.
g. Balance of responsibility and power - Businesses have a lot of power and an equally large
amount of responsibility is needed to balance against that power.
h. Stockholder interests - Social responsibility will improve a business's stock price in the
long run.
i. Possession of resources - Businesses has the resources to support public and charitable
projects that need assistance.
j. Superiority of prevention over cures - Businesses should address social problems before
they become serious and costly to correct.
Arguments Against Business Social Responsibility Include:

a. Violation of profit maximization - Business is being socially responsible only when it

pursues its economic interests.
b. Dilution of purpose - Pursuing social goals dilutes business's primary purpose of achieving
economic productivity.
c. Costs - Many social responsibility actions do not cover their costs and someone must pay
those costs.
d. Too much power - Businesses have a lot of power already and if they pursue social goals,
they will have even more power.
e. Lack of skills - Business leaders lack the necessary skills to address social issues.
f. Lack of accountability - There are no direct lines of accountability for social actions.

How the External Environment Affects Managers

 One of the important organizational factors affected by changes in the external
environment is jobs and employment. For example, economic downturns result in
higher unemployment and place constraints on staffing and production quotas for
managers. Not only does the external environment affect the number of jobs
available, but it also impacts how jobs are managed and created. Changing conditions
can create demands for more temporary work and alternative work arrangements.

Environmental Uncertainty

Environmental uncertainty refers to the degree of change and complexity in an organization's

environment.
The first dimension of uncertainty is the degree of change. If the components in an
organization's environment changes frequently, it is a dynamic environment. If change is
minimal, it's a stable one. A stable environment might be one with no new competitors, few
technological breakthroughs by current competitors, little activity by pressure groups to
influence the organization, and so forth. Degree of change in this case means change that's
unpredictable. If change can be accurately anticipated, it's not an uncertainty for managers.
The other dimension of uncertainty describes the degree of environmental complexity, which
looks at the number of components in an organization's environment and the extent of the
knowledge that the organization has about those components. An organization with fewer
competitors, customers, suppliers, government agencies, and so forth faces a less complex
and uncertain environment. Organizations deal with environmental complexity in various
ways. Complexity is also measured in terms of the knowledge an organization needs about its
environment.

Session 6: The Business and Its Objectives

OBJECTIVES:
 Define the objectives of business
 Mention the importance of business objectives.
The objectives are specific result that an organization seeks to achieve in pursuing its basic
mission OR, objectives are he ends towards an enterprise activity is aimed.
The objectives of a business include:
 Survival: The ability to remain in operation in spite of difficulties.
  Growth: i.e., the business expanding in terms of branches. It should not remain
stagnant.
 Maximize Profit: i.e., adequate returns on investment. Profit is the main objective of
every business.
 Employee welfare: i.e., taking care of its employees for efficient performance.
 Social Progress: i.e., providing social services by public institutions. Social Progress
by discharging their social responsibility to its public’s.
Importance of Objectives
 It provides direction.
 It aids evaluation.
 It reveals priorities.
 It allows coordination.
 It helps in the performance of the management function.