MODULE 3

• Management involves the organization and coordination of business activities to achieve defined objectives, often included as a factor of production along with machines, materials, and money
• Inputs to a business system in the 19th century included land, capital, and labor
• Labor encompasses the mental and physical efforts of all workers, regardless of skill or education, who perform tasks required to produce and sell goods and services
• Capital includes buildings, machinery, tools used to produce products or services, and money used to buy those items
• In the 1980s, information became a vital input for businesses due to data-intensive operations and the need to maintain competitiveness in the market
• Anthony Stafford Beer stated, "If cybernetics is the science of control, management is the profession of control"
• Henry Mintzberg identified managers playing roles like entrepreneur, disturbance handler, resource allocator, negotiator, monitor, disseminator, spokesman, figurehead, leader, and liaison
• The manager performs roles like enabler, coach, counselor, leader, communicator, planner, coordinator, organizer, and controller within the business system
• The business system encompasses design, production, support, engineering, and distribution activities
• Financial accounts like profit and loss statements and balance sheets are essential for measuring a company's performance
• The income statement shows revenues and costs incurred in making sales, with profit calculated as revenue minus cost
• The balance sheet summarizes the financial balances of a business, showing the position of the business at a specific moment
• Assets, liabilities, and owner's equity are listed on the balance sheet, with total assets equaling non-current assets plus current assets
• Liabilities include financial obligations like current liabilities and long-term liabilities, with total liabilities equaling current liabilities plus long-term liabilities
• Owner's equity is the residual claim or interest of investors in assets after all liabilities are paid
• Financial accounts kept by companies include the Statement of Changes in Equity
• The Statement of Changes in Equity explains the changes of the companies’ equity throughout the reporting period
• The basic formula for the Statement of Changes in Equity is: Beginning Equity + Net Income - Dividends = Ending Equity
• The Statement of Cash Flows is a measure of how well a company generates cash to pay its debt obligations and fund its operating expenses
• The Statement of Cash Flows reports on a company’s cash flow of activities, particularly its operating, investing, and financing activities
• Operating activities in the Statement of Cash Flows include any sources and uses of cash from business activities, reflecting how much cash is generated from a company's products or services
• Positive values in Operating Activities mean the company is generating profit from operations, while negative values indicate spendings
• Investing Activities in the Statement of Cash Flows show net gains or losses from investments
• Financing Activities in the Statement of Cash Flows indicate an increase or decrease in cash or cash equivalents obtained from financial sources
• Return on Capital Employed (ROCE) is a common performance measure that indicates how well assets have been used
• ROCE formula: ROCE = Profit before tax * 100% / Capital employed, where Capital employed = total assets – current liabilities
• Return on Sales (ROS) formula: ROS = Profit before tax * 100% / Sales revenue
• Sales per Employee is a performance measure calculated as Revenue divided by the number of employees
• Inventory Turn-over formula: Inventory Turn-over = Cost of Goods Sold / Average Aggregate Inventory Value
• Inventory Turn-over ratio indicates how quickly a company's inventory is sold
• Percentage of Sales derived from products less than 1 to 2 years old is a non-financial performance indicator showing how innovative a company is
• Land - AGRICULTURE-BASED ECONOMIES emphasized

  on land, since land is a major factor to the quality of

  the products that would be produced and harvested.

  Emphasis on land has decreased as time approached

  the Industrial Revolution.
• As Industrialization took place, emphasis on capital as a more

  important input rather than land took place too because of the vast need of materials and equipment for labor.
• Three roles of Managers according to Mintzberg

  Interpersonal

  Emotional

  Decisional
• A corporate system is the collection of processes and functions

  through which ideas are processed and eventually becomes a

  product to be sold in the market. Finished product in time will be

  replaced, scrapped and recycled.
• PRODUCTION PROCESSES

  IDEA

  PRODUCTION PROCESS

  CHARGE CUSTOMERS

  SUPPLIERS ARE PAID

  SUPPORT FOR SERVICES

  DISPOSAL AND RECYCLING
• Business have two funds

  Entrepreneur's own

  Borrowed
• There are two Financial accounts required by law for companies to keep.

  Profit and Loss accounts

  Balance Sheet