Management and entrepreneurship

• Management


  The process of accepting accountability for the innovative application of resources in order to achieve business goals
• Levels of management


  • Top management
  • Middle management
  • Lower management
• Top management


  • Responsible for the strategic decision of the business, i.e. planning for the future of the business to ensure the business has a sustainable future
  • Looks at integrating demands of the different interest groups/stakeholders, while taking responsibility for the overall business results and performance within the market place
• Middle management


  • Responsible for tactical decisions in the business, i.e. medium-term decisions
  • Interpret top management's decisions in terms of the demands and impact on each business function/department
  • Implement the overall business plan in each department, while ensuring there is synergy between the different functional areas in the business
• Lower management


  • Responsible for the day to day decisions in the business, i.e. managing the operations of the business on a daily basis within the parameters described by the policies and procedures of the different business functions
• Management tasks


  • Planning
  • Organising
  • Leading
  • Controlling
• Planning


  1. Deciding what should be done

  2. Deciding how it should be done

  3. Deciding when it should be done

  4. Deciding who should be doing it
• Principles of effective planning

  • Planning is a rational process aimed at the future
  • An effective planning process will follow a funnel approach
  • Plans should be flexible and adaptable to change
  • Planning takes place on different levels and must be arranged in a hierarchy of importance
  • Top management should clearly communicate long-term direction of the business to ensure understanding and buy-in from lower level management
  • Managers should receive guidance and support from superiors to ensure that plans are realistic and economical
  • Managers will be held accountable for plans and the implementation thereof
• Importance of planning


  • Ensures attention is focused on business objectives so that all decisions made are in line with vision and mission
  • Minimizes risks and uncertainty in the business and helps management prepare for changes in external and internal environments
  • Involves integration of the different business functions and coordination to achieve vision/mission
  • Facilitates control because plans are used as a benchmark against which to measure performance
• Steps in the planning process

  1. Establishing objectives

  2. Deciding on planning period

  3. Considering alternatives

  4. Implement the plan

  5. Controlling process
• Organising


  Identifying activities that should be carried out in the business, grouping these activities and then dividing them amongst teams or individuals who will work towards achieving business objectives
• Steps involved in organising

  1. Considering objectives

  2. Identifying and grouping activities

  3. Assigning of duties

  4. Delegating authority
• Advantages of proper organisation

  • Patterns of communication
  • Authority and responsibility
  • Create proper balance
  • Stimulate creativity
  • Encourage growth
• Leading or activating staff members


  Encourages the workforce to perform accordingly to implement plans and organise resources
• Principles of leading


  • Harmony of objectives
  • Clear communication
  • Unity of direction
  • Direct supervision
  • Following up
• Leadership and management


  • A manager has authority to insist on people doing as instructed
  • A leader has expertise to make people aware of the advantages of pursuing a certain course of action, thereby creating a desire in people to follow
• Leadership/management styles


  • Autocratic
  • Democratic
  • Laissez-faire
  • Transactional
  • Transformational
  • Situational
• Control


  Checking the current performance against predetermined standards that were set in the planning phase to ensure there is progress in achieving the business' objectives
• Employees


  Inspired and motivated to such a degree that they often achieve more than they thought possible
• Leader


  • Ability to focus on both the task and the team
  • Shows employees appreciation
  • Never hesitates to praise an employee who deserves it
• Situational leadership style


  • A combination of all the above leadership/managerial styles
  • Manager adapts the style to whatever is required in the specific situation
• Situational leadership style


  • If situation requires discipline – autocratic
  • If employees are artistic and don't require structure – laissez-faire
  • A democratic, transactional or transformational style will be implemented where it will yield the best results
• Control


  • Checking the current performance against predetermined standards that were set in the planning phase to ensure there is progress in achieving the business' objectives
  • The last step in any process and will provide the manager with feedback to determine how problems can be addressed in order to improve the performance of employees and the overall business
• Steps in Controlling process

  1. Set standards so that the business' expectations are clear to every employee

  2. Measure actual performance against predetermined standards

  3. Correct any deviations from the projections when compared to actual performance
• Components of a good control system

  • Suitable/appropriate for the business
  • Flexible so that it can be adapted to changes in the environment
  • Employee-centred (understand the system and believe it is fair)
  • Aims to identify flaws and errors the business will then avoid repeating in the future
  • Economical and cost of the system should not exceed the benefits gained from the system
• Communication


  • Transfer and receiving of ideas and attitudes between management and workers, as well as business and external groups
  • Ensures coordination of activities within the business by letting workers know exactly what is expected from them
  • Clear communication channels enable workers (or external stakeholders) to inform management about problems and ideas
  • Helps to improve the overall performance of the business, because the relevant people are informed about certain facts if and when (or before) they need the information
• Coordination


  • Ensures there is cooperation between different departments in the business and that everybody works towards a common goal
  • Management has to coordinate the use of both tangible and intangible resources optimally
  • The ultimate goal of coordination is to create synergy between individual efforts, teams and departments
• Principles of Coordinating Resources

  1. Clear objectives

  2. Sound and comprehensive business policies

  3. Induction process

  4. Chain of command

  5. Liaison between departments
• Delegation


  • Necessary to reduce the work load of senior staff and to achieve a more meaningful distribution of tasks and responsibilities
  • The manager will delegate duties, authority and responsibilities to subordinates
  • The person to whom the tasks were delegated must be able to perform the new tasks and may need additional training to empower him/her
  • Both the employee and the manager who delegated the responsibility will be held accountable for the quality of the work done
• Discipline


  • The process of worker discipline is guided by the Labour Relations Act
  • The purpose of discipline is to improve future behaviour in the business
  • It is crucial when disciplinary measures are implemented, that it is done consistently (everybody is treated fairly)
  • There is a misconception that the business has to issue three warnings before the employee may be dismissed
  • The business 'code of conduct' will specify what the disciplinary action should be for different offences
• Decision Making


  1. In order to solve problems, the manager has to make decisions about the most appropriate course of action

  2. All relevant facts must be considered

  3. There are a variety of external factors that may influence the decision-making process

  4. A choice is made between regarding what will be the best in a particular situation

  5. Business decisions should be objective, with no personal prejudice influencing the decisions

  6. It is important to assess the decision by considering its feasibility and viability
• Motivation


  • If a manager 'pushes' employees to perform according to certain expectations, it is vital that the employees are motivated to achieve their goals
  • Employees have to feel that they have a special interest in the work and that they want to fulfil this responsibility
  • Performance in the work place depends on two variables: the ability to do the work and the willingness to complete the activities
• Maslow's hierarchy of needs


  • Maslow suggests every person has a variety of needs that have to be satisfied
  • He looks at needs that are not satisfied as the starting point for motivation
  • Maslow has identified five levels of needs and believes a person is only able to move up the hierarchy once each level has been reasonably met

  
• Adam's Equity Theory


  • Argues that there is a sound relationship between the performance of the workforce and the rewards received
  • Individuals will use their own subjective judgement to determine the fairness of their rewards
  • Looks at the ratio between inputs (person's knowledge, skill, experience, efforts and time) and compares this to the rewards received
• Entrepreneur


  • The person who combines the three factors of production to start a new business venture
  • Sees an opportunity in the market and takes the risk of starting a new business by investing capital to make a profit
  • Usually operates at top level management
• Entrepreneurial characteristics (competencies)


  • Initiative
  • Risk taker
  • Information gatherer
  • Planner
  • Self-confidence
  • Problem solver
  • Persistence
  • Assertiveness
  • Credibility
  • Concern for quality
  • Experience
• Difference between a manager and an entrepreneur

  • Motive
  • Status
  • Risk
  • Rewards
  • Innovation
• Activities performed by an entrepreneur

  1. Generating viable and feasible business ideas

  2. Conduct necessary market research

  3. Evaluate the different avenues of obtaining funds

  4. Recruiting the right workforce

  5. Procurement of other factors of production

  6. Develop action plans for the implementation of the idea
• Intrapreneur


  • The 'inside entrepreneur" who works within a business and uses entrepreneurial qualities and business resources to change innovative ideas into profit
  • Does not have to operate at top management level but will implement the new idea within the department with approval of his/her manager
• Ultrapreneur


  • Identifies a viable business opportunity and then establishes a business
  • Procures a super management team of highly competent individuals who then develop, produce and market the idea
  • Aims to achieve a maximum return in the shortest possible time and then repeat the process over and over again