Business Management

• Stakeholders


  Individuals or groups with vested interests in a business
• Strategies to address conflicting stakeholder interests

  1. Transparent communication

  2. Fair decision-making

  3. CSR initiatives

  4. Balancing short-term profits with long-term sustainability
• Classical Approach


  • Management as planning, organising, and controlling
  • Hierarchical organisational structure
  • Autocratic leadership style
• Behavioural Approach


  • Management as leading, motivating, and communicating
  • Team-oriented approach
  • Participative/democratic leadership style
• Contingency Approach


  • Adapting to changing circumstances
  • Adjusting management style based on situational demands
• Benefits of Quality Management Practices


  • Focus on continuous improvement, customer satisfaction, and operational efficiency
  • Enhances product/service quality, reduces defects, and improves overall business performance
• Investigating aspects of business

  1. Identify qualities of managers with high personal and ethical standards

  2. Analyse ways of coordinating key business functions for an SME

  3. Examine effective cash flow management

  4. Assess the role of the income statement and the balance sheet

  5. Explain how SMEs manage change effectively
• Qualities of Ethical Managers

  • High personal and ethical standards demonstrated through honesty, integrity, and fairness
  • Transparency in decision-making and communication
  • Upholding moral values even in challenging situations
  • Leading by example and fostering an ethical culture
• Coordinating Business Functions for SMEs

  1. Operations: Streamlining production processes for efficiency and quality

  2. Marketing: Identifying target markets, creating effective marketing strategies

  3. Finance: Managing cash flow, analysing financial statements

  4. Human Resources: Recruiting, training, and managing employees ethically
• Effective Cash Flow Management

  1. Timely collection of receivables to ensure positive cash inflows

  2. Managing payables to align with cash availability

  3. Maintaining cash reserves for emergencies

  4. Monitoring cash flow through cash flow statements
• Income Statement


  Reflects a business's financial performance over a period, showing revenue, expenses, and profit or loss
• Balance Sheet


  Presents a snapshot of a business's financial position by listing assets, liabilities, and equity
• Managing Change in SMEs

  1. Identifying Change Need: Analysing internal and external factors driving change

  2. Setting Achievable Goals: Defining clear objectives for change initiatives

  3. Business Information Systems: Implementing tools to support and monitor change

  4. Addressing Resistance: Communicating change benefits, involving employees in the process

  5. Utilising Consultants: Seeking external expertise for complex changes
• Interpersonal


  An employee's ability to work well with others
• Communication


  The process of transmitting information, ideas, thoughts, or feelings between individuals or groups through verbal, non-verbal, or written means
• Strategic thinking


  The ability to envision and plan for the long-term goals and objectives of an organisation, considering various factors and potential outcomes
• Vision


  A clear and inspiring description of a desired future state or outcome that guides and motivates individuals and organisations toward a common goal
• Problem-solving


  The process of analysing and finding solutions to challenges or obstacles by identifying the root causes and applying logical and creative methods
• Decision-making


  The process of selecting a course of action from multiple alternatives based on analysis, judgement, and consideration of potential consequences
• Flexibility


  The willingness and capability to adapt, change, or adjust to new situations, requirements, or unexpected developments
• Adaptability to change


  The ability to adjust and thrive in the face of evolving circumstances, whether they are internal shifts within an organisation or external changes in the environment
• Reconciling the conflicting interests of stakeholders

  The process of finding common ground and mutually beneficial solutions when individuals or groups with differing goals or interests are involved in a decision-making process
• Business Goals


  Objectives a company aims to accomplish for its success and growth
• Types of Business Goals

  • Profits
  • Market Share
  • Growth
  • Share Price
  • Social Goals
  • Environmental Goals
• Achieving a Mix of Goals

  • Balancing Objectives: Striving for a combination of goals to achieve a holistic and sustainable business model
  • Trade-offs: Recognizing that some goals might conflict, and finding optimal compromises
  • Synergy: Aligning goals to reinforce one another, e.g, social responsibility enhancing brand reputation
• Staff Involvement for Goal Achievement

  1. Innovation: Encouraging employees to contribute fresh ideas and creative solutions

  2. Motivation: Fostering enthusiasm by aligning individual and organisational goals

  3. Mentoring: Experienced employees guide and develop younger colleagues, transferring knowledge

  4. Training: Enhancing skills and knowledge to improve performance and achieve goals
• Classical Approach


  The classical approach to management is a historical perspective that emphasises systematic and structured methods to achieve efficiency and productivity within an organisation. It focuses on the key functions of planning, organising, and controlling to streamline operations.
• Management as Planning, Organizing, and Controlling

  • Planning: Developing strategies, setting goals, and outlining the steps needed to achieve them
  • Organising: Structuring resources, tasks, and roles to achieve efficiency and coordination
  • Controlling: Monitoring performance against plans and making adjustments to ensure objectives are met
• Hierarchical Organisational Structure


  • Organisations are structured in a clear hierarchy with multiple levels of authority and responsibility
  • Decision-making flows from the top management down to lower levels
  • Communication follows a chain of command, often resulting in centralised control
• Autocratic Leadership Style


  • Leadership is centralised at the top, where decisions are made by a single authority figure or a small group
  • Communication is one-way, from top to bottom, with limited employee involvement
  • Employees follow instructions without much input, and tasks are closely monitored
• Key Aspects of the Classical Approach

  • Efficiency: Focus on streamlining processes and tasks to minimise waste and optimise productivity
  • Formalisation: Clearly defined roles, rules, and procedures for consistency
  • Specialisation: Dividing tasks into specialised roles to maximise proficiency
  • Centralization: Concentration of decision-making authority at the top levels of management
  • Bureaucracy: Hierarchical structure with clear lines of authority and standardised procedures
• Limitations of the Classical Approach

  • Rigidity: May not adapt well to dynamic environments or changing circumstances
  • Limited Creativity: Emphasis on rules and procedures might stifle innovation
  • Employee Disengagement: Autocratic leadership can lead to lack of motivation and reduced job satisfaction
• Behavioural Approach


  The behavioural approach in management emphasises the significance of human behaviour and interpersonal relationships within organisations. It focuses on how managers lead, motivate, and communicate with their employees to enhance productivity and achieve organisational goals.
• Management as Leading, Motivating, Communicating


  • Managers take an active role in leading and guiding employees
  • Emphasis on communication to ensure clear understanding of tasks and goals
  • Motivation techniques are used to inspire employees to perform at their best
• Teams


  • Recognizes the importance of teamwork and collaboration
  • Encourages the formation of cohesive and effective work teams
  • Teamwork promotes idea sharing, problem-solving, and collective effort
• Participative/Democratic Leadership Style


  • Managers involve employees in decision-making processes
  • Encourages input from all levels of the organisation
  • Employees feel empowered and valued, leading to higher engagement
• Benefits of the Behavioural Approach

  • Improved Employee Morale: A focus on interpersonal relationships enhances job satisfaction and engagement
  • Enhanced Productivity: Motivated and engaged employees tend to be more productive
  • Better Communication: Open lines of communication lead to fewer misunderstandings and conflicts
  • Innovative Environment: Team collaboration often leads to creative problem-solving and innovation
• Limitations of the Behavioural Approach

  • Complexity: Managing human behaviour is intricate and challenging due to individual differences
  • Time-Consuming: Participative decision-making can be time-consuming and slow
  • Potential for Conflict: Involving multiple perspectives can sometimes lead to disagreements
  • No Universal Solution: There is no single best way to manage all situations
• Contingency Approach


  • Complexity: Different factors interact and influence each other, requiring careful analysis
  • Effective Leadership: Leaders must possess the ability to diagnose situations and adapt their strategies accordingly
  • Circumstance-Dependent: Management approaches should be chosen based on the specific challenges and opportunities faced
• Implementation of the Contingency Approach

  1. Diagnosis: Identifying relevant internal and external factors affecting the organisation

  2. Choice of Approach: Selecting the most appropriate management style or structure based on the diagnosis

  3. Evaluation: Continuously assessing the effectiveness of the chosen approach and making adjustments as needed