Business Management

• 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.
• 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

  • Operations: Streamlining production processes for efficiency and quality
  • Marketing: Identifying target markets, creating effective marketing strategies
  • Finance: Managing cash flow, analysing financial statements
  • 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 Skills


  • Interpersonal - to 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


  • Profits: Generating revenue exceeding expenses to ensure financial sustainability
  • Market Share: Capturing a portion of the total market demand for a product or service
  • Growth: Expanding operations, customer base, and revenue over time
  • Share Price: Increasing the value of company shares, reflecting investor confidence
  • Social Goals: Contributing positively to society, such as philanthropy or community engagement
  • Environmental Goals: Reducing ecological impact and promoting sustainability
• 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 Definition


  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

  1. Planning: Developing strategies, setting goals, and outlining the steps needed to achieve them

  2. Organising: Structuring resources, tasks, and roles to achieve efficiency and coordination

  3. 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
• Behavioural Approach Definition


  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. This approach contrasts with the classical approach that primarily focuses on structuring tasks and processes.
• Key Aspects of the Behavioral Approach

  1. Management as Leading, Motivating, Communicating: Managers take an active role in leading and guiding employees

  2. Emphasis on communication to ensure clear understanding of tasks and goals

  3. Motivation techniques are used to inspire employees to perform at their best

  4. Teams: Recognizes the importance of teamwork and collaboration

  5. Encourages the formation of cohesive and effective work teams

  6. Teamwork promotes idea sharing, problem-solving, and collective effort

  7. Participative/Democratic Leadership Style: Managers involve employees in decision-making processes

  8. Encourages input from all levels of the organisation

  9. Employees feel empowered and valued, leading to higher engagement
• Benefits of the Behavioral 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
• Contingency Approach Definition


  The contingency approach, also known as the situational approach, is a management theory that suggests there is no one-size-fits-all solution to managing organisations. Instead, the most effective management style, structure, or strategy depends on the specific circumstances at hand.
• Adapting to Changing Circumstances

  1. Dynamic Environment: Businesses operate in constantly changing environments, influenced by factors like market trends, technology, and regulations

  2. Flexibility: The contingency approach emphasises the need to adjust strategies and practices in response to these changing conditions

  3. Customization: Managers tailor their decisions to the unique characteristics of the situation, considering factors like the organisation's size, culture, industry, and competitive landscape

  4. Optimal Fit: The goal is to find the best fit between the organisation's needs and the management approach chosen
• Key Concepts of the Contingency Approach

  • No Universal Solution: There is no single best way to manage all situations
  • 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
• Advantages of Contingency Approach

  • Acknowledges the complexity of real-world business environments
  • Promotes flexibility and responsiveness to change
  • Supports tailored decision-making for improved outcomes
  • Encourages a proactive stance towards emerging challenges
• Coordinating Key Business Functions and Resources


  1. Ensuring alignment of efforts and resources to optimise productivity and minimise waste

  2. Operations: Managing day-to-day activities involved in producing goods and/or services

  3. Overseeing processes to ensure efficient production and delivery

  4. Goods and/or Services: Core offerings of a business, which can be tangible goods or intangible services

  5. Production Process: Steps involved in creating goods or delivering services, including design, manufacturing, and distribution

  6. Quality Management: Ensuring that products or services meet or exceed customer expectations

  7. Implementing processes to maintain high quality standards

  8. Marketing: Identification of the Target Market - Identifying specific groups of potential customers with shared characteristics

  9. Tailoring marketing strategies to appeal to these target segments

  10. Marketing Mix - Combination of elements (product, price, place, promotion) used to influence customer decisions

  11. Crafting strategies to address product features, pricing, distribution, and promotional activities

  12. Finance: Cash Flow Statement - Financial statement showing inflows and outflows of cash over a specific period

  13. Helps assess a company's ability to manage liquidity and meet financial obligations

  14. Income Statement - Summarises revenue, expenses, and profits/losses over a certain period

  15. Provides insight into the financial performance of the business

  16. Balance Sheet - Snapshot of a company's financial position at a specific point in time

  17. Presents assets, liabilities, and owner's equity, giving a glimpse of financial health

  18. Human Resources: Recruitment - Process of attracting, evaluating, and selecting potential employees

  19. Aims to find the right candidates to fill job vacancies

  20. Training - Developing employees' skills and knowledge to enhance their performance

  21. Ensuring employees have the tools to succeed in their roles

  22. Employment Contracts - Legally binding agreements outlining terms of employment

  23. Specifies roles, responsibilities, compensation, and other employment terms

  24. Separation – Voluntary/Involuntary - Voluntary separation: Employees leaving by choice (resignation, retirement)

  25. Involuntary separation: Employees leaving due to company decisions (layoffs, terminations)
• Ethical Business Behaviour


  Conducting business in alignment with moral principles and societal expectations<|>Treating employees, customers, stakeholders, and the environment fairly and ethically
• Managing Change


  1. Responding to Influences: Adapting to internal and external shifts that impact the organisation's operations, goals, and environment

  2. Identifying Change Need: Recognizing factors like technological advancements, market trends, competition, or internal inefficiencies that necessitate change

  3. Managing Change Effectively: Business Information Systems - Implementing tools to gather, analyse, and disseminate information essential for informed decision-making during change

  4. Setting Achievable Goals - Defining clear objectives for the change process, aligning with the organisation's strategy and vision

  5. Resistance to Change - Acknowledging that change can meet resistance due to fear, uncertainty, or comfort with the status quo

  6. Management Consultants - Seeking external expertise to guide and facilitate complex change initiatives