Controlling Basics In Business Management

Published Date: 02 Nov 2017

Copyright © 2013

Table of Contents

Business Plan xx

Being a Leader xx

What is Management xx

Planning xx

Strategic Planning xx

Organizing xx

Staffing xx

Controlling xx

Organisational Behaviour xx

Operation xx

Risk Management xx

People Management xx

Managing Employees xx

There is an attachment n leading a business, Can I use this in place ch2 – Being a leader?

Let me know

Controlling Basics in Business Management

Chapter: 1

Business Plan

Governs the Company’s Blueprint to being Successful

The business plan lays down the foundation essential for any business to thrive. This document states the enterprise’s business goals and its plan to reach those goals. A business plan can be created for internal purposes, such as formulating a strategy for expanding the company’s growth utilizing various anticipated scenarios like acquiring a smaller company or expanding its products or services. A business plan can also be used for external purposes such as during the design of the startup phase, which not only creates a strategic blueprint for the company but is necessary for startup capital from lending sources or additional investors.

The most important section of a business plan is the executive summary. This section explains the position of the company presently and its future trajectory and why management’s conceptualization is a good business idea; why it optimizes the probability of being successful. The executive summary should emphasize the strengths of the business and should be written last but introduced at the beginning of the document.

What to include in the Executive Summary

Established businesses should include the subsequent relevant information:

The Mission Statement – Details the reasoning behind the existence of the enterprise and it should guide decision making. It consists of the target market, the products or services provided, the uniqueness of said products or services and how/why/what makes is so highly desirable.

Company Information – Contains background information as to when the business was formed and the names and roles of the people or person who started the company. It also lists the number of employees and business location (s).

Growth Highlights – Demonstrates the growth trends the business has experienced. The aforementioned growth notated could be in either or both financial or market share.

Products/Services –Give brief narrative of the products or services the company provides.

Financial Information – Give information about the company’s bank and investors if seeking financing.

Summarize future plans – Where does management foresee the company in the future.

If the company is a startup or new business the owners will not have as much detailed relevant information as an established firm would have. In contrast the owners will need to demonstrate proficiency gained by their experience and background as well as the decision mechanism utilized in their determination that they could start, maintain, and develop a fledgling enterprise such as the one being considered.

A thorough market analysis would have to be depicted. This analysis must illustrate a need in the firm’s target market that the anticipated business products or services will be uniquely qualified to meet. Then narrate the company’s future plans.

The next section of the business plan is the Company Description. This section reviews various components of the enterprise. This area describes the type of business and targeted market needs to be met. It also describes how the products and services offered will satisfy those needs. It specifies the consumers or enterprises the business will use to deliver its products or services. The competitive advantages anticipated to ensure the viability of the business will be detailed such as superior management, unique product, and efficient operational processes.

The Market Analysis highlights management’s working knowledge of the industry, market, research findings and conclusions.

Industry Description and Outlook – Gives a narrative describing the industry, its current size, and expected growth rate. It also explains and details the users of the products or services offered by the business in subsets.

Information About Target Market – Homogeneous characteristics such as the needs of the anticipated customers and are these unmet needs. Demographics of the customers and geographic location. The data should include the annual purchases or procurement of services your intended customers make in the industry. The projected growth rate for this group. Anticipated market share to be attained. Market share ratio and aggregate number of customers expected to gain in an explicit geographic region. Give reasons behind these expectations and calculations. Explain pricing model, gross margin levels, and any discounts planned. A competitive analysis should introduce the company’s competition by product line or service and market segment. Details about the competition’s market share, strengths and weaknesses, how important your market target is to the competition. Are there any indirect competitors who will negate the probability of success for the business? The barriers to entry should be explained.

Regulatory Restrictions – Detail the regulatory requirements affecting the enterprise and methods of compliance. Notate the anticipated costs associated with meeting the regulatory requirements.

The Organization & Management section explains the business organizational structure, describes the owners of the enterprise, profiles of the management personnel, and the merits of the board of directors.

Details about the duties of the personnel involved with the business should be spelled out. Why were these particular individuals chosen? A detailed illustration of each department should be given.

This section also includes who is on the board and how ownership intends to maintain it. The salaries and benefits package should be described as well as the incentives for high performance. An organizational chart describing the levels of personnel and the functions of the company’s departments should be illustrated.

Furthermore, the legal structure of the business should be given. Is it a partnership or sole proprietorship? If it is a partnership is it a general or limited liability? If the business is incorporated; is it a C or S corporation?

A list of ownership information that should be placed on the business plan is:

Names of owners

Percentage of ownership

The type of involvement they will have with the company.

Forms of ownership such as the issuance of common or preferred stock and how it relates to a particular owner. Is an owner a general or a limited partner?

Outstanding equity equivalents such as options and warrants.

Management Profiles.

The Service or Product Line section explains the product mix or services the company is offering to its customers and emphasis is given to the merits of the products or services as it relates to potential or current customers. How the product or service will meet the needs of the company’s target customers should be narrated in detail. The advantages that the aforementioned products/services have over the competition needs to be explained as well as the current development stage of the product such as business idea or prototype. Also details about the current Lifecycle of the firm’s product/service needs to be explained as well as any factors impacting its life cycle going forward.

Details about existing, pending, or expected copyright or patent filings go in this section of the business plan. Trade secrets and existing legal agreements pertaining to nondisclosure or non-compete agreements are also listed in this section.

Research and Development activities are detailed here as well as expected R&D activity results. An analysis of the competition’s R&D activities should also be made and described.

Marketing & Sales management strategy follows the Service or Product line section. The company’s marketing plans need to be introduced and should be an ongoing and evolving mechanism modified throughout the course of the business future going forward.

The tools utilized to attract and maintain customer loyalty and be a force in increasing sales. The marketing strategy should include four different plans:

A market penetration strategy.

A growth strategy which may include increasingly acquiring other companies or expanding existing departments. It may discuss a franchise strategy or horizontal strategy which would implement plans to deliver products to different customers or a vertical strategy which entails providing the same products but at different points along the distribution route.

Channels of distribution strategy may consist of retailers, an internal sales force or wholesalers.

Communication strategy outlining the tools the company will use to reach its customers. Such as a combination of advertising, promotions, printed material, and social media.

Once the marketing strategy has been established the sales strategy needs to be denoted. This explains business:

A sales force strategy. If the company is going to have a sales force will it consist of company employees or independent representatives? How many salespeople are needed and how will they be recruited and trained? Compensation for the sales force needs to also be listed.

The company’s sales activities must be detailed, such as identifying the firm’s prospects and organizing the contacts then acquiring the leads with the highest degree of purchasing the products. Additionally, the noted number of sales calls needed to be made over a certain time period and rationalized average number of calls necessary to make per sale, the average dollar size per sale and average dollar size per vendor.

The Funding Request is necessary if the owners or management is seeking funding for the enterprise. It should list the following:

The firm’s current funding requirement.

Any funding requirements over the next five year term

The intended use of the funds received. Will it be used for capital expenditures, working capital, acquisition, or debt retirement?

Any strategic financial situational future plans. Such as being acquired, debt repayment mechanism planned, or selling the company.

When narrating the firm's funding requirements, the funds needed now and in the future needs to be stipulated as well as the time period each request will cover. Furthermore, the type of funding the company wants such as debt or equity needs to be noted and of course the terms. Historical and prospective financial information must be provided.

The Financial Projections should be created after the market has been analyzed and objectives have been set. If the company is an established business its historical financial information regarding the company’s performance needs to be provided. Information regarding the last 3-5 years is standard depending on how long the business existed. The information includes the firm’s income statements, balance sheets, and cash flow statements for each year. Creditors will also be looking for collateral sources.

All companies, whether start up or growing, will be required to give projections. Creditors are interested in seeing where the owners/management expects the company to be in the next five years. Monthly or quarterly projections should be given for the first year. After that it’s quarterly or annually for the subsequent years.

The funding requests should mesh with the projection and the assumptions need to be given. A Short analysis including ratio and trend analysis of all of the financial statements should be made. Graphs are powerful tools in this aspect.

An appendix should not be included as part of the main body of the business plan it should only be included at the discretion of management. Management wants sections of the business plan confidential but creditors want to see this information in order to make decisions regarding lending funds to the business. The appendix should include:

Credit history of both the business and the owners

Key managers resumes

Product pictures

Letters of Reference

Details of market share

Associated magazine articles

Licenses, permits, and patents

Legal documents

Contracts

List of business consultants, as well as attorney and accountant.

Any copies of the business plan need to have elements of control. Moreover, the business plan can be modified and updated when needed.

Chapter: 2

Leading A Business

Effective Decision Making

Psychology has played a tremendous role in business and many leadership traits have been gleaned and analyzed. There has been an assortment of psychological tests to determine what characteristics are analogous to most successful leaders. The list of characteristics can be used to modify and develop managers’ leadership skills.

Managers of yesterday were narrowly focused and due to the modernized business environment became outdated. Today’s leaders have to have vision and be adept at acquiring new knowledge as well as teaching others. The dynamics of today emphasize ethics and trust in the enterprise.

A pioneer in the field of personality assessment introduced the Leadership Potential equation in 1954. It was based on military leaders and even the modern world use it to illustrate an effective leader. The following are the characteristics of an effective leader:

Emotional Stability – It is important that strong leaders tolerate stress and frustration. They have to be well-adjusted and have a mature psychological makeup to withstand the rigors of any given circumstance.

Dominance – Competitiveness as well as being decisive are common hallmarks of leaders. They assert themselves competitively and challenge themselves to overcome obstacles. They use assertiveness techniques when interacting with others as well as in their thinking.

Enthusiasm – Being depicted as active and energetic are also traits leaders have. They tend to be open and have the capacity to withstand change. They are also very alert and extroverted.

Conscientiousness – Leaders train themselves to be self-disciplined and have a deep seated desire to chronically do their best regardless of circumstances.

Social boldness –A leader is aggressive socially and has the mental strength to overcome social awkwardness. They respond to others overtures.

Self-assurance – Being self-confident and resilient are characteristics illustrated by leaders. They have no need for validation and prior mistakes or failures do not have a negative effect on them.

Compulsiveness – Leaders give careful thought when making decisions. Their reputation is very important to them. When socially interactive they are aware of their personal control over themselves and interact purposefully.

Intuitiveness – Information overload is a prevalent phenomenon in the world of today. Even natural geniuses lack the capacity to know and retain everything. Logic and reasoning has its limits but intuition and trusting instincts will always be relevant.

Empathy – Having the ability to perceive another individual perspective is an important aspect of being a leader. Building trust without it is difficult and it’s difficult to maximize the efforts of employees without trust.

Charisma – Leaders are perceived as special and much charisma magnifies this perception. Motivational techniques are significantly more effective. Arousing support for the company’s concerns and vision is crucial for a firm’s viability.

Leaders have been created by going thru a constantly evolving developmental process. These qualities are not quite innate. Not deserting one's accountability to oneself and others while persistently overcoming circumstances. An individual whose goal is to be a leader should focus on developing those aspects of personal characteristics that’s viewed as insufficient.

Effective decision making is essential for leaders because of the repercussions they have on the business. The following are tips that can be used to make wiser decisions:

Define explicitly what the decision is that needs to be determined. Is this a decision someone else is supposed to make or you? When does an answer to the decision have to be rendered? What’s the importance of this decision to you?

Brainstorm the alternatives in written format. Use resources at your disposal to discover more about each alternative.

Use visualization regarding each alternative. Does one result sway toward your satisfaction?

Ignore or discount the outcomes quite unlikely to occur.

Once a decision has been attained implement it. No consternation or second-guessing will be beneficial. You did your best.

Many people have tried to learn many new things all at once and later realized that they were quite overwhelmed and the end result was very little was learned. That is not how the brain works. The brain examines and divides information resulting in a better understanding of what’s transpiring without being overwhelmed by it. Society shapes our perceptions and teachings but these tenets are not necessarily known by us to be true. The following are common mistakes made by leaders when contemplating a decision:

Placing too much emphasis on expert information. Remember the human factor that is reflected in expert’s biases. Get information from different sources.

Overestimating the knowledge received from others while discounting yours for one reason or another because it is felt they know more than we do. Probably due to them being an authority figure, parent, or someone held in high esteem. The question to ask is "do they know more about this dilemma than I do"? Do their scruples match mine? Have they been in similar situations personally? Their opinions need to be kept in perspective.

Undervaluing the information they receive from people whose opinions they may feel are irrelevant, such as children, low status groups, blue collar workers, or even women. This matter can result in flawed judgment due to the fact that these groups of people may perceive another side of your problem. There is a risk you may miss a larger perspective of the issues. Know why you are discounting the opinions of others.

Seeing or hearing only what they want to see or hear. Be aware that expectations or biases may affect good judgment. Similarly, is ignoring someone telling us something we do not want to hear. There is a need to be open.

Not adjusting to their feelings or intestinal reactions. Sometimes our bodies are communicating to us by stomach ache or headache when making a decision. Our brains are chronically inundated with data and we cannot consciously process all of it; as a result this additional information is placed in our subconscious. Our bodies’ stores this data until it is needed and we normally could not retrieve it on a conscious level. Natural clues are tied to the decision making process through our feelings or gut reactions. However, society has enforced the tenet that we ignore these feelings, but better decisions will manifest it going forward if intuition was utilized more often.

Chapter 3

Managing Employees

Array of Different Types of Employees

A formal tool utilized to communicate with the company’s employees is the employee handbook. It explains the business’s expectations from their employees and what the employees can expect from the company. It should be written in a very clear and easy to understand format and makes the firm’s policies easy to reach. An employee handbook should include the following:

Non-Disclosure Agreements and Conflict of Interest Statements – These documents are not legal requirements but it is prudent to have these in place to protect trade secrets and proprietary information.

Anti-Discrimination Policies – Equal employment opportunity laws must be adhered to. They prohibit discrimination and harassment, also the Americans with Disabilities Act is a very important law that must be followed.

Compensation- Declare to employees that federal and state taxes will be deducted in addition to voluntary deductions for the business’s benefits programs. Furthermore, legal obligations regarding overtime pay should be stipulated in addition to pay schedules, performance reviews, time keeping, and breaks as well as bonus structure and salary increases.

Work Schedules – Work hours and schedules should be illustrated, including attendance, punctuality, and the notification process of absences. Policies regarding flexible schedules and telecommunicating need to also be addressed.

Standards of Conduct – Addresses the manner employees should conduct themselves in the workplace, including dress code and inappropriate behavior. Employees’ legal obligations should be reinforced especially if the organization is involved in regulated activities.

General Employment Information – A description of the business and employment policies regarding employment eligibility, job classifications, employee referrals, employee records, job postings, probationary periods, termination and resignation process.

Safety and Security – Comprised of the policy to maintain a safe and secure work environment, including complying with Occupational Safety and Health (OSHA) laws requires all employees to report all accidents, injuries, potential safety hazards, suggestions regarding safety and health, and safety related issues to management. Safety policies should also detail the company’s policy regarding adverse weather conditions and unsafe community conditions. The security policy should also state policy regarding securing the work environment resources such as locking file cabinets or computers when not in use.

Computers and Technology – Computers and communication technology are important resources for a firm to conduct business. Policies detailing the handling of software and the computers and other steps essential to securing electronic information. Also policies regarding social media while at work may also be included.

Media Relations – A single point of contact for all media interaction such as a rep in public relations. Also the handling of phone calls from reporters should be addressed in the handbook.

Employee Benefits – The eligibility requirements for all benefit programs should be outlined including all benefits that may be required by law such as worker’s compensation and COBRA.

Leave – The organization’s leave policies should narrate those that are required by law. Family medical leave, jury duty, military leave, and time off for court cases and voting need to be written. Also document policies for vacation, holiday, bereavement, and sick leave.

Management entails hiring and interacting with many different types of personalities and types of people such as individuals with disabilities. There are certain governmental programs that assist and encourage firms to hire people with disabilities in the form of tax credits as long as the business complies with certain legal requirements regarding the accommodation of employees with disabilities. The Americans with Disabilities Act requires employers with more than 15 employees provide reasonable accommodation for individuals with disabilities, unless undue hardship would result in compliance. A reasonable accommodation is any alteration in the work place that provides an individual with a disability to enjoy equal employment opportunities.

Managers of introverts should resist the temptation of perceiving them as shy or uncertain due to their penchant for thinking first. Their introverted characteristics need to be recognized so that they can be properly managed and motivated to be successful. Introverts should be approached with the understanding that time should be given for them to process information. So be patient and wait for their responses. Communicate with them in writing and send important information by email or memos so that they can take in the information and formulate decisions. Another tip is to give them independent assignments and inform them they are responsible and accountable for completing the task. Also, assigning introverts to work on a team with a balance of extroverts can be positive for the organization and the introvert especially if they can be matched with other employees they can relate to. Introverts tend to go through mental loops, so request that they give periodic updates to maintain focus on their assignment.

Narcissistic employees spend an enormous amount of time talking about themselves and purposely attempting to feed their enormous egos. The narcissist will always place his/her need before the organization. Attending to a narcissist appropriately can help manage their behavior. Taking the time to study the behaviors of narcissists can aid the manager in being proactive. They may cause a negative environment in the workplace by having a sense of entitlement and espousing negative comments about the other employees. A narcissistic employee may maintain focus if given clear and detailed guidelines and direction. Expressing behavioral expectations for the employee and maintaining their adherence can modify their negative behaviors.

Being placed at the center of attention is benevolent to a narcissist. A narcissist can be an effective presenter in the business given a clearly defined role and expectation, of course training and practice will be necessary because if they can maintain focus on the business material their natural vibrancy will be illustrated. By being properly managed a narcissistic employee may have a niche in the organization that’s mutually beneficial.

Unfortunately, narcissism is not arrogance it’s a psychological disorder and if they are causing problems in the office then they will continue to do so unless appropriate steps are implemented. Have the human resource department work with the counseling service which employees are referred. A willing narcissistic employee can benefit by managing their behavior with the appropriate counseling services.

If a narcissistic employee causes a detrimental effect on the other employees, there may be instances when their fellow coworkers complain to management. These matters need to be documented especially if other methods dealing with the employee were ineffective. The company’s procedure for disciplinary action may have to be initiated or developing a file for cause of possible termination.

Managing employees with many years of experience may be a challenge to many managers. There are many instances when a seasoned veteran has a greater understanding of the assignments than the manager however an effective manager must maximize the use of that knowledge without being undermined.

Respectfulness is a two way perspective and a manager should give recognition and acknowledgement to their employee’s mastery of his/her craft. Their ideas should be valued and a manager should not take all the credit instead they should show appreciation to their subordinates for their contribution.

Seek feedback. A truly effective manager realizes that he/she does not need to make all the decisions themselves. They can have a beneficial interactive relationship with experienced subordinates and actively listen to them. Additionally, encouraging experienced employees to participate as mentors for inexperienced coworkers would be a great way to transfer valuable knowledge to other interested individuals which will have a positive impact on all concerned individuals in the workplace.

Performance issues should be managed the same way as the other employees. Do not accept poor quality of work you are still the manager and an employee’s numerous years of experience is no excuse not to do their job to the best of their ability or follow company policy. Do not question your ability to lead by being insecure. There was a reason you were placed as a manager and intimate knowledge of all operational facets is not necessary to be an effective leader.

A lazy employee is problematic and the matter must be addressed due to the fact that they are being unproductive and are unnerving their fellow coworkers who are picking up his/her share of the work. Management needs to discuss the matter with human resources to identify their options and document accordingly especially if termination is being considered. Discuss execution of job duties and how you two can work together to reach targeted goals. Afterwards monitor productivity levels in accordance with company policy should this matter continue if optimal levels of productivity has not been realized after the discussion then disciplinary measures will have to be rendered possibly leading to dismissal.

Realistically some employees need greater amounts of supervision than others. A lazy employee may be the result in the manager not spending enough quality time with his/her staff members. The manager may need to engage and interact with the staff members more often. Talk about the tasks and projects they are working on as well as the deadlines they are attempting to meet. Do not single out the lazy employee. Engaging with your group can help the under performer feel like they are getting similar attention as the other team members.

Many times managers are immersed with difficult employees who can’t get along due mainly to different personalities, which can cause strife in the office. It’s nearly impossible to find a workplace where everyone enjoys all their coworkers company but most employees ignore the coworkers they do not like and focus on their duties. However, there are times when difficult workers would engage in inharmonious dialogue and let the negativity fester and hurt workplace morale and create a negative environment felt by customers also.

Management must deal with this negative scenario by identifying the issue and talk to each participant separately and ask them what’s causing him/her to not be a professional at work. The manager needs to ensure that both sides have been listened to. A remedy plan needs to be created and discussed with each employee. Fundamental interaction communication tools can be reviewed and explain how each employee can appear less verbally abusive. Tell the other employee to report to you if the matter continues. Warn both employees that if they cannot find a way to work together further action will continue. Separate the employees if the dispute and lack of acceptance to working things out fails and if that cannot occur have the employees work different schedules.

Sometimes managers have to deal with employees who do not respect their authority. It is important that an effective manager has the ability to earn employees respect. The completion of assigned duties necessitates that managers effectuate the earned right to assert their authority. If your management approach is not respected by a subordinate the situation must be dealt with immediately so that it does not interfere with workplace norms.

The first move is to have a private meeting with the subordinate and question why your orders are not being followed. Explain that optimizing the functioning of the department is possible if everyone does their assigned job. Listen to the employees reasoning. If they were offended by something you did purposely then apologize and if you feel your behavior should change then take the necessary steps. If you hear no acceptable response to the way you were treated explain that your orders must be respected and that each of you have duties in the workplace that must be carried out and maintained. Show the disrespectful employee the duties of his/her job description and reinforce a performance plan. If the staff member’s direction can be defined as well as his/her goals lack of authority may diminish.

Document the staff member’s insubordinate behavior once he/she has been notified that your authority needs to be respected. Write details of this behavior, expected behavioral changes, and when the matter will be reviewed again. Give him/her short tasks to complete and give feedback. If the negative behavior continues, you must consult with human resource manager about additional training and document each incident to possibly take disciplinary action including recommending possible termination.

Giving a critical evaluation during the performance review is typically unpleasant to a manager but it is a necessary part of managing others. Attempt to be tactful and professional when expressing the negative news.

Start with the positive aspect of the performance review and discover something to compliment the staff member with. Beginning on a positive note will minimize the employee feeling being attacked. Question the employee about what he/she thinks their performance has been. Express your concern clearly. The issue should be about the employee’s actions or behavior not attitude or your perception of his/her mindset. Afterwards, state your expectations and wait for the employee’s response. Some employees may have some unknown mitigating circumstances and be remorseful others may not have a response and act if it’s not a big issue. Use the employee’s response to determine yours if he/she acts remorseful a second chance may be warranted if he/he does not act remorseful issue a written warning or termination but be mindful of state employment laws.

Place a plan in writing and have the employee sign the review. This is a record about the meeting and will protect you if termination does occur in the future. Furthermore, it reinforces the seriousness of the matter to the employee.

Managing employees that don’t like you have the potential to be problematic but being a manager entails being tough-minded while managing different personalities. This scenario may present a challenge, however it is one that must be overcome in order to get the work done. Arrange a meeting with the aforementioned individual and explicitly ask if there is an issue that needs to be addressed regarding how they feel about you. Since you are the manager you must take the high road and ask what you can do to minimize the tension.

Afterwards refocus on your work because it is not a requirement that employees like you. However, they need to get over their personal feelings and be professional while focusing on their duties even if that means interacting with you daily. In order to avoid miscommunication and developing a kind of negativity in the team relationship, you need to insist on effective and positive communication and seek clarification about what is being said. Sometimes a manager has to accept the status quo and realize that person does not like your management style. Reevaluation is fine but don’t overcompensate so that your employees can like you more; as long as everyone is maintaining their duties in the workplace things should be fine.

Managing employee retention results in maintaining the corporate culture and minimizing personnel expenses. A 2008 study by the Society for Human Resource Management computed the estimated cost to recruit, train, and lost production results in a cost of 50% of the salary for the new position.

Strategies can be used to improve employment retention such as encouraging group members to express themselves regarding their development or job related topics. Implement an open-door policy and use a suggestion box and show appreciation if an employee’s idea is being utilized. This arrangement manifests a collaborative atmosphere enjoyed by all.

Chapter 4

Planning

Characteristics of Planning

Planning involves forward thinking and contemplating future aspects of action to be constructed and adhered to. It is a procedural process which determines the when, how and who is going to perform a specific duty. It considers the human and physical resources of the business and details courses of action leading to a desired result. It is a basic management function and a degree of foresight, analysis, and depth of business knowledge is needed as well as predetermined goals.

The following are steps in planning:

Establishment of objectives – Planning is initiated with goal setting and targeted objectives to be noted clearly and explicitly. Objectives should be practical, acceptable, workable and achievable.

Establishment of Planning Premises-The expectations regarding the shape of occurrences in the future. They are the foundation of the planning process and also involve which direction the manager would pursue if actual plans had to be modified due to certain issues and what those issues may be. Having established planning premises assist in avoiding those obstacles.

Choice of alternative course of action-When events are forecasted and premises are established, alternative activities have to be contemplated as possible courses of action. As a result each alternative will be investigated by analyzing its benefits and negative aspects. The resources available and requirements for these alternatives will have an impact as well. Various quantitative techniques should be used to insure the appropriate alternatives are properly measured numerically if possible.

Formulation of derivative plans- Derivative plans are subordinate which enhance the accomplishment of the main plan. These plans flow from the main plan and help it expeditiously. These plans include policies, procedures, rules, and budgets etc.

Securing Co-operation – After choosing a desired plan it is suggested that the employees necessary to implement the plan be told about them in confidence. This will inspire them to contribute to taking pride in doing their part and will be a strong motivational mechanism. It also would give management an opportunity to receive valuable feedback.

Follow up/Appraisal of plans-Determination of the effectiveness of the plan chosen and after its implementation can be derived from the feedback of other departments and employees affected by the plan. It is possible that modifications may be needed.

There are various characteristics of planning listed below:

Planning is goal oriented-Planning is created to accomplish business objectives. Planning associates group effort that otherwise may be misdirected regarding the use of individual effort as a result it creates synergy. It leads to desired goals being reached expeditiously and economically.

Planning is looking ahead-It requires a futuristic perspective, analysis, and prediction. As a result planners are prognosticators and a plan is a live ongoing production of the prognostication. It is a mental inclination of things which may occur in the future.

Planning is an intellectual process-Creative thinking, sound judgment, and imagination is important ingredients needed for effective business planning. It is not guessing but an axiom of gyrating thinking. Planning is always founded on objectives, facts and perceived estimates.

Planning involves choice and decision making-There should be different avenues available to reach the business objective utilizing the proper decision making mechanism allows management to choose the plan that yields the desired affect within the business’s resources available at the proper cost.

Planning is the primary function of management/Primacy of Planning- Planning is analogous to the soil being laid and the steps being taken on that soil symbolizes the functioning of management which guides organizing, staffing, directing, and controlling. All aspects of management are enacted within the framework of plans laid out.

Planning is Pervasive-All levels of management in every department engage in planning. The nature of the planning will differ according to the level of management.

Planning is designed for efficiency-A plan causes the avoidance of wasting resources and minimizing costs while reaching for targeted goal. Planning must benefit the enterprise in the manner of saving time, money, materials, methods, equipment, and personnel if properly designed and executed.

Planning is flexible- Planning has a futuristic perspective as a result it has to be malleable and to be modified to changing conditions.

The advantages of planning are as follows:

Planning facilitates management by objectives-Planning manifests management to formulate a blueprint that causes employees to focus on goals and objectives and it clarifies what those goals and objectives are. It emphasizes the reasoning for certain activities to be acted upon.

Planning minimizes uncertainties-Due to the fact that in reality there are a lot of factors and elements which have risks of varying degrees involved in business; planning takes into consideration anticipated events and courses of action needed to navigate the business to withstand those conditions whatever they may be.

Planning facilitates coordination-The attainment of organizational goals depends on the interaction of personnel in various departments each doing their part along the spectrum of the plans. It also avoids duplication of efforts.

Planning improves employee morale-employees are aware of the expectations placed upon them. It also creates an environment comprising order and discipline.

Planning helps in achieving economies-Effective planning leads to the allocation of resources to various operational departments. It minimizes the wasting of resources by choosing the most advantageous use of resources.

Planning facilitates controlling-Planning encompasses predetermined goals and the standards used to measure performance. There is no effective control system without a carefully crafted plan.

Planning provides competitive edge- Effective planning is a premium for an organization with effective planning. Planning may involve a myriad of work activities that may benefit one company which did properly adapted. Furthermore, anticipating the future moves of the competition is part of a comprehensive plan.

The following are the disadvantages of planning:

Internal Limitations

Rigidity-It has the capability to be too structured and not allowing deviation. It expects personnel to strictly adhere to the plan and does not allow for individualism only conformity.

Misdirected Planning-Every planner has his/her own biases, interests, and preferences which may not be created to benefit the organization as a whole.

Time consuming-Planning encompasses the gathering and analysis of information and its interpretation. If there are a lot of alternatives, this process could consume quite amount of a manager’s time.

Probability in planning-The forecasts are built on estimates and predicting the future is impossible. Although very sophisticated tools and models are used in the planning phase an unanticipated future occurrence causes problems.

False sense of security-Perceived great plans may cause some managers to take certain aspects of the business for granted and may be too late to mobilize changes when warranted as a result opportunities could be missed out on.

Expensive-Gathering, analyzing, and evaluating data and information as well as alternatives can cost a significant amount of time, effort, and money.

External Limitations

Political Climate-Changes in government from one political party in Congress to another can have a negative impact on plans.

Labor Union-Strikes, lockout,

Policies of competitors-Plans may be affected if competition created modified policies.

Natural Calamities-This definitely could have a bearing on plans and most natural disasters are not predicted or anticipated like hurricanes.

Changes in demand and prices- changes in fads and tastes can definitely alter plans.

Chapter 5

What is Management

Managing Business

Management is a universal term and all businesses are involved in management. It is the art of accomplishing endeavors with people in formalized groups and cultivates an atmosphere in which people can perform their assigned tasks in an efficient and effective manner; while minimizing costs. It is the process of working with others in a predetermined effort to optimize the goals of the organization by effectively using limited resources.

Initiating and maintaining the internal environment is an element that involves management because their decisions effectuate the various aspects of production. They are responsible for creating the conditions which maximize the efforts of their employees. It includes making sure raw materials are available, determining wages and salaries, formulation of rules and policies etc.

The following categories define management in detail:

Management as a process – as a process it involves interacting functions in the organization. It’s a process through which management forms, operates, and directs harmonious organization through a coordinated cooperation of people. It involves developing and maintaining relationships with others and producing an environment which is mutually beneficial to all concerned parties; by causing the employees to be productive for obtaining the company’s organizational goals. The company’s organizational purpose depends on managing people and financial resources. Moreover, management is an ongoing aspect consisting of an infinite amount of problem solving.

Management as an Activity – Management is constantly engaged in communicating with superiors and subordinates. They communicate orally and in writing. Managers are also involved in making numerous decisions which vary in nature and these decisions impact others in the organization. Interpersonal activities are relevant to maintain strong rapport with subordinates and superiors.

Management as a Discipline – Referencing that branch of knowledge conducting the study of principles and practices of basic administration. It denotes a manager’s code of conduct and discusses various techniques for managing resources efficiently.

Management as a Group – Management as a group includes all the managers in the business from CEO to first line supervisors. However the term management as a group may only comprise of top management such as the CEO, SVP’s, and the Board of Directors. There are also patrimonial/family managers who have become managers because they own the enterprise or family members of the owners. Then there are professional managers who have been appointed due to their specialized area. Additionally, there are political managers/civil servants who manage in the public sector.

Management as a Science- Science is a processional set of knowledge regarding a specific area of study that consists of facts that describes an occurrence. It determines a cause and effect relationship among variables and denotes the principles establishing their relationship. These principles are built upon judicious methodologies pertaining to observation and confirmed through testing. Management principles have been derived from experiments and practical experiences of a significantly large number of managers. The cause and effect aspect can be reflected in the principle that if employees are fairly compensated and given incentives they will be motivated to do their jobs effectively. However, working under poor working conditions will result in low productivity. Management principles can be tested for confirmation. Management falls under the realm of social science due to the fact we are dealing with human beings.

Management as an Art – Art involves personally applying knowledge and skill attempting to receive the desired results utilizing various techniques. Art involves practical actions theory alone is not enough. Using these techniques through physical action is a form of art. Having a degree in management is not sufficient, using those theories while actually managing in an organization is reflective as management being an art. The art of management encompasses a personal touch and personality which differs from one manager to another. Creativity is evident in art and management due to the fact you are personally creating something new by combining intelligence and imagination. Management utilizes human and other resources in a positive manner to reach the desired results. "Practice makes perfect." Every artist is goal oriented due to the fact that they are striving to reach a desired result. Management shares the same characteristic.

Management as a Profession – Over the last few decades there has been an increased demand for managerial professionals. This trend resulted from the separation of ownership from management, the growth of industrial competition, and growing the size of a business segment. Managers must have the desire to acquire an expertise in managerial principles. There are numerous institutes and universities that offer training and a formal education in management. Although there is no legal educational requirement. Managers have the social obligation to provide quality goods and services at reasonable prices. They are also expected to adhere to a code of conduct

Management involves directing human and physical resources in the attainment of organizational goals. Management success is measured by achieving predetermined objectives. Management is universally required in all types of organizations regardless if it is a political, social, cultural, or a business enterprise. Whenever multiple people are engaged in tasks for a common end result it necessitates management. It utilizes group effort to meet goals and objectives.

The main objective of management is to maximize output by minimizing the resources used to provide the product or service to the marketplace. Management’s thought process combined with the use of employees, material, and financial resources are used in a harmonious manner which will also decrease costs.

Other management objectives is efficiently using the associated elements of production and insuring beneficial interactive functioning in the workplace. This accord manifests good working conditions, appropriate wages and salaries along with incentive plans which will result in higher profits for the employer. Through increased productivity and employment management positively affects society.

The following are 14 management principles:

Division of Labor – The specialization of tasks in the workforce can be divided and subdivided and given to employees based on their areas of expertise. This results in the work being simpler and efficiently completed. It also assists the worker in developing speed and accuracy.

Party of Authority & Responsibility – Authority infer superiors rights for employees to execute their assigned tasks according to management instruction and assertion. Responsibility is holding oneself accountable to complete the assigned task. If authority is given to an individual then he/she is also caused to be responsible. If a person is made responsible for a job he/she has concerned authority. Irresponsibility may be the result of authority without responsibility and responsibility without authority causes ineffectiveness

Principle of One Boss – An employee should answer and receive orders from only one boss at a time. Receiving instructions from more than one individual undermines authority, lessens discipline, divides loyalty, causes confusion, and overlapping of work.

Unity of Direction – There should be one plan for a set of activities and related activities and they should be under the direction of one manager.

Equity – Comprises fairness, kindness, and justice. If employees are expected to be devoted to the workplace management should be kind, fair, and non-discriminatory. However, force and harshness is warranted under certain circumstances

Order – The appropriate and systematic placement of things and people. The placement of things is termed material order which insures effective use for the physical asset. Social order refers to selecting and appointment of an individual for a particular task.

Discipline – The subordinate should respect his/her superiors and follow their orders. Rules and policies also have to be adhered to. The enforcement of discipline involves strong superiors at all levels, clear and fair agreements with employees, and punishments being judiciously made.

Initiative – Employees should be encouraged to take initiative in their assignments and by taking appropriate actions without being asked to do so.

Fair Remuneration – Wages and salaries should be fair, reasonable, satisfactory, and rewarding. Wages should be established on the factors regarding cost of living, job assigned, financial position of the firm, and market rates.

Stability of Tenure – Employees should not be moved from one job to another periodically. It takes time for an employee to adjust to a new job and do it well; funds spent on training are wasted.

Scalar Chain – This principle refers to the chain of the superior’s ranging from top management to lower management. Every order, requests, instructions have to pass through the Scalar Chain. However, in instances of urgency and expediency there is a shortcut referred to as the Gang Plank; which is a temporary communication mechanism between two points.

Sub-Ordination of Individual Interest to General Interest – In case of incongruence of interests between the individual and group; group interests supersede.

Espirit De’ Corps (can be achieved through unity of command)-It illicit a harmonious interaction in work teams and motivates employees to work harder.

Centralization and Decentralization- Centralization refers to decision making being rendered by top management. Decentralization is sharing authority down the management spectrum. The size of the organization, experience of management, and dependability as well the talent of subordinates are the elements which determines the degree of centralization and decentralization. The proper balance of the two is mostly sought.