Business objectives

› Specific
› Measurable
› Attainable
› Realistic
› Timed.

Importance
› Providing a guide for the operation of the firm.
› Providing a sense of direction and unity for the firm.
› Coordinating the firm’s activity.
› Motivating employees

Types of objectives
Short-term: operational objectives:
o These are made by lower-level management.
o Example: to increase weekly sales from 1,000 units to 1,500 units.

› Medium-term: tactical objectives:

o These are made by middle management.
o Example: to improve efficiency/productivity by 10 percent in 9 months’ time

› Long-term: strategic objectives:

o These are made by top management.
o Examples: to diversify the firm’s output in 4 years; to enter into the overseas
market in 5 years

Hierarchy of objectives
Vision is where the business wants to go in the future.
It is a statement of purpose – for example, the business aims
to expand its market share across the Caribbean.
Mission statement
This is a statement which outlines the main aim of a
business or company. A mission statement gives a clear
outline of the business’s aspirations and values.

Strategic objectives

Tactical objectives
Strategic objectives are sometimes called tactical objectives.
They are performance targets established by middle
management (department heads) for achieving specific
organisational outcomes.

Business ethics and social responsibility

Business ethics refers to the morals or set of standards that are used to guide
a business on how it should conduct its affairs. This usually includes written
and unwritten codes on how businesses should behave.
Some common ethical issues within CARICOM include:
● The testing of products on animals
● The use of child labour
● How employees deal with customers
● Truthful versus deceptive advertisements.

An ethical code
This is a formal business document that states the rules that management
should follow when faced with a decision.
For example:
› Should the fi rm relocate to a country paying a lower wage rate?
› Should the fi rm put on the market a life-saving drug after limited testing?
› Should advertising aimed at children be restrained?
The importance of business ethics
1. They improve the image of the firm.
2. They can lead to an increased market share.
3. They can lead to increased sales.
4. The firm’s profi t margin will increase.
5. They will create a better society.
6. They are necessary for the survival of the firm.
7. Some unethical practices are punishable my law.
8. They attract staff.

NOTE- Integrity:
this implies the honesty with which a firm conducts its business activities.
This honesty must be exhibited in the firm’s relationship with its various
stakeholders.

Essential features of information for decision-making

1. Accurate: information upon which a decision is based should be accurate.
2. Timely: the information must be as recent as possible.
3. Relevant: the data must be relevant to the given situation.
4. Cost-effective: the cost of collecting the data must be less than the
benefits to be gained

Stages in decision-making
1. Definition of problem
2. Data collection
3. Analysis & evaluation
4. Alternative strategies
5. Implementation
6. Evaluation

Factors affecting decision-making

Impact of globalisation on business
Multinational company
A multinational company (MNC) is one that has its headquarters in the
metropolitan country and subsidiaries in developing countries.

Advantages to host country

❖ Create employment: they create employment for skilled and unskilled
labour
❖ Tax revenue: this is a major form of revenue for the government of
Trinidad & Tobago
❖ Earner of foreign exchange: this is important to pay for imports

Disadvantages to host country

❖ They repatriate their profits, therefore the multiplier effect does not
take place in the host country
❖ There is very little transfer of technology
❖ Policy making takes place in metropolitan country, so the interest of the
host country might not be considered

Impact on Caribbean businesses

Positive impacts
❖ Create linkages with foreign firms
❖ Domestic firms can grow and expand
❖ Foreign exchange
❖ Access to new technologies
❖ To enter overseas market

Negative impacts
❖ Competition may force inefficient firms out of the market
❖ More money spent to advertise in order to maintain market share
❖ May not have the human resources to use the new technologies
❖ May not have the resources to purchase new technologies
❖ May even lose market share in the domestic economy
 MODULE 2 The management of people

Evolution of management theories (principles and contribution to modern-day

organisations)
Classical model:
1. F.W. Taylor’s views are still applicable:
A. Money motivates
B. Observe and recording staff performance
C. Efficiency is a keynote
D. Workers are still paid by piece-rate system

2. Henri Fayol:
A. Established the functions of management.
B. The span of control should be between three and six.
C. There should be tight managerial control.

3. Max Weber (German sociologist):

His approach to management:
A. Clearly defined hierarchy
B. Division of labour
C. Impersonal relationship
D. Detailed rules and regulations

Human relations model (Elton Mayo)

1. The human relations model recognises:
A. Employees as humans with special needs
B. That social pressure from co-workers has a tremendous effect on
workers’ level of productivity
C. Group standards determine the workers’ level of output
D. Group allegiance is more valuable than money

Systems approach

The contingency approach

The functions of management
The term ‘management’ may be defined as the process of
organising the available resources of the business to achieve
desired results.
● A manager is an individual who makes decisions about the use of
limited resources and the planning, organising, directing and controlling of
these resources to achieve the organisation’s goal.

1. Planning: defining the aims and objectives of the firm.

2. Organising: allocating resources to achieve objectives.
3. Leading and directing:
a. Leading involves using influence to motivate workers to achieve
established goals.
b. Directing involves giving orders and instructions.
4. Controlling: this involves ensuring the firm's objectives are being met. If
not, to take corrective action.
5. Staffing: ensuring that the human resource is adequate and fully trained.
6. Coordinating the activities of the various departments.
Organisational structure
PG.32 - 37

Motivation pg.37 -42

Leadership

The trait theory

1. It is a genetic approach to understanding leadership. It assumes that leaders
are born rather than
Made.

Leadership skills
Leadership skills include the following:
i. Adaptability
ii. Tact
iii. Communication
iv. Problem solving
v. Critical thinking
vi. Listening

Leadership style refers to the way in which managers make decisions and
relate to their staff.

Autocratic leadership style

1. Authoritarian and assumes responsibility for all aspects of the firm’s
operations.
2. Communication is one way – from top to bottom.
3. There is a clear chain of command
4. Leader retains control
Democratic/participative
1. Communication is two-way.
2. Can be persuasive: leader makes the decision and convinces workers that the
decision was good.
3. Can be consultative: where workers are consulted before a decision is made

Laissez Faire
1. The leader has a peripheral role, leaving the staff to manage the firm.
2. Leader evades his responsibilities: he delegates it.
3. Communication is horizontal.
4. Can bring out the best if workers are professionals.

Transformational leader
1. A leader who has the vision, the power and the personality to effect the
change necessary to
bring about radical changes in the firm.

Informal leaders are individuals who have the ability to lead without formal
power.
Group and team management
A team is a group of people with a common aim.

An effective team must possess the following characteristics: trust,

commitment, participation, flexibility, decision by consensus,
encouragement, support and growth.

Stages of team development

Forming: individuals in the group begin to know the members of the group.

Storming: conflict may arise if people’s goals are different from each
other and they may not want to accept someone else’s point of view.

Norming: members begin to develop techniques to work together. Rules

are established.
Communication is improved.

Performing: the group begin to function effectively. Objectives are

accomplished.

Adjourning: the group break up as the objectives are met, or because

members have left.

The characteristics of effective teams

➢ Commitment
➢ Participation
➢ Trust
➢ Decisions by consensus
➢ Flexibility
➢ Encouragement
➢ Support and growth
 Teams
Advantages to the organisation
❖ Productivity is increased because of the pooling of ideas
❖ It reduces management cost: there will be less need for middle
management
❖ There is continuity: if a member of a team is absent, others can
continue to function
❖ Responsibility is shared
❖
Disadvantages to the organisation
❖ It can result in the loss of specialisation among workers
❖ More time is taken to arrive at a decision as there are more
members in the team
❖ Time is lost: production is disrupted as teams establish themselves
❖ The introduction of team working will require workers to be trained
to work as a group. There is a financial cost to the firm

Causes of conflict
Possible causes of conflict
Management style
Competition for scarce resources
Lack of communication
Clash of personalities

Strategies to manage conflict

Avoidance
Smoothing
Compromise
Collaboration
Confrontation
Management of change
Nature of change.
Technological change has led to:
1. The way in which the firm operates.
2. High cost of purchasing the technology.
3. High cost of training workers.
4. More efficient methods of keeping records.
5. More efficient methods of communication

Economic change
1. Management has also to deal with changes in the economic external
environment.
2. Changes in the trade cycle means: Consumers’ disposable income
changes, Tax rates may change, Exchange rates change

Demographic changes
As the size and structure of the population change, so too must the way
the firm operates.

Social changes
As the structure of the society changes, management must keep abreast
of these changes; for example, more working women will mean the demand
for appropriate working clothing will increase, and the demand for pre-
cooked and fast food will also increase.

Legal
1. Firms will also have to deal with legal issues; e.g. methods of
advertising, minimum wages, health and safety regulations.
2. Firms may have to change their advertising technique; take some
products off the market.
Resistance to change
➢ Fear
➢ Disrupted habits
➢ Loss of control and confidence
➢ Poor training
➢ Redistribution of workload and lack of purpose
➢ Loss of power
➢ Lack of communication

Strategies to manage change

1. Management must be clear on its objectives for bringing about the
proposed change and must be able to see the change implemented.

2. Management must ensure that morale in the workforce is high. If this

is so, then the proposed change will be more readily accepted.

3. There must be a level of trust; if workers know they will benefit from
the proposed change, they will be more likely to accept this change.

4. Management must provide the necessary training to equip workers so

they will feel comfortable in the changed environment.

5. Management must introduce change gradually, wherever this is

possible.

6. There must be open communication about the proposed change. All

stakeholders must be free to express their point of view.

7. It is important that those affected by the proposed change are given

sufficient time to adjust to the change
Communication in business
Communication is said to be effective when what is said is understandable
in the way it was intended and there is feedback.

a. Effective communication

1. Management’s main objective is to get things done through others. This

means letting people know what they have to do, listening to them and

noting their progress.

2. To communicate effectively, management must:

›Obtain feedback

› Empathise: this means they must try to see things from the other

person’s point of view and they must use the language that will be

understood.

› Consider the external environment: if there is noise or anything else in

the external environment that would prevent the receiver from

understanding the message correctly.

› Use the most appropriate channel of communication:

o Face-to-face communication allows for the additional use of body

language

o Written communication is more effective for more detailed information

o One-way communication is faster and better for use in the military but

inadequate elsewhere

b. Effective two-way communication can improve productivity:

1. According to Mayo, it is important for managers to show they are

interested in the welfare of their employees.

2. Communication can meet the social and esteem needs of the worker.

3. Hertzberg noted that feedback is an important motivator.

c. Effective communication and motivation:

1. Motivation is important for the success of the firm. To motivate

employees, it is vital to communicate information effectively to them

and to obtain feedback on their performance.

2. This is a two-way process.

3. The more motivated worker is more likely to communicate.

d. Good communication in a firm

When communication is good in a firm:

1. Messages do not get distorted.

2. Information is passed quickly and effectively, enabling improved

decision-making.

3. There is both upward and downward communication.

4. Information flows effectively between the firm and the external

Environment.

Communication structure
Pic 52-57

Lines of communication
Formal and
Informal channels
Human resources management
1. Human resource management is the process of making the most

efficient use of the human resources in the firm.

2. This is necessary in order for the firm to achieve its objectives.

It involves management of the human resource in the following
areas:
a. Recruitment
b. Selection
c. Compensation
d. Training and development
e. Performance appraisal
f. Managing change

3. In large organisations a human resources department is

established. In smaller organisations these functions are performed

by the respective heads of departments.

4. The human resources department is responsible for attracting,

developing and maintaining an effective workforce.

5. It is vital for the human resources department to measure or

assess worker performance.

Improvements in performance should be noted and, more

importantly, be communicated to staff.
These include:
a. Labour productivity
b. Absenteeism rates
c. Labour turnover
d. Health and Safety

6. Labour productivity:
a. Labour productivity compares the number of workers with total output.

b. If it increases, labour is more efficient, and the firm will be more

competitive as the cost of production is falling.

Formula:
Labour productivity = Output per period
Number of employees at work

7. Absenteeism rates:
a. Absenteeism rates measure the proportion of the workforce who are

ill, but who are absent over a given time period.

b. Absenteeism can have the following consequences:

i. Firms unable to meet targets

ii. Loss of market share

iii. Extra cost to hire workers to provide cover for absentees

iv. Loss of morale

Formula:
Absenteeism % = Number of staff absent (on 1 day) × 100
Total number of staff

Pg 60 - 64

Module 3