CHAPTER 1 Introduction to Business Management

Learning outcomes
□Define the term management
□Differentiate between the concepts efficient and effective
□Discuss the various resources needed for an organisation
□Illustrate the physical transformation process
□Explain the four fundamental management functions
□Explain the six additional management functions
□Describe each of the management skills required by the different levels
of management
□Distinguish between the different levels of management
□Briefly distinguish between all the functions of a business
□Discuss how general management interacts with other business
functions
Key Focus of Business Management
□ Free market principle: satisfaction of multiple human needs.
□ Factors of production/inputs: entrepreneurship, natural,
information and physical resources, labour and capital.
□ Effectiveness & Efficiency: profit & satisfy needs/wants
□ Managerial Skills & qualities: for navigating through turbulent business
environment & complex problem solving
□ Four (4) fundamental management functions:
- Planning
- Organizing
- Leading
- Control
Need for management

What happens in a business?

Factors of Effective and Satisfy Society’s

Make a Profit
Production Efficient Needs

The factors of production in a business are used in an effective and efficient

manner to make a profit by satisfying the needs of consumers.
Need for management

Inputs Outputs
Transformation
(Resources) (Performance)
• Human • Physical • Achievement of
• Financial Transformatio goals
• n Process • Products
Physical
• Natural • Services
• • Management • Productivity
Information
• Process
Entrepreneurship • Job creation
• Profit

Fig 1.1 - Transformation process

 Need for management –
Organisational resources (inputs)
What are they?
Resources/inputs of the organisation offered to the market in exchange
for a profit.

Six (6) different types of resources:

□ Human resources
□Financial resources
□Physical resources
□Natural resources
□Information resources
□Entrepreneurship
Need for management -
Organisational resources (inputs)

1. Human resources

 People who perform the activities necessary to achieve organisational goals.

 Businesses cannot function without people.
Need for management -
Organisational resources (inputs)

2. Financial resources
Owners’ contribution vs Non-owners’ contribution

SAVINGS

 Capital required to start and operate the business.

Need for management -
Organisational resources (inputs)
3. Physical Resources

 Needed to perform the activities of an organisation

 Examples: Building, equipment, computers, vehicles, tools
Need for management -
Organisational resources (inputs)

4. Natural resources

SCARCE

LIMITED

 Provided by nature
 Examples: crude oil, water, minerals (zinc, copper, iron, gold, diamonds etc.
 Need for management -
Organisational resources (inputs)
5. Information resources

 Information is power and has changed the ways business is conducted.

 Makes it possible to determine needs and wants quickly → enables the provision of
the products and services desired by consumers.
Includes: Management environment data, annual financial statements, business
statistics, etc.
 Need for management -
Organisational resources (inputs)
6. Entrepreneurship

 Skills and abilities to start a new business venture, expand it and manage it successfully
 Combination of the other 5 resources and taking on RISK in providing goods & services
Need for management

Inputs Outputs
Transformation
(Resources) (Performance)
• Human • Physical • Achievement
• Financial Transformatio of goals
• Physical n Process • Products
• Information • Services
• Entrepreneurship • Management • Productivity
Process
• Job creation
• Profit

Fig 1.1 - Transformation process

Efficient vs Effective

EFFICIENT EFFECTIVE
Using resources Making the right
wisely in a cost- vs decisions &
effective successfully
manner. implementing them.

•Why Efficiency & Effectiveness?

Note: Limited & scarce resources!!!
Unlimited customers needs
& wants
Need for management

Inputs Outputs
Transformation
(Resources) (Performance)
• Human • Physical • Achievement of
• Financial Transformatio goals
• Physical n Process • Products
• Information • Services
• Entrepreneurship • Management • Productivity
Process
• Job creation
• Profit

Fig 1.1 - Transformation process

Definition of management

The process of utilising an organisations

resources to achieve specific objectives
through the functions of planning,
organising, leading and control
Definition of management
• Four fundamental
management functions
should be performed in
sequence
WHY???
Reason 1:
Know what to do.
Reason 2:
Know how to do it.
6 Additional management functions

Coordination
Decision-Making
Communication

Motivation
Delegation
Discipline
Six (6) additional management functions

Coordination
A functional unit is created to achieve business
objectives.

Decision-making
Possible solutions are considered to choose the best
solution.
Six (6) additional management functions

Communication
The transfer of messages between the business and its
external and internal environment.

Motivation
When the owner and the manager persuade the
employees to voluntarily do their work very well.
Six (6) additional management functions

Delegation
The tasks are allocated to employees.

Discipline
Conduct that helps to ensure the successful operation of
the business.
Management skills

Seven (7) management skills:

1. Technical skills Ability to use methods, processes and techniques in a specific discipline
to perform a task.
2. Interpersonal skills Work with people, understand them and motivate them.
3. Conceptual skills See the bigger picture, formulate creative and strategic plans.
4. Diagnostic skills Diagnosing and analysing a problem in the business by studying its
symptoms and then developing a solution.
5. Communication skills Convey ideas and information as well as receive ideas and information
from others effectively
6. Decision-making skills Choose a plan to solve a problem which produces either consequences or
results.

7. Time management skills Prioritize work to work efficiently and effectively and delegate
responsibility.
Managerial levels

• Responsible for overall

direction
• LT goals, vision and

TOP mission
• CEO, MD, President,
VP
••Implement
Strategicdecisions
managersof top management,
Supervise work of lower management
MIDDLE • Medium term planning
•lMarketing, HR, Finance etc.
• Functional managers

• Responsible for daily activities

FIRST/LOWER • Short-term planning
• Supervisors, sales manager,
office manager
•Operational managers
Managerial levels in UFS

Top

Middle

First-
Managerial levels in UFS

Rector
Prof. Francis TOP
Peterse
n
Dean – Faculty of Economic
and Management Sciences MIDDLE
Prof. Philippe Burger

HOD (chairperson) – Department of

Business Management FIRST-LINE
Prof Neneh Brownhilder
8 Business Functions
1. General
8. Public Relations Management 2. Operations
Management
Management

7. Human Resource
Business 3. Financial
Management Functions Management

6. Marketing 4. Purchasing
Management Management
5. Administrative
Management
 8 Business Functions
• All the activities that are necessary to the very important task
General of management on all levels throughout the entire business.
management

• The management process used in manufacturing businesses

Operations and service businesses.
management

• The management of the business’s financial activities.

Financial
management
 8 Business Functions

• The acquisition of all the resources that a business needs to achieve

Purchasing its objectives.
management

• The service of obtaining, recording and analysing information and

Administrative communicating the results to management.
management

• The transfer of goods and services to customers in order to satisfy

Marketing their needs, as well as the activities that make the transfer possible.
management
 8 Business Functions

• All the activities concerned with procuring, developing,

Human resources compensating, integrating and retaining personnel.
management

• Evaluates public attitudes, promotes the policies and procedures

of a business to the public and plans and executes programmes
Public relations of action to earn public acceptance and understanding.
management
8 Business Functions

□Represent all the activities performed in the business

□Level of middle management
□Functional manager is responsible for a certain function/ department
□Vital: alignment of all functions & coordination of all departments to
achieve organisational goals.
8 Business Functions
The difference between general
management function & the other
functions
Interaction of general management with
 Cannot be placed in a department of its own other business functions
 Includes all the other functions
 POLC

 Levels of management

 Managers in each functional area/ department.

 Decision-Making

Conceptual
Interpersonal
Communication

Time management
Technical Diagnostic
 THE END
OF
CHAPTER 1