Chap 2 Business MGT - 10

CHAPTER 2
BUSINESS
MANAGEMENT
SME Definitions
• In 2005, National SME Development Council
(NSDC) approved the use of common definitions
for SMEs in the manufacturing, manufacturing-
related services, primary agriculture and services
sectors.
• applied by all Government Ministries and

Agencies involved in SME development, as well
as by the financial institutions.
Technopreneruship (WBB10102)
SME Definitions
The use of common definitions for SMEs will:
• strengthen government efforts to create effective
policies and support programmes for specific
target ;
• make it easier to provide technical and financial
assistance to SMEs; and
• allow for the identification of SMEs in the
various categories and levels.
SME Definitions
SMEs can be grouped into :

– Micro, Small, or Medium
These groupings are decided based on EITHER

– the numbers of people a business employs OR
– on the total sales or revenue generated by a business in
a year.
Number of Employees
Based on the number of full-time employees:
Manufacturing
Primary Services Sector
(including Agro-
Agriculture (including ICT**)
Based) & MRS*
Micro Less than 5 Less than 5 Less than 5

employees employees employees
Between 5 & 19 Between 5 & 50 Between 5 & 19

Small
employees employees employees
Between 20 & Between 51 & 150 Between 20 & 50

Medium
50 employees employees employees
*MRS : Manufacturing-Related Services

** ICT : Information and Communications Technology
Annual Sales Turnover
Based on annual sales turnover :
Manufacturing
Primary Services Sector
(including Agro-
Agriculture (including ICT**)
Based) & MRS*
Less than Less than Less than

Micro
RM200,000 RM250,000 RM200,000
Between Between Between

Small RM200,000 & less RM250,000 & less RM200,000 & less
than RM1 million than RM10 million than RM1 million
Between RM1 Between RM10 Between RM1

Medium million & RM5 million & RM25 million & RM5
million million million
*MRS : Manufacturing-Related Services
** ICT : Information and Communications Technology
Characteristics of a Small Business
• Ownership
• Management
• Resources
• Organisational Structure
• Flexibility of Change
MANAGEMENT FUNCTIONS
Planning
a management function
that involves defining
goals, establish strategies
for achieving those goals,
and developing plans to
integrate and coordinate
activities.
PURPOSES OF PLANNING
• Planning provides direction
• Planning reduces uncertainty
• Planning minimizes waste and
redundancy
• Planning sets the standards used in
controlling.
Goals and Plans
• Goals
– are desired out comes for individuals,
groups, or entire organizations.
– Goals = objectives
– provide the direction for all management decisions
and form the criteria against which actual work
accomplishments can be measured.
Goals and Plans
• Plans
– documents that outline how goals are going to be
met and that typically describe resource allocations,
schedules, and other necessary actions to accomplish
the goals.
Levels of Goals/Plans
Types of Goals (1)
Stated goals
• official statements of what an organization says, and
what it wants its stakeholders to believe.
• can be found in an
– organization's charter
– annual report
• made by managers-are often conflicting and excessively
influenced by what society believes organizations
should do.
• Examples: Faster revenue growth, wider profit margins,
bigger market share.
Types of Goals (2)
Real goals
• those goals that an organisation actually pursues –
observe what organizational members are doing.
Actions define priorities.
• For example, universities that proclaim the goal of
limiting class size, facilitating close students- faculty
relations, and actively involving students in the
learning process and then put them into lecture classes
of 300 or more are pretty common.
Characteristics of well design
goals
S-Specific
M-Measurable
A-Achievable
R-Realistic
T-Time Frame
Types Of Plans
Types Of Plans: Breadth
• Strategic plans
– apply to the entire organization, establish the organization's
overall goals, and seek to position the organization in terms
of its environment.
– tend to cover a longer time frame and a broader view of the
organization.
– include the formulation of goals
• Operational plans
– specify the details of how the overall goals are to be
achieved.
– define ways to achieve the goals.
– tend to cover short time periods-monthly, weekly, and day-
to-day.
Types Of Plans: Time frame
long-term plans
• with the time frame beyond three years.
short-term plans
• covering one year or less.
Types Of Plans: Specificity
Specific plans
• clearly defined and leave no room for interpretation.
• They have clearly defined objectives. There's no
ambiguity and no problem with misunderstanding.
Directional plans
• flexible plans that set out general guidelines.
• provide focus but don't lock managers into specific
goals or courses of action.
Types Of Plans: Frequency of use
Single-use plan
• a one-time plan specifically designed to meet the
needs of a unique situation.
• Example: a single-use plan to guide the creation and
implementation of the new service.
Standing plans
• ongoing plans that provide guidance for activities
performed repeatedly.
• policies, rules, and procedures.
• Example: the safety and health policy developed by
the university.
Organising
a management function that
involves determining what
tasks are to be done, who is to
do them, how the tasks are to
be grouped, who report to
whom, and where decisions are
to be made
The Purposes of Organising
• Divides work to be done into specific jobs and
departments
• Assign tasks and responsibilities associated with
individual jobs
• Coordinates diverse organizational tasks
• Clusters jobs into units
• Establishes relationships among individuals, groups
and departments
• Establishes formal lines of authority
• Allocated and deploys organizational resources
Organisational Structure
• the formal arrangement of jobs within an

organisation.
• arranged in levels that represent the management
hierarchy.
represent the division
of work and the way in
which tasks are CEO
departmentalised
represent the
chain of
command
Department Department Department
Key Elements of Organisational Design
1. Work Specialisation
2. Departmentalisation
3. Chain Of Command
4. Span Of Control
5. Centralisation And Decentralisation
6. Formalisation
Key Element 1: Work specialisation
• describe the degree to which activities in an

organisation are divided into separate jobs.
• an entire job is not done by one individual but
instead is broken down into steps, and each
step is completed by a different person.
• Individual employees specialise in doing part
of an activity.
Key Element 2: Departmentalisation
• the basis on which work or individuals are

group into manageable units called department
• department a unique group of resources

established by management to perform some
organisational task.
Departmentalisation
• Functional
• Product
• Geographical
• Process
• Customer
Functional departmentalisation
• group jobs by functions performed.
• Can be used in all types of organisation.
• Advantages
– Efficiencies from putting together similar specialties and
people with common skills, knowledge and orientations
– Coordination within functional area
– In-depth specialisation
• Disadvantages
– Poor communication across functional areas
– Limited view of organisational areas
Functional (cont.)
Plant Manager
Manager,
Manager, Manager, Manager, Manager,
Human
Engineering Accounting Manufacturing Purchasing
Resources
Product departmentalisation
• Group jobs by product line
• Each major product is placed under the authority of a
manager who’s responsible for everything to do with
that product line.
• Advantages
– Allows specialisation in particular products and services
– Managers can become experts in their industry
– Closer to customers
• Disadvantages
– Duplication of functions
– Limited view of organisational goals
Product (cont.)
Managing
Director
Executive Director Executive Director Executive Director

Children Wear Men’s Wear Women’s Wear
Geographical departmentalisation
• Groups jobs on the basis of territory or

geography such as southern, northern, western,
eastern, state or country.
• Advantages
– More effective and efficient handling of specific
regional issues that arise
– Serve needs of unique geographic markets better
• Disadvantages
– Can feel isolated from other organisational areas
Geographical (cont.)
Vice President
For Sales
Sales Director, Sales Director,

Sales Director,
Sales Director, Southern Midwestern
Eastern Region
Western Region Region Region
Process departmentalisation
• Groups jobs on the basis of product or customer

flow.
• Work activities follow a natural processing flow
of products or even of customers.
• Advantages
– More efficient flow of work activities
• Disadvantages
– Can be used with certain types of products
Process (cont.)
Plant
Superintendent
Manager,
Manager,
Manager, Manager, Manager, Manager, Inspection and
Planning and
Sawing Assembling Lacquering Finishing Shipping
Milling
Department Department and Sanding Department Department
Department
Customer departmentalisation
• Groups jobs on the basis of customers who have

common needs or problems that can be met by
having specialist for each.
• Advantages
– Customers’ needs and problems can be met by
specialists
• Disadvantages
– Limited view of organisational goals.
Customer (cont.)
Director of Sales
Manager, Manager,
Manager,
Wholesale Government
Retail Accounts
Accounts Accounts
Key Elements 3: Chain of command
• the continuous line of authority that extends

from upper organisational levels to the lowest
levels and clarifies who reports to whom.
• It helps employees answer questions such as
– “Who do I go if I have a problem?”
– “To whom am I responsible?”
Key Element 3: Chain of command
• Authority - formal and legitimate right of a

manager to make decisions, issue orders, and
allocate resources to achieve organisationally
desired outcomes.
• Responsibility - duty to perform any assigned
duties.
• Unity of command –the management principle
that each person should report to only one
manager.
Key Element 4: Span Of Control
• the number of employees a manager can
efficiently and effectively manage
Key Element 4: Span Of Control
Factor Increase Span of Decrease Span of
Control when… Control when…
1. Similarity of 1. similar functions 1. different functions
functions
2. Geographic 2. physically close 2. physically distant
contiguity
3. Complexity of 3. simple tasks 3. complex tasks
functions
4. Coordination 4. need little 4. need much
coordination coordination
5. Planning 5. manager spends 5. manager spends
little time planning much time planning
Key Element 5: Centralised and
decentralised
• Centralised organisation
– Decision are made by limited number of persons at
the top
• Decentralised organisation
– Operating decision are made throughout the
organisation.
Key Element 6: Formalisation
• jobs within the organisation are standardised

and the extent to which employee behavior is
guided by rules and procedures.
• highly formalised job = then workers has little
discretion as to what is to be done, when it's to
be done, and how he or she does it.
• resulting in consistent and uniform output.
Leading
is a management function that
involves motivating
subordinates, influence
individuals or teams as they
work, selecting the most
effective communication
channel, or dealing in any way
with employee behavior issues
Studying Leadership
Leadership Motivation
Traits and Skills
• Traits: the unchanging characteristics of a

person that predisposes someone to act in a
particular way.
– Leaders Have Drive
– Leaders Have Honesty and Integrity
– Leaders Are Motivated to Lead
– Leaders Have Self-Confidence
– Leaders Have Cognitive Ability
– The Leader Knows the Business
Traits and Skills
• Skills : the ability to do something in an effective
manner.
Technical skills • job know-how, knowledge of the industry
and its particular process, machinery and
problems.
Interpersonal • Knowledge of human behaviour, the ability
skills to work effectively with individuals and
groups.
Conceptual skills • ideas, plans, and directives.
• the ability to see the organization as a whole
and to understand the overall effect of
several departments.
Power and Leadership
Power is the potential ability to influence the behavior of
others.
• Legitimate Power
develop from a formal management position in an
organization and the authority granted to it.
• Reward Power
results from the authority to reward others
• Coercive Power
develop from the authority to punish or recommend
punishment
Power and Leadership
• Expert Power
stems from special knowledge or skill in the tasks
performed by subordinates.
• Referent Power
results from characteristics that command subordinates
identification with respect and admiration for, and desire
to emulate the leader.
Motivation
• the set of processes that Factors that affect

work motivation:
moves a person toward a
goal.
• motivated behaviors are Individual Job
voluntary choices differences characteristics
controlled by the
individual employee.
organisational
practices
Maslow's Hierarchy of Needs
Maslow's Hierarchy of Needs
Level I Physiological •most basic human needs.
needs •They include food, water, and comfort
Level II Safety needs •the desires for security and stability,
•to feel safe from harm
Level III Social needs • the desires for affiliation.
• They include friendship and belonging.
• satisfy employees' social needs through sports
teams, parties, and celebrations.
Level IV Esteem needs • the desires for self-respect and respect or
recognition from others.
• Show appreciation
Level V Self- • the desires for self-fulfillment and the realisation
actualisation of the individual's full potential.
needs
Controlling
is a management function
that involves monitoring
actual performance,
comparing actual to
standard, and taking action
id necessary.
Importance of Controls
• Critical link back to planning

• Empowering employees
• Protecting the workplace
Controlling Process
Controlling Process: Step 1 (Measure)
a) How We Measure
Advantages Disadvantages
Personal o Get firsthand knowledge o Subject to personal biases
Observations o Information isn’t filtered o Time-consuming
o Intensive coverage of work o Obstructive
activities
Statistical Reports o Easy to visualize o Provide limited

o Effective for showing information
relationships o Ignore subjective factors
Controlling Process: Step 1 (Measure)
a) How We Measure
Advantages Disadvantages
Oral Reports o Fast way to get information o Information is filtered
o Allow for verbal and nonverbal o Information can’t be
feedback documented
Written Reports o Comprehensive o Take more time to prepare

o Formal
o Easy to file and retrieve
Controlling Process: Step 1 -Measure
b) What We Measure
– Examples
• Production manager • Marketing managers:
(paper tablet – percentage of market held
manufacturer) – average dollar per sale,
– quantity of paper tablets – number of customer visits
produced per day and per per salesperson
labor-hour – number of customer
– scrap rate impressions per advertising
– percent of rejects returned medium.
by customers.
Controlling Process: Step 2 -
Comparing
• determines the degree of variation between actual

performance and the standard
• to determine the acceptable range of variation.
• A standard is the level of activity established to serve
as a model for evaluating organisational performance.
Controlling Process: Step 3-Taking
Managerial Action
a) Correct Actual Performance
• Examples: changing strategy, structure, compensation
practices, or training programs; redesigning jobs; or
firing employees.
Controlling Process: Step 3-Taking
Managerial Action
• A manager who decides to correct actual performance
has to make another decision:
Immediate corrective Basic corrective action

action corrects problems looks at how and why
at once to get performance has deviated
performance back on and then proceeds to
track. correct the source of
deviation.
Controlling Process: Step 3- Taking
Managerial Action
b) Revise the Standard
• It is possible that the variance was a result of an
unrealistic standard; that is, the goal may have been
too high or too low.
Tools for Controlling Performance

Chap 2 Business MGT - 10

Încărcat de

Informații document

Descriere originală:

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Chap 2 Business MGT - 10

Încărcat de

Drepturi de autor:

Formate disponibile

CHAPTER 2

• applied by all Government Ministries and

SMEs can be grouped into :

These groupings are decided based on EITHER

Micro Less than 5 Less than 5 Less than 5

Between 5 & 19 Between 5 & 50 Between 5 & 19

Between 20 & Between 51 & 150 Between 20 & 50

*MRS : Manufacturing-Related Services

Less than Less than Less than

Between Between Between

Between RM1 Between RM10 Between RM1

• the formal arrangement of jobs within an

Department Department Department

• describe the degree to which activities in an

• the basis on which work or individuals are

• department a unique group of resources

Executive Director Executive Director Executive Director

• Groups jobs on the basis of territory or

Sales Director, Sales Director,

• Groups jobs on the basis of product or customer

• Groups jobs on the basis of customers who have

• the continuous line of authority that extends

• Authority - formal and legitimate right of a

• jobs within the organisation are standardised

• Traits: the unchanging characteristics of a

• the set of processes that Factors that affect

• Critical link back to planning

Statistical Reports o Easy to visualize o Provide limited

Written Reports o Comprehensive o Take more time to prepare

• determines the degree of variation between actual

Immediate corrective Basic corrective action

S-ar putea să vă placă și