TOPIC FOUR: BUSINESS MANAGEMENT

The Meaning and Importance of Management

OBJECTIVE; Explain the meaning and importance of management.
Meaning.
Management – Act of allocating resources to accomplish desired goals and objectives
efficiently and effectively. Management comprises planning, organizing, staffing,
leading or directing, and controlling an organization (a group of one or more people or
entities) or effort for the purpose of accomplishing a goal. Or
Is the organization and coordination of the activities of a business in order to achieve
defined objectives.
Business Management are the activities associated with running a company, such as
controlling, leading, monitoring, organizing, and planning.
Importance of Management
Importance of management in business organisation.
Management is concerned with acquiring maximum prosperity with a minimum effort.
Management is essential wherever group efforts are required to be directed towards
achievement of common goals. The following points further highlight the significance
of management.

Achievements of group goals: Management makes group efforts more effective.

The group as a whole cannot realize its objectives unless and until there is
mutual co-operation and co-ordination among the members of the group.
Management creates team work and team spirit in an organization by
developing a sound organization structure. It brings the human and material
resources together and motivates the people for the achievement of the goals of
the organization.

Optimum utilization of resources: Management always concentrates on

achieving the objectives of the enterprise. The available resources of production
are put to use in such a way that all sort of wastage and inefficiencies are
reduced to a minimum. Workers are motivated to put in their best performance
by the inspiring leadership. Managers create and maintain an environment
conducive to highest efficiency and performance. Through the optimum use of
available resources, management accelerates the process of economic growth.

Minimization of cost: In the modern era of intense competition, every business

enterprise must minimize the cost of production and distribution. Only those
concerns can survive in the market, which can produce goods of better quality at
the minimum cost. A study of the principles of management helps in knowing

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 certain techniques used for reducing costs. These techniques are production
control, budgetary control, cost control, financial control, material control, etc.

Change and growth: A business enterprise operates in a constantly changing

environment. Changes in business environment create uncertainties and risk and
also produce opportunities for growth. An enterprise has to change and adjust
itself in the everchanging environment. Many of the giant business corporations
of today had a humble beginning and grew continuously through effective
management.

Efficient and smooth running of business: Management ensures efficient and

smooth running of business, through better planning, sound organization and
effective control of the various factors of production.

Higher profits: Profits can be enhanced/increased in any enterprise either by

increasing the sales revenue or reducing costs. To increase the sales revenue is
beyond the control of an enterprise. Management by decreasing costs increases
its profits and thus provides opportunities for future growth and development.

Provide innovation: Management gives new ideas, imagination and visions to

an enterprise.

Social benefits: Management is useful not only to the business firms but to the
society as a whole. It improves the standard of living of the people through
higher production and more efficient use of scarce resources. By establishing
cordial relations between different social groups, management promotes peace
and prosperity in society.

Useful for developing countries: Management has to play a more important role
in developing countries, like Tanzania. In such countries, the productivity is low
and the resources are limited. It has been rightly observed, "There are no under-
developed countries. They are only under-managed ones".

Establishes sound organization structure: Management establishes proper

organization structure and avoids conflict between the superiors and
subordinates. This helps in the development of spirit of cooperation and mutual
understanding, and a friendly/suitable/appropriate environment is provided in
the organization.
Conclusion: The significance of management in business activities is relatively greater. The
inputs of labour, capital and raw material never become productive without the catalyst of

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management. It is now widely recognized that management is an important factor of growth of
any country

FUNCTIONS OF MANAGEMENT
Planning. Planning involves defining a goal and determining the most effective
course of action needed to reach that goal. Typically, planning involves
flexibility, as the planner must coordinate with all levels of management and
leadership in the organization. In other words, Planning is concerned with
'what', 'how, and 'when' of performance. It is deciding in the present about the
future objectives and the courses of action for their achievement. It thus involves:
Determination of long and short-range objectives;
Development of strategies and courses of actions to be followed for the
achievement of these objectives; and
Formulation of policies, procedures, and rules, etc., for the implementation of
strategies, and plans.
Importance of planning
To coordinate activities so as to meet organizational goal
Gives direction of the future activities of the organization.
Smoothen operation of organization activities

Organizing/organization. Organizing involves identification of activities

required for the achievement of enterprise objectives and implementation of
plans; grouping of activities into jobs; assignment of these jobs and activities to
departments and individuals; delegation of responsibility and authority for
performance, and provision for vertical and horizontal coordination of activities.
Every manager has to decide what activities have to be undertaken in his
department or section for the achievement of the goals entrusted to him.

The organizing function of leadership controls the overall structure of the company.
The organizational structure is the foundation of a company; without this structure, the
day-to-day operation of the business becomes difficult and unsuccessful.

Organizing thus involves the following sub-functions:

Identification of activities required for the achievement of objectives and

implementation of plans.

Grouping the activities so as to create self-contained jobs.

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 Assignment of jobs to employees.

Delegation of authority so as to enable them to perform their jobs and to

command the resources needed for their performance.

Establishment of a network of coordinating relationships.

developing the organizational structure and chain of command within the company.
Staffing. The staffing function of management controls all recruitment and
personnel needs of the organization. The main purpose of staffing is to hire the
right people for the right jobs to achieve the objectives of the organization. Since
the efficiency and effectiveness of an organization significantly depends on the
quality of its personnel and since it is one of the primary functions of
management to achieve qualified and trained people to fill various positions,
staffing has been recognized as a distinct function of management. Staffing
involves more than just recruitment; it also encompasses/comprises several
subfunctions:
Manpower planning which involves determination of the number and the kind
of personnel required.
Selection of the most suitable persons for the jobs under consideration.
Transfers, promotions, termination and layoff.
Training and development of employees.
Recruitment for attracting adequate number of potential employees to seek jobs
in the enterprise.
Placement, induction and orientation/Performance appraisals.

# Without the staffing function, the business would fail because the business would
not be properly staffed to meet its goals.

Directing: Directing is the function of leading the employees to perform

efficiently, and contribute their optimum to the achievement of organizational
objectives. Jobs assigned to subordinates have to be explained and clarified, they
have to be provided guidance in job performance and they are to be motivated to
contribute their optimum performance with zeal and enthusiasm. The function of
directing thus involves the following sub-functions

Communication (the process of information flow from one person to another and
across the organization)

Motivation (the act of stimulating the people so that they give their best to the
organisation)

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 Leadership (the process by which a manager guides and Influences the work of
his subordinates)

# If the manager fails in leading the people towards better performance, any amount
of planning and organizing, however effective they are, may not help the
organisation.
Controlling. The controlling function of management is useful for ensuring all
other functions of the organization are in place and are operating successfully.
Controlling involves establishing performance standards and monitoring the
output of employees to ensure each employee’s performance meets those
standards. The controlling process often leads to the identification of situations
and problems that need to be addressed by creating new performance standards.
The level of performance affects the success of all aspects of the organization.

Thus, controlling involves the following process;

Measurement of performance against predetermined goals.

Identification of deviations from these goals.

Corrective action to rectify deviations.

Coordinating. The coordinating function of leadership controls all the

organizing, planning and staffing activities of the company and ensures all
activities function together for the good of the organization. Coordinating
typically takes place in meetings and other planning sessions with the
department heads of the company to ensure all departments are on the same
page in terms of objectives and goals. Coordinating involves communication,
supervision and direction by management.

In other words, Coordinating is the function of establishing such relationships among

various parts of the organization that they all together pull in the direction of
organizational objectives. It is thus the process of tying together all the organizational
decisions, operations, activities and efforts so as to achieve unity of action for the
accomplishment of organizational objectives. Coordination, as a management function,
involves the following sub-functions:

Clear definition of authority-responsibility relationships

Unity of direction

Unity of command

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 Effective communication

Effective leadership
Conclusion: It may be pointed out that although management functions have been
discussed in a particular sequence-planning, organizing, staffing, directing, controlling
and coordinating – they are not performed in a sequential order. Management is an
integral process and it is difficult to put its functions neatly in separate boxes.
Management functions tend to coalesce/combine/work together/unite, and it
sometimes becomes difficult to separate one from the other. For example, when a
production manager is discussing work problems with one of his subordinates, it is
difficult to say whether he is guiding, developing or communicating, or doing all these
things simultaneously. Moreover, managers often perform more than one function
simultaneously.
PRINCIPLES OF MANAGEMENT
Management principles are guidelines for the decisions and actions of managers.
1. Division of Work - According to this principle the whole work is divided into
small tasks. The specialization of the workforce according to the skills of a
person, creating specific personal and professional development within the
labour force and therefore increasing productivity; leads to specialization which
increases the efficiency of labour.
2. Authority and Responsibility - This is the issue of commands followed by
responsibility for their consequences. Authority means the right of a superior to
give enhance order to his subordinates; responsibility means obligation for
performance.
3. Discipline - It is obedience, proper conduct in relation to others, respect of
authority, peer workers etc. It is essential for the smooth functioning of all
organizations.
4. Unity of Command - This principle states that each subordinate should receive
orders and be accountable to one and only one superior. If an employee receives
orders from more than one superior, it is likely to create confusion and conflict.
5. Unity of Direction - All related activities should be put under one group, there
should be one plan of action for them, and they should be under the control of
one manager.
6. Subordination of Individual Interest to Mutual Interest - The management
must put aside personal considerations and put company objectives firstly.
Therefore, the interests of goals of the organization must prevail over the
personal interests of individuals.
7. Remuneration - Workers must be paid sufficiently as this is a chief motivation of
employees and therefore greatly influences productivity. The quantum and
methods of remuneration payable should be fair, reasonable and rewarding of
effort.
8. The Degree of Centralization - The amount of power wielded with the central
management depends on company size. Centralization implies the concentration
of decision-making authority at the top management.

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 9. Scalar Chain- This principle states that; ina n organisation there must be
someone with overall authority.
10. Line of Authority - This refers to the chain of superiors ranging from top
management to the lowest rank. The principle suggests that there should be a
clear line of authority from top to bottom linking all managers at all levels.
11. Order - Social order ensures the fluid operation of a company through
authoritative procedure. Material order ensures safety and efficiency in the
workplace. Order should be acceptable and under the rules of the company.
12. Equity - Employees must be treated kindly, and justice must be enacted to
ensure a just workplace. Managers should be fair and impartial when dealing
with employees, giving equal attention towards all employees.
13. Stability of Tenure of Personnel - Stability of tenure of personnel is a principle
stating that in order for an organization to run smoothly, personnel (especially
managerial personnel) must not frequently enter and exit the organization.
14. Initiative - Using the initiative of employees can add strength and new ideas to
an organization. Initiative on the part of employees is a source of strength for
organization because it provides new and better ideas. Employees are likely to
take greater interest in the functioning of the organization.

BUSINESS ETHICS
Ethics refers to a set of values, principles and rules of acceptable behaviour, which
influence how individuals, groups of people and society in general behave.
Business ethics is a form of applied ethics or professional ethics, that examines ethical
principles and moral or ethical problems that can arise in a business environment.
Alternatively, Business ethics refers to acceptable behavior that should be displayed by
business people.
Business ethics helps businesses in deciding what actions are right or wrong depending
on circumstances.
Therefore, business ethics is a key tool used to decide what is right or what is wrong in
business transactions/practices.
Ethical issues-are the moral concerns that arise in the course of carrying out business.
In centrally, unethical issues are immoral concerns that arise in the course of carrying
out business.

COMPONENTS OF BUSINESS ETHICS

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 These can further be discussed as follows
1. Respect As an entrepreneur building a business, you need to respect yourself and
surround yourself with people you can respect.
2. Honor: Good people are a fundamental part of good ethics. They are also great
ambassadors for doing things right. Management should give special attention to strong
performers and people who exemplify the spirit of the organization. Most companies
recognize top achievers and producers.
3. Integrity: ethics binds business management to not lie, steal, or cheat. As a business
undertaker, make word your bond and always stand by your word. When you are
wrong, own up to it and make good on the deal. Treat others, as you would want to be
treated.
4. Customer focus: This is a component of business ethics whereby a company focus on
producing/offering what customers are willing to pay for.
5. Passion: Great organizations are comprised of people who have a passion for what they
are doing. They are excited, driven, and believe that their work and efforts can make a
difference
6. Persistence: People in organizations have the will to persist. They will keep working even
when results are not what they hoped, or when customers refuse to buy.
7. Trustworthiness and Honesty. Trustworthiness is a key element of business ethics
because the client must have deep trust in your company. It also refers to the client’s trust
that has to an organization, you are truthful, fair and display honorable business
practices.
Honesty refers to making honest commitments to clients. Always commit to what you
can achieve and the timeline required. Do not make empty promises to a client.

THE NEED FOR ETHICAL ISSUES IN BUSINESS

Why we need Ethical issues in business?
i. Ensures no discrimination in business-Business ethics ensures there is no
discrimination in areas such as recruitment (hiring), promotion, training,
remuneration and assignment of duties. These processes should be objective and
based on merit, qualification, experience and ability.
-It ensures that everybody is given an equal opportunity (has equal chance) and is not
discriminated against because of their sex, religion, ethnicity, social background etc.
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 ii. Ensures protection of the environment/Helps in avoiding environmental
pollution-Business ethics prohibits business units from carrying out activities that
may cause pollution and degradation of the environment. Environmental
degradation may be caused by human activities such as logging and unplanned
cultivation. Pollution may be caused by activities such as:
a. Dumping effluents from production units into water masses thereby causing
water pollution. Water pollution is disastrous to human health and to aquatic
animals.
b. Emitting carbon dioxide and other gases into the atmosphere causing air
pollution
c. Damping of waste material on the land surface causing solid waste pollution this
creates terrible sites to watch and breeding places for dangerous insects such as
flies.
d. Releasing carbon dioxide and other gases into the atmosphere thereby causing
air pollution
e. Channeling effluents from factories to water masses thereby causing water
pollution. Such pollution can be harmful to human health and aquatic animals.
f. Disposing of waste material such, as paper and scrap metal on the land surface
thereby causing solid waste pollution.
g. Producing too loud noise which might be harmful to human beings’ hearings
h. Emitting too strong light that may be harmful to our eyesight.
iii. Ensures fair play in competition-Ethics ensures that businesses do not engage in
unfair practices while competing with others. These practices may include:
➢ destroying a competitor’s product or promotional tools such as billboards
➢ buying and destroying competitor’s products before they reach the market
➢ giving false information about a competitor’s product
iv. Helps in avoiding environmental degradation-Ethics ensures that the physical
environment is not degraded through business activities. Such activities may
include:
 Deforestation through logging
 Unplanned cultivation.
v. Ensures rights of employees are upheld-Ethics ensures that the employer does not
violate the rights of employees especially as laid out in their terms and conditions of
employment. Such rights include payment of dues in time.
vi. Eliminates use of unfair means of achieving business objectives-Ethics ensures
that the business operations are carried out in a professional way e.g. it is unethical
to give or receive a bribe in order to win a business contract. Similarly, it is not
ethical to hoard goods awaiting their prices to go up.
vii. Avoids consumer exploitation-Ethics ensures that consumers are not exploited by
the business. Consumers may be exploited through practices such as:
a) Overcharging them
b) False advertisement
c) Selling poor quality goods and services
d) Selling wrong quantities
e) Selling harmful commodities.

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