In the theory of management, the organization has two principal aspects One relates to the establishment of so-called lines of responsibility, drawn usually. In the form of an organization chart that designates the executives of the business, from the president to the foreperson or department head, and specifies the functions for which they are responsible. The other prinCIpal aspect relates to the development of a staff of qualified executives. It is obvious to me that planning in management has three principal aspects.
One is the establishment of broad basic policies With respect to production; sales, the purchase of equipment, materials, and supplies and accounting, the second aspect relates to the implementation of these policies by departments. The third relates to the establishment of standards of work in all departments. Direction is concerned primarily. With supervision and guidance by the executive in authority; in this connection, a distinction is generally made between top management, which is essentially administrative in nature, and operative management, which is concerned with the direct execution of policy.
Control involves the use of records and reports to compare performance With the established standards for work, I have read that management as just defined dates from the latter part of the 19th century. A notable impetus to its evolution was provided by the American engineer Frederick Taylor who developed techniques for analyzing the operations involved in the production and for setting standards for a day’s work. Industrialists to other phases of business, including the employment of qualified workers and wage incentive programs either to replace or to supplement the piecework system that had previously prevailed, adapted the techniques originally devised by Taylor, Industrial management experts who succeeded Taylor have applied his techniques to a wider range of business problems.
Among the leading successors are the Austrian-American management consultant and educator Peter Drucker and the American economist, and writer. and diplomat John Kenneth Galbraith. I have a great deal of experience in several management positions. Obviously, managers are superVIse monitor, and coordinate the different areas of industry.
For example, financial managers locus on generating and reinvesting finance capital. Human resource managers help recruit people With desirable skills and place them where they are most needed. Marketing managers help sell final goods and services to customers. Labor refers to workers as a group. Workers in an industry sell their own labor in exchange for an income they negotiate With the management. While these negotiations may occur on an individual basis, many wage negotiations occur between employees who have organized into a group called a labor union (formed to improve the members‘ wages and working conditions) and managers. This group wage and benefitrnegotiating process Is called collective bargaining. The relationship between labor and management can involve substantial conflict. While labor often requests higher wages to improve its standard of livmg, management may resist because wage increases may cut into industry profits. Managers can use the threat of Iayoffs(releasing employees) in order to keep wage increases down, while workers can go on strike (Withhold their labor) if their demands are not met.
Specialists in the field known as labor relations study how workers organize themselves, as well as the subsequent interactions between management and labor. In most developed countries, labor relations changed significantly in the second half of the 20th century. While approximately 25 percent of Us workers belonged to unions in 1955,15 percent belonged to unions in 1997. An important distinction between labor and other inputs. such as capital, machinery, and equipment. is that employees have the ability to develop innovative solutions to production problems and to learn new SKINS. The collection of skills and knowledge that employees possess is called human capital. The production process can support or undermine the development of worker skills and knowledge. If workers are inhibited from developing new skills and are required to repeat simple tasks. the process is said to be de-skilling.
At the end of the 20th century, many industries were trying to boost productivity by helping employees to expand their skills. lwould like to add a little history to the management definition. During much of the 20th century. most manufacturing employees Worked on the assembly line, a system in which. Work in process passes progressively from one group of Workers to the next until the finished product emerges at the end of the line, In this system, each worker specializes in a specific task, or in part of the production process. along the assembly line and performs that task repeatedly, This type of mass production. characterized by high iob specralization, is known as Fordism. This term is derived from the assembly line process developed for building automobiles by the early Ford Motor Company, Fordist production processes increase the speed of work and production. However, they depend on endless repetition of highly specialized tasks. so the workers often do not learn a productive range of skills Thus. Fordist production processes may limit an industry’s flexibility in adapting to changing markets.
In the late 20th century, many industries replaced Fordism with new management practices that allow workers to have more of a say in decisions. as well as greater iob flexibility. These new management techniques. known as postrFordism. deremphasize assigning specific tasks to individuals and instead emphasize cooperative decision-making, skills-building, and teamwork. and custom production PostrFordist management techniques are now used in many forms In a Wide range of industries, including the motor vehicle. computer software, and machinertool industries. Business. an organized approach to provrding customers with the goods and services they want. The word business also refers to an organization that provrdes these goods and services. Most businesses seek to make a prolit-—that is, they aim to achieve revenues that exceed the costs of operating the business. Prominent examples of for—profit businesses include Mitsubishi Group, General Motors Corporations, and Royal Dutch/Shell Group. However, some businesses only eek to earn enough to cover their operating costs.
Commonly called nonprofits, these organizations are primarily nongovernmental service providers. Examples of nonprofit businesses include such organizations as social serVice agencies. foundations. advocacy groups. and many hospitals. Business plays a Vital role in the life and culture of countries With industrial and postindustrial (server and information-based) freer market economies such as the United States. In freermarket systems, prices and wages are primarily determined by competition, not by governments. In the United States, for example. many people buy and sell goods and servtces as their primary occupation. In 2001 American companies sold in excess of $10 trillion worth of goods and services. Businesses provide just about anything consumers want or need. including basic necessities such as food and housing, luxuries such as whirlpool baths and Wide-screen televisions, and even personal services such as caring lor children and finding companionship. There are many types of businesses in a free-market economy. The three most common are manufacturing firms, merchandisers and servtce enterprises.
Manufacturing firms produce a Wide range of products, Large manufacturers include producers of airplanes, cars, computers, and furniture. Many manufacturing firms construct only parts rather than complete, finished products, These suppliers are usually smaller manufacturing firms, which supply parts and components to larger firms. The larger firms then assemble final products for market to consumers. For example, suppliers provide many of the components in personal computers, automobiles, and home appliances to large firms that create the finished or end products. These larger end-product manufacturers are often also responsible for marketing and distributing the products. The advantage that large businesses have in being able to efficiently and inexpensively control any parts of a production process is known as economics of scale. But small manufacturing firms may work best for producing cenain types of finished products. Smaller end-product firms are common in the food industry and among artisan trades such as custom cabinetry.
Merchandisers are businesses that help move goods through a channel of distributionwthat Is, the route goods take in reaching the consumer. Merchandisers may be involved in wholesaling or retailing, or sometimes both. A wholesaler is a merchandiser who purchases goods and then sells them to buyers, typically retailers, for the purpose of resale. A retailer is a merchandiser who sells goods to consumers. A wholesaler often purchases products in large quantities and then sells smaller quantitres of each product to retailers who are unable to either buy or stock large amounts of the product. Wholesalers operate somewhat like large, end-product manufacturing firms. benefiting lrom economies of scale. For example. a wholesaler might purchase 5.000 pairs of work gloves and then sell 100 pairs to 50 different retailers. Some large American discount chains. such as Kmart Corporation and Wal-Mart Stores, Inc, serve as their own wholesalers.
These companies go directly to factories and other manufacturing outlets, buy In large amounts, and then warehouse and ship the goods to their stores. The division between retailing and wholesaling is now being blurred by new technologies that allow retailing to become an economy of scale. Telephone and computer communications allow retailers to serve far greater numbers of customers in a given span of time than is possible in face-to-face interactions between a consumer and a retail salesperson. Computer networks such as the Internet, because they do not require any physical communication between salespeople and customers, allow a nearly unlimited capacity for sales interactions known as 24/7–that is, the Internet site can be open for a transaction 24 hours a day, seven days a week and for as many transactions as the network can handle. For example, a typical transaction to purchase a pair of shoes at a shoe store may take a halfrhour from browsing to fitting, to the transaction with a cashier.
But a customer can purchase a pair of shoes through a computer interface With a retailer in a matter of seconds Computer technology also prowdes retailers With another economy of scale through the ability to sell goods Without opening any physical stores. often referred to as electronic commerce or ercommerce. Retailers that provide goods entirely through Internet transactions do not incur the expense of building so-called brick-and-mortar stores or the expense of maintaining them. Service enterprises include many kinds of businesses. Examples include dry cleaners, shoe repair stores, barbershops, restaurants, ski resorts, hospitals, and hotels. In many cases service enterprises are moderately small because they do not have mechanized services and limit service to only as many individuals as they can accommodate at one time. For example, a waiter may be able to provide good service to four tables at once, but With five or more tables, customer service will suffer.
I have learned that in recent years the number of serVIce enterprises in wealthier freer market economies has grown rapidly, and spending on serVIces now accounts for a significant percentage of all spending. By the late 19905, private serVIces accounted for more than 21 percent of us. spending. Wealthier nations have developed postindustrial economies, where entertainment and recreation businesses have become more important than most raw material extraction such as the mining of mineral ores and some manufacturing industries in terms of creating jobs and stimulating economic growth. Many of these industries have moved to developing nations, especially with the rise of large multinational corporations. As postindustrial economies have accumulated wealth, they have come to support systems of leisure, in which people are willing to pay others to do things for them. In the United States, vast numbers of people work rigid schedules for long hours in indoor offices, stores, and factories. Many employers pay high enough wages so that employees can afford to balance their work schedules With purchased recreation.
People in the United States. for example, support thrivmg travel, theme park, resort, and recreational sport businesses. I know that here are a number of different forms of business ownership. These include sole proprietorships, partnerships, corporations jomt ventures. and syndicates, I have been in several of these different forms of ownership at one time or another. The most common form of ownership is a sole proprietorship–that is, a business owned by one individual. At the beginning of the let century, there were more than 17 million sole proprietorships in the United States. These businesses have the advantage of being easy to set up and to dissolve because few laws exist to regulate them. Proprietors, as owners, also maintain direct control ol their businesses and own all their profits. On the other hand, owners of proprietorships are personally responsible for all business debts and, because they are constrained by the limits of their personal financial resources, they may find it difficult to expand or increase their profits.
For those reasons, sole proprietorships tend to be small, primarily service and retail businesses. A partnership is an association of two or more people who operate a business as covowners. There are different types of partners. A general partner is active in the operation of a business and is liable for all of its debts. In small businesses with only two or three owners, all typically will be general partners A limited partner, by contrast, invests in a business but is not involved in its daily operations. Partnerships, like sole proprietorships, are relatively easy to establish. Furthermore. partners can pool financial resources to fund expansion and can divide their duties and responsibilities according to personal expertise and abilities. For example, one partner may be very good at selling, while another has a knack for maintaining good Iinancial records. As With sole proprietorships, however, partnerships may entail substantial financial risks, as all of the general partners are liable for the debts of the business.
And unlike proprietorships, disagreements among partners can harm partnership businesses. lam very aware that a corporation is a legal entity that exists as distinct from the individuals who control and invest in it, As a result. a corporation can continue indefinitely through complete changes of ownership, leadership, and staffing. Current owners can sell their holdings to other individuals or if they die, have their assets transferred to heirs. This is possible because a corporation creates shares of stock that are sold to investors. One strength of the corporate business structure is that stockholders have limited liability, as opposed to the unlimited liability of general partners, so they cannot lose more than their initial investment. Investors may also easily buy and sell stocks of public corporations through stock exchanges. By offering stock publicly, a corporation enables anyone with some money to buy the stock and become a partrowner of the company. As a result, corporations can more easily raise capital for business expansion than can sole proprietorships and most partnerships.
I know that investors control a corporation through the election of a managing body, known as a board of directors. In a large corporation. investors collectively decide who will oversee the operation of the enterprise In turn, the board chooses a president, who decides on the key company personnel and helps formulate company strategy. Many corporations are highly successful business organizations. With profits far exceeding those of many sole proprietorships and partnerships. However. they traditionally have higher tax burdens than other kinds of businesses. Also, the fees involved in creating and organizing a corporation can be expensive. In joint ventures and syndicates, individuals or businesses cooperate to create a single product or sen/ice package, A joint venture is a partnership agreement in which two or more indwidualr or group run businesses Join together to carry out a single business process. For example, U, S.rbased General Motors and Toyota Motor Corporation, based in Japan. have a joint venture called New United Motor Manufacturing, Inc., created for the purpose of producing cars in California.
A syndicate is an association of individuals or corporations formed to conduct a specific financial transaction such as buying a business. Quite often syndicates are created for the purpose of buying sports franchises. For example, the Miami Heat basketball team and the New York Yankees baseball team are each owned by syndicates of individuals, Each member of these syndicates is also involved in the operation of other businesses. A variety of operations keep businesses, especially large corporations, running efficiently and effectively. Common business operation dIVIsions include production, marketing, finance and human resource management. Production includes those activities involved in conceptualizing, designing, and creating products and services. in recent years there have been dramatic changes in the way goods are produced. Today. computers help monitor, control and even perform work. Flexible, high-tech machines can do in minutes what it used to take people hours to accomplish. Another important development has been the trend toward Just-in-time inventory.
The word inventory refers to the amount of goods a business keeps available for wholesale or retail. In just-in-time inventory, the firm stocks only what it needs for the next day or two. Many businesses rely on fast, global computer communications to allow them to respond quickly to changes in consumer demand. Inventories are thus minimized and businesses can invest more in product research, development. and marketing, I comprehend that marketing is the process of identifying the goods and serVices that consumers need and want and prowding those goods and sen/ices at the right price, place, and time. Businesses develop marketing strategies by conducting research to determine what products and serwces potential customers think they would like to be able to purchase. Firms also promote their products and services through such techniques as advertising and personalized sales, which serve to inform potential customers and motivate them to purchase.
Firms that market products for which there is always some demand, such as foods and household goods, often advertise if they face competition from other firms marketing similar products. Such products rarely need to be sold lace-to-face. On the other hand. firms that market products and services that buyers will want to see. use, or better understand before buying. often rely on personalized sales. Expensive and durable goodswsuch as automobiles. electronics. or furniturerrbenefit from personalized sales. as do legal financial. and accounting sen/ices. Finance involves the management of money. All businesses must have enough capital on hand to pay their bills. and for-proﬁt businesses seek extra capital to expand their operations. In some cases. they raise long-term capital by selling ownership in the company. Other common financial activities include granting. monitoring. and collecting on credit or loans and ensuring that customers pay bills on time.
The financial division of any business must also establish a good working relationship with a bank. This is particularly important when a business wants to obtain a loan. I understand that businesses rely on effective human resource management (HRM) to ensure that they hire and keep good employees. and that they are able to respond to conflicts between workers and management. HRM specialists initially determine the number and type of employees that a business Will need over its first lew years of operation, They are then responsible for recruiting new employees to replace those who leave and for filling newly created posrtions. A business’s HRM division also trains or arranges for the training of its staff to encourage worker productivny. efficiency. and satisfaction. and to promote the overall success of the business. Finally human resource managers create workers’ compensation plans and benefit packages for employees. I have successfully held the role ol various business management positions.
In summary I believe the term Business Management usually relers to the activities involved in enhancing leaders‘. managers‘ and supervisors’ abilities to plan and organize lead and control the organization and its members, Consequently. many View the term “management development” to include executive development (developing executives). leadership development (developing leaders) managerial development (developing managers) and superi/isoral development (developing superVIsors). As mentioned above. there are people who assert a strong difference between “leading” and “managing”. These people often refer to leadership development (developing skills in leadership) as apart from management (and managerial) development (developing skills in planning. organizing and controlling).