BUSINESS MANAGEMENT

TRAINING IN BUSINESS MANAGEMENT

Welcome to business and management.

INTRODUCTION

You have chosen to study a dynamic subject that will stretch your knowledge and challenge your
ideas. This is course, which is designed to engage you with the key concepts, models, debates and
problems in the study of business and management.

The subject of business and management offers an ideal opportunity to develop this academic and
professional approach, as a wide variety of groups, individuals and organizations offer diverse
opinions and theories regarding the workings of business and successful management.

Definition: business is any enterprise which makes, distributes or provides

any service which other members of the community need and are willing to

pay for it”. Urwick and Hunt

Alternatively:

A Business is any legal entity that may be owned by one person as a

Sole Proprietor or by two or more people thereby creating a

Partnership or Corporation.

 The economic growth of an individual /group of people/country depends on

the act of engaging oneself into some form of exchange which creates

economic activity to the great multitude.

 Business economically refers to the state of work, effort and acts by which

humans or people employee variety of resources with an intended purpose of creating an economic
production growth of wealth

 Hence it can be alluded to the fact that business is connected to the state of
producing or purchase and sale of goods and services with the main objective of realizing profit.

The main aim of many business operation is to make a profit either in

the short or long term.

A Business Activity does not only involve trading activities i.e. buying

and selling, but can include other forms of business activities like:

 Banking Manufacturing Educational

 Insurance Providing services Internet services

 Transportation both passenger and cargo, etc…

Business: is a fundamental and universal feature of human existence and yet the concept of business
is difficult to define with any degree of precision. Most business activities take place within an
organizational context and reveal a wide variety of organizations ranging from the small local
supplier of a single good or service to a multibillion dollar multinational corporation.

BUSINESS GOALS

Profit – Making profit is the primary goal of any business enterprise.

 Growth – Business should grow in all directions over a period of time.

 Power – Business houses have vast resources at its command. These resources

confer enormous economic and political power.

 Employee satisfaction and development - Business is people. Caring for employee satisfaction and
providing for

their development has been one of the objectives of enlightened

business enterprises.

 Market Leadership – To earn a niche for oneself in the market, innovation is the key factor.

 Challenging – Business offers vast scope and poses formidable challenges.

 Joy of creation – It is through business strategies new ideas and innovations are given a shape and
are converted into useful products and services.
 Service to society – Business is a part of society and has several obligations towards it.

 Quality Products and Services – Persistent quality of products earns brand loyalty, a vital ingredient
of

success.

CHARACTERISTICS OF BUSINESS

Business been an economic activity has some features and characteristics

which sets it apart from non-business activity and the following are some

important characteristics of business.

1. PRODUCTION OR ACQUISITION OF GOODS

 The business activity of any business is trading.

 The goods may be produced, manufactured or procured.

 Business is either to produce manufacture or procure and then to supply for a price to those
who are in need of the goods produced, manufactured or procured.

2. PROFIT THE BASIC MOTIVE OF BUSINESS

 Profit is an indicator of success and failure of business.

 It is the difference between income and expenses of the business

 Profit= Income - Expenses.

 The primary goal of a business is usually to obtain the highest possible level of

profit through the production and sale of goods and services.

 It is a return on investment. profit acts as a driving force behind all business

activities.

3. RISK AND UNCERTAINTIES

 Risk is defined as the effect of uncertainty arising on the objectives of the

business. Risk is associated with every business.

 Business is exposed to two types of risks. Insurable and Non-Insurable

 Insurable Risk is one that can be predicted e.g. taxes, change in the volume of

expected sales, cost of supplies and equipment, overhead costs, salaries and cost of goods and
services offered etc.

 Non-Insurable risk is one that form of risk that cannot be easily be predictable e.g. changes
in trends and tastes of customers, impact of the local economy on

customer base and any unexpected action taken by your competitors.

 The management and calculation of risk is vital to ensure the success and failure of the
business. Insurance and risk management minimize the risk associated with the business.

4. DEALING IN GOODS AND SERVICES

 Business refers to goods and services dealt with a view to supply to those who need them
and are ready to make payment for the same

 Every business deals with some form of product (goods or services)

 The goods may either be consumers’ goods (cloth, books, electronics

appliances, medicine etc.) or producer goods (machinery, tools etc. ) or

services (courier or transport services etc.).

5. REGULAR DEALINGS

 One of important characteristics of business is regularity and recurrences.

Business is not a single operation.

 A single operation would never constitute a business. It should a regular and continuous
entity.

 Recurrence of dealing is a must to constitute a business.

6. CREATIVE AND DYNAMIC

 Modern business is creative and dynamic in nature.

 Business firm has to come out with creative ideas, approaches and concepts

for production and distribution of goods and services.

 It means to bring things in fresh, new and inventive way

 One has to be innovative because the business operates under constantly

charging of the macro environmental factors known as PESTEL.

SELF ASSESSMENT

1. What is Business Management?

2. List 2 goals of a Business

TRAINING IN BUSINESS MANAGEMENT Module 02

Business organization

The term business organization describes how businesses are structured and how their structure
helps them meet their goals. In general, businesses are designed to focus on either generating profit
or improving society. ... The basic categories of business organization are sole proprietorship,
partnership, and corporation

Scope of business

 Scope refers to the combined objectives and requirements needed to complete a project.
The term is often used in project management. Properly defining the scope of a project allows
managers to estimate costs and the time required to finish the project. That's what makes scope
management such an important part of business—it saves both time and money

Nature of bussiness

 The nature of business refers to the overall activities of a company in their quest to create,
market, and sell a service or a product. Essentially, the main focus for what a company does in a
particular sector or industry is known as that company’s nature of business

Forms of business

1. Sole Proprietorship
 A sole proprietorship is a business owned by only one person. It is easy to set-up and is the
least costly among all forms of ownership. The owner faces unlimited liability; meaning, the creditors
of the business may go after the personal assets of the owner if the business cannot pay them.

Forms Of Business Organization

 One of the first decisions that you’ll have to make as a manager is

how your business should be structured or how you should

restructure your business

 Any business form as its own advantages and disadvantages hence in

establishing a form of business it calls for making the right decision

for your business.

 All businesses must adopt some legal configuration that defines the

rights and liabilities of participants in the business’s ownership,

control, personal liability, lifespan and financial structure. The

form of business determines which income tax return form to file

and the company’s and owner’s legal liabilities.

 In general we can simply say that there are three forms of business

1.sole proprietorship

2.partinership

 3.corporations

SOLE PROPRIETORSHIP

 This is a business owned by only one person who provides all the

capital needed to set up and manage the organization and takes

profit as his reward.

Main features of Sole Proprietorship are as follows;

 It is a business owned by only one person who provides all the needed capital and manages
it alone.

 The owner of the business makes all the business decisions. Receives

the profits that the business earns, and bears the financial responsibility for losses

 It is the simplest and most common type of business enterprise. The sole proprietorship, as
its name implies, is a

business owned and managed by one individual.

 The business tends to be small in size although it is not always so.

 This type of business enterprise is not confined to retail trade.

 The owner determines how many employees to hire, when they

should be rewarded or penalized, what products to produce, how

they are to be marketed. The owner of the business need not to seek

ones permission on decision making.

 The basic limitation upon decision-making is that the owner must observe the law and
honour contracts. Otherwise, the owner is free to make wise or foolish decisions.

Advantages Of Sole Proprietorship

 The business is easy to set up, control and

manage.

 It requires a small amount of capital to set up;

as a result many people are able to run this

type of business. Least costly form of ownership to begin

 The owner makes independent and quick

operational decisions. Total decision-making authority

 Business affairs are kept private except when

completing Tax returns.

 The law provides that the sole proprietor

shall pay tax. No special legal restrictions

 The owner enjoys the profit incentive

Disadvantages Of Sole Proprietorship

 The personal assets are at risk because the

business has unlimited liability.

 It is more difficult for a Sole Trader to source

outside finance because in most cases they

lack collateral. Limited access to capital

 The sole trader is entirely responsible for all

aspects of the business (Marketing,

Production, Finance etc…) Limited skills and capabilities

 Difficulty of continuing business after death or

disability and bankruptcy of the proprietor. Lack of continuity of the business

 The Sole Trader is responsible for all the debts

of the business.

THE PARTENERSHIP

 A partnership exists when at least two, and usually not more than twenty (20)

persons agree to carry on a business together. The Partnership Act, 1890, defines

a partnership as a relationship which subsists between persons carrying on

business in common with a view to profit.

 Partnership is an association of two or more people who co-own a

business for the purpose of making a profit.

 The co-owners (partners) share the business’s assets, liabilities, and

profits according to the terms of a previously established partnership agreement (if one exists).

 Like the individual proprietorship, partnerships are easy to establish.

There are two distinct types of Partnerships, namely General Partnership and Limited Partnership.

 General partnership is the most common type of partnership that involves all partners working
together on a daily basis sharing all privileges, benefits, and

liabilities of the partnership.

Partners who have unlimited liability for the partnership’s debts and usually take an active role in
managing the business.

 Limited partnership is the type of partnership in which some partners

contribute in raising capital but do not take part in the management of the

business. A partnership composed of at least one general

partner and at least one limited partner. This type of a partner is sometimes referred to as a “Silent
Partner.”

 A partnership Agreement is a document specifying and regulating the

running of the business. It contains the duties, responsibilities, rights, penalties

and general functions of partners towards the business. Most partnerships are based upon an
agreement that spells out the

ownership of shares and duties of each partner.

Advantages Of Partnership

 Few formalities are required to set up this type of business.

 Sharing of partners’ knowledge and complementary skills.

 Sharing of general management of the business.

 No obligations to publish Accounts and affairs of the business to the public.

 Sharing of profits (or losses) of

the business.

 larger pool of capital and flexibility

 Ability to attract limited partners.

 Minimal government regulation

Disadvantages

 Each partner is liable for the debts of the partnership, even if caused

by the actions of other partners. Unlimited liability of at least one partner

 Personality clashes can affect the business greatly if not checked. Potential for personality
and authority conflicts

corporations

 The death or bankruptcy of one partner will automatically dissolve the partnership unless
otherwise provided for in a partnership agreement.

 Less operational management. Difficulty in disposing of partnership interest

SELF ASSESSMENT

1. What is Business Organization? Ans: Is the structured organisation that focuses to meet their
goals.

2. Name 3 forms of businesses Ans: sole proprietorship, Partnership and corporation

3. What is a partnership? Ans: is when two or more persons combine their resources to form a
business in view of making profits, share risks and losses.
TRAINING IN BUSINESS MANAGEMENT Module 03

CORPORATIONS

• The corporation is the most complex of the three major forms of

business ownership.

• It is a separate entity apart from its owners and may engage in

business, make contracts, sue and be sued, own property, and pay

taxes.

• A corporation is a form of business enterprise that is owned by a

large number of shareholders. The corporation has the legal status

of a fictional individual and is authorized by law to act as a single

person.

• The shareholders elect a board of directors that appoints the

management of the corporation, usually headed by a president.

Management is charged with the actual operation of the corporation

Unlike the sole proprietorship and partnerships that can be established with minimal paperwork, a
corporate charter is required to set up a corporation. The laws of each state are different, but
typically, for a fee, corporations can be established (incorporated) and can become legal “persons”
subject to the laws of that state.

Limited Companies

A Company may be defined as an association where two or more people come together for a
common business goal.

A Company has what is termed as “Corporate Personality”.

It has all the rights that are in some cases as those of a human individual and is always treated by
Law as a “Separate person”.
 When a Limited Company fails, its members or shareholders are only required to meet their debts
up to the nominal value of their shares. This is the limited liability of persons investing in business
ventures. Limited companies are either private or public.

PRIVATE LIMITED COMPANY

 A private company is any registered company formed and owned by individuals other than the
public.

 Its name will always end with the word Limited abbreviated as Ltd.

 The minimum number of shareholders required for a private company is two (2) and can have
shareholders up to fifty (50).

Advantages of a Private Limited Company

 It is a legally separate entity or personality from the owners.

 The liability of the Shareholders is limited, so their personal assets are not at risk.

 Shareholders have direct control over the company’s affairs.

 It can easily raise more capital by selling shares though not publicly.

 The company has sure continuity, as it does not depend on one person.

Disadvantages of a Private Company

 There are too many legal formalities to comply with.

 Accounts should be audited annually hence the need to engage services of External Auditors.

 The company is less flexible compared to a sole proprietorship.

 It is a costly exercise to form a Limited liability than that of a sole proprietorship. Public Limited
Company

A public company states in its Articles of Association that it is a Public Company mostly abbreviated
as Plc. This type of company is one that advertises inviting the public to buy shares in it. It also lists
its shares on the stock exchange market.
Characteristics of a Public Limited Company

 It is a company formed by at least two (2) persons without a maximum number.

 The shareholders or members of the company elect a Board of Directors to control it.

 The day to day running of the business is in the hands of the Managing Director.

 The Board of Directors deal with the Managing Director on Policy issues.

 It is a separate legal entity and is registered with the Registrar of Companies.

Advantages of a Public Limited Company

 The company is a separate legal entity and as such the liability of shareholders is limited to the
amount of shares they hold in the company.

 It can raise more capital by the sale of shares on the stock exchange (i.e. LUSE).

 It can employ professionals in such fields like Marketing, Accounting,

Human Resource Management etc, which makes it more efficient.

 Its size makes it possible for the company to buy modern equipment and technology.

 It has assured continuity.

Disadvantages of a Public Limited Company

 It has to comply with many regulations set to protect Employers, Employees and other
Stakeholders.

 There is little secrecy, as its accounts must be published annually. This is a legal requirement.

 Decisions tend to be delayed because of the amount of administration or bureaucracy involved

such as those that require the Board’s approval.

 The risk of takeover bids by other companies because shares of a public limited company can easily
be bought on the stock exchange
SELF ASSESSMENT:

1. What is a corporation and list two advantages of it? Ans: is a business enterprise that is owned by
a large number of shareholders and two advantages are that it protects investors from liability of a
business and it attracts capital with the sale of stokes and bonds.

2. What is a private limited company? Ans: is any registered company formed and owned by
individuals other than the public.

3. Why is a company termed as a corporate personality”? Ans: the rights which are in some cases of
those of human individual and are always treated by law as a separate person.

TRAINING IN BUSINESS MANAGEMENT Module 04.

Management

What is management?

Management can be defined as the process of working with and through other people in order to
achieve organizational objectives within a changing environment efficiently and effectively.

Also, management is the coordination and administration of tasks to achieve a goal. Such
administration activities include setting the organization’s strategy and coordinating the efforts of
staff to accomplish these objectives through the application of available resources. Management can
also refer to the seniority structure of staff members within an organization.

To be an effective manager, you’ll need to develop a set of skills, including planning, communication,
organization and leadership. You will also need extensive knowledge of the company’s goals and
how to direct employees, sales and other operations to accomplish them.

Five basic operations of a manager

In general, there are five basic functions of a manager:

 Setting objectives
 Organizing

 Motivating the team

 Devising systems of measurement

 Developing people

1. Setting objectives

Setting and achieving objectives is the primary way a manager accomplishes and maintains success.
They must also be able to convey them to their staff or employees in a compelling manner. For
instance, a restaurant manager could state they want to improve service times and remind
employees that faster service increases revenue and tips.

2. Organizing

Managers evaluate the type of work, divide it into achievable tasks and effectively delegate it to
staff. Organization consists of a series of relationships among individual staff as well as departments
or entities inside the organization. It is the manager’s responsibility to ensure that these individuals
and entities work together in harmony, which includes motivating staff members and departments
to stay on task. A good manager is skilled at building interpersonal relationships among their team
members and can troubleshoot when members confuse their encounter challenges.

Organization also requires a manager to establish relationships of authority among their team
members. Maximizing organizational arrangements can help businesses enhance the company’s
efficiency in the market, reduce the costs of business and improve productivity.

3. Motivating the team

In addition to the tasks of organization and delegation, motivation includes having the skills to
handle different types of personalities in a team. An effective manager must know how to form and
lead successful teams and know how to galvanize team members around a cause.

4. Devising systems of measurement

Managers need to set targets or key performance indicators that the team aims for and then
generate ways to measure whether their team is on track to meet those goals. Because it can be
challenging to come up with measurable ways of understanding performance, managers must often
be creative and thoughtful. However, like the other functions of management, measurement is
critical to improving business performance.

5. Developing people

In addition to leading their team toward a goal and measuring their progress along the way, good
managers invest in their staff’s development. Managers can, for example, work with their team to
help them set goals to move up in their careers.

Managers must have leadership skills to use these five operations successfully. They are responsible
for coaching their team members by helping them recognize their strengths and weaknesses and
improve their performance. Different managers may have different styles of leadership. Regardless
of their style, managers should develop their leadership skills to be an effective supervisor

LEVELS OF MANAGEMENT

• 1. Top level management (–board of directors, md, owners, chief executives)

• To analyse, evaluate and deal with the environmental forces

• To establish overall long term goals and broad policies of the company including the master budget

• To appoint departmental and other key executives

• To represent the company to the outside world

• To coordinate the activities and efforts of different department

2. Middle level management –sales executives, production executives, production executives etc.

• To interpret and explain the policies framed by top management

• To compile and issue detailed instruction regarding operations

• To cooperate among themselves so as to integrate various parts of the division or a department

• To motivate supervisory personnel to work for organizational goals

• To develop and train supervisory and operative personnel.

3) Supervisory / operating / lower level management -(superintendents, branch managers, general

foremen).
• To plan day to day production within the goals lay down by higher

Authority

• To assign jobs to workers and to make arrangement for their training

And development

• To supervise and control workers and to maintain personal contact

With them

SELF ASSESSMENT

1. Define Management Ans: is the process of working with and through other people in order to
achieve organizational objectives within a changing environment efficiently and effectively.

2. List 2 basic operations of a manager Ans: Setting Objectives and Organising.

3. Mention 3 levels of Management Ans: To analyse, evaluate and deal with the environmental
forces, represent the company to the outside world and coordinate the activities and efforts of
different department.

TRAINING IN BUSINESS MANAGEMENT

Functions of Management

Management in some form or another is an integral part of living and is essential wherever human
efforts are to be undertaken to achieve desired objectives. The basic ingredients of management are
always at play, whether we manage our lives or business.

“Management is a set of principles relating to the functions of planning, organizing, directing, and
controlling, and the applications of these principles in harnessing physical, financial, human, and
informational resources efficiently and effectively to achieve organizational goals”.

Management is essential for an organized life and necessary to run all types of organizations.
Managing life means getting things done to achieve life’s objectives and managing an organization
means getting things done with and through other people to achieve its objectives.
There are basically five primary functions of management. These are:

1. Planning

2. Organizing

3. Staffing

4. Directing

5. Controlling

Five Functions of Management

1. Planning

Planning is future-oriented and determines an organization’s direction. It is a rational and systematic

way of making decisions today that will affect the future of the company. It is a kind of organized
foresight as well as corrective hindsight. It involves predicting of the future as well as attempting to
control the events. It involves the ability to foresee the effects of current actions in the long run in
the future.

Peter Drucker has defined planning as follows:

“Planning is the continuous process of making present entrepreneurial decisions systematically and
with best possible knowledge of their futurity, organizing systematically the efforts needed to carry
out these decisions and measuring the results of these decisions against the expectations through
organized and systematic feedback”.

2. Organizing

Organizing requires a formal structure of authority and the direction and flow of such authority
through which work subdivisions are defined, arranged and coordinated so that each part relates to
the other part in a united and coherent manner so as to attain the prescribed objectives.
According to Henry Fayol, “To organize a business is to provide it with everything useful or its
functioning i.e. raw material, tools, capital and personnel’s”.

It follows, therefore, that the function of organizing is concerned with:

1. Identifying the tasks that must be performed and grouping them whenever necessary

2. Assigning these tasks to the personnel while defining their authority and responsibility.

3. Delegating this authority to these employees

4. Establishing a relationship between authority and responsibility

5. Coordinating these activities

3. Staffing

Staffing is the function of hiring and retaining a suitable work-force for the enterprise both at
managerial as well as non-managerial levels. It involves the process of recruiting, training,
developing, compensating and evaluating employees and maintaining this workforce with proper
incentives and motivations. Since the human element is the most vital factor in the process of
management, it is important to recruit the right personnel.

According to Kootz & O’Donnell, “Managerial function of staffing involves manning the organization
structure through the proper and effective selection, appraisal & development of personnel to fill
the roles designed in the structure”.

4. Directing

The directing function is concerned with leadership, communication, motivation, and supervision so
that the employees perform their activities in the most efficient manner possible, in order to achieve
the desired goals.

The leadership element involves issuing of instructions and guiding the subordinates about
procedures and methods.

The communication must be open both ways so that the information can be passed on to the
subordinates and the feedback received from them.
Motivation is very important since highly motivated people show excellent performance with less
direction from superiors.

Supervising subordinates would lead to continuous progress reports as well as assure the superiors
that the directions are being properly carried out

5. Controlling

The function of control consists of those activities that are undertaken to ensure that the events do
not deviate from the pre-arranged plans. The activities consist of establishing standards for work
performance, measuring performance and comparing it to these set standards and taking corrective
actions as and when needed, to correct any deviations.

According to Koontz & O’Donnell, “Controlling is the measurement & correction of performance
activities of subordinates in order to make sure that the enterprise objectives and plans desired to
obtain them as being accomplished”.

The controlling function involves:

a. Establishment of standard performance.

b. Measurement of actual performance.

c. Measuring actual performance with the pre-determined standard and finding out the deviations.

d. Taking corrective action.

SELF ASSESSMENT:

1. Mention the 5 basic function of management

2. What is planning as a function of management?

3. What is staffing?

4. Why is motivating important