Principles of Business Management

[Pages:18]Principles of Business

Management 2nd Edition

Edited by

JOHAN STRYDOM

Contributors Marolee Beaumont Smith

Andreas de Beer Maggie Holtzhausen

Jerome Kiley Danie Nel

Cecile Nieuwenhuizen Theuns Oosthuizen Sharon Rudansky-Kloppers Rigard Steenkamp

OXFORD

UNIVERSITY PRESS SOUTHERN AFRICA

Table of contents

Preface

xxv

PART i INTRODUCTION TO BUSINESS

MANAGEMENT

i

I Business and its challenges

3

Johan Strydom

Purpose of this chapter

3

Learning outcomes

3

1.1 Introduction

7..

4

1.2 What is a business?

4

1.2.1 Business and profits

5

1.3 The economic principle

6

1.4 The factors of production

7

1.4.1 Natural resources

7

1.4.2 Human resources

8

1.4.3 Capital

9

1.4.4 Entrepreneurship

10

1.5 The economic systems in which businesses operate

11

1.6 South African businesses and the changing social contract 12

1.6.1 The expectations of business-related stakeholders

14

1.6.2 The expectations of opinion-related stakeholders

15

1.6.3 The expectations of public-related stakeholders

15

1.6.4 Corporate social responsibility

16

1.6.5 The current social contract of a South African business . 17

1.7 The parts of this book

19

Case study: Shoprite 2010 annual report -- how the

Shoprite group is interacting with its stakeholders

21

Summary

23

Glossary

24

Multiple-choice questions

26

References and end-notes

27

Answers to multiple-choice questions

28

PRINCIPLES OF BUSINESS MANAGEMENT

2 The business environment

29

Jerome Kiley

Purpose of this chapter

29

Learning outcomes

29

2.1 Introduction

29

2.2 The systems approach

30

2.3 The organisational environment

31

2.3.1 The micro-environment

33

2.3.2 The market environment

34

2.3.3 The macro-environment

36

2.3.3.1 The natural environment

37

2.3.3.2 The technological environment

38

2.3.3.3 The social environment

39

2.3.3.4 The political environment

40

2.3.3.5 The economic environment

40

2.3.3.6 The international environment

42

2.4 Conducting a SWOT analysis (study of the parts) of a

business's environment

43

Case study: Pick n Pay

45

Summary

47

Glossary

48

Multiple-choice questions

:

50

References and end-notes

51

Answers to multiple-choice questions

52

PART 2 MANAGEMENT TASKS

53

3 The task of management

55

Theuns FJ Oosthuizen

Purpose of this chapter

55

Learning outcomes

55

3.1 Introduction

55

3.2 What is management?

56

3.3 What is a manager?

56

3.4 Organisations in which managers work

57

3.5 Levels of management

58

3.5.1 Top management

59

3.5.2 Middle management

59

3.5.3 First-level management

59

\

3.6 Management tasks

;

3.6.1 Planning

3.6.2 Organising

3.6.3 Leading

3.6.4 Motivating

3.6.5 Controlling

3.7 Areas of managements

3.7.1 Production and operations managers

3.7.2 Logistics managers

3.7.3 Information-technology managers

3.7.4 Financial managers

3.7.5 Human-resources managers

3.7.6 Marketing managers

3.7.7 Public-relations managers

3.7.8 Administrative managers

3.8 Management skills

3.8.1 Conceptual skills

3.8.2 Human skills

3.8.3 Technical skills

3.9 Management competencies

3.10 Management roles

3.10.1 Decisional roles

3.10.2 Interpersonal roles

3.10.3 Informational roles

Case study: Toys for Africa

Summary

Glossary

Multiple-choice questions

References and end-notes

Answers to multiple-choice questions

Planning Sharon Rudansky-Kloppers Purpose of this chapter Learning outcomes 4.1 Introduction 4.2 Why planning is necessary 4.3 The planning process 4.3.1 Setting goals

Table of contents

60 60 61 61 62 62 63 63 63 63 64 64 64 64 64 65 65 65 66 66 67 67 68 69 70 71 71 74 74 75

76

76 76 76 77 77 79

PRINCIPLES OF B U S I N E S S M A N A G E M E N T

f

A

4.3. i. i The mission statement of the organisation

79

4.3.1.2 The environment of the organisation

82

4.3.1.3 The values of management

82

4.3.1.4 The experience of management

82

4.3.2 A hierarchy of goals

82

4.3.2..1 The mission statement

82

4.3.2.2 The strategic goals

83

4.3.2.3 The tactical goals

84

4.3.2.4 The operational goals

84

4.3.3 Criteria for setting effective goals

84

4.3.4 Developing action plans

86

4.3.4.1 Strategic plans

87

4.3.4.2 Tactical plans

87

4.3.4.3 Operational plans

87

4.4 Implementing the selected plans

87

4.5 The full circle

88

Case study: Medical scheme takes action

88

Summary

89

Glossary

90

Multiple-choice questions

91

References and end-notes

92

Answers to multiple-choice questions

92

5 Organising

93

Andreas de Beer

Purpose of this chapter

93

Learning outcomes

93

5.1 Introduction

93

5.2 The organising process

94

5.2.1 Gathering information

94

5.2.2 Identifying and analysing activities

94

5.2.3 Classifying activities

94

5.2.4 Allocating staff

94

5.2.5 Assigning authority and responsibility

95

5.2.6 Facilitating (encouraging) work

95

5.3 Principles (basic rules) of organising

95

5.3.1 Co-ordination

95

5.3.1.1 The chain of command

95

5.3.1.2 Unity of command

95

Table of contents

5.3.1.3 Span of control

96

5.3.2 Authority

97

5.3.2.1 Line authority

97

5.3.2.2 Staff authority .77

97

5.3.2.3 Line-and-staff authority

97

5.3.2.4 Functional authority

97

5.3.2.5 Project authority

97

5.3.3 Responsibility

99

5.3.4 Accountability

99

5.3.5 Delegation

.-

,

99

5.3.5.1 Centralisation and decentralisation

100

5.3.6 Specialisation

100

5.3.7 Divisionalisation

101

5.3.7.1 A divisional structure based on business functions 101

5.3.7.2 A divisional structure based on products

102

5.3.7.3 A divisional structure based on geographic location

(place on the earth)

103

5.3.7.4 A divisional structure based on projects

103

5.3.7.5 A divisional structure based on consumer or

client needs

103

5.4 Organisational structures

106

5.4.1 The line organisational structure

106

5.4.2 The line-and-staff organisational structure

106

5.4.3 The functional organisational structure

107

5.4.4 The divisional organisational structure

108

5.4.5 The matrix organisational structure

108

5.4.6 The teams organisational structure

108

5.4.7 The network organisational structure

no

5.5 The changing organisation

no

Case study:Jonny Happy Feet Limited

in

Summary

113

Glossary

113

Multiple-choice questions

114

References and end-notes

115

Answers to multiple-choice questions

115

6 Leading

116

Maggie Holtzhausen

Purpose of this chapter

116

PRINCIPLES OF BUSINESS MANAGEMENT

f

:

Learning outcomes

116

6.1 Introduction

116

6.2 The three components of leadership

118

6.2.1 An interactive framework of leadership

118

6.3 Leadership versus management

119

6.4 A brief history of leadership theories

121

6.4.1 Earlier leadership theories

121

6.4.1.1 Trait theories

122

6.4.1.2 Behaviour theories

122

6.4.1.3 Situational approaches

122

6.4.2 Newer leadership approaches

122

6.4.2.1 A re-birth of earlier trait theories

123

6.4.2.2 A move towards leadership-follower approaches 124

6.4.2.3 Other leadership perspectives (theories)

125

6.5 Leadership tools

126

6.6 Leadership and diversity

127

6.6.1 Leadership and gender

127

6.6.2 Leadership and culture

127

6.6.3 Integrating diverse leadership styles

129

6.7 Worldwide leadership trends

129

Case study: Me, myself as manager and leader

130

Summary

131

Glossary

'.

131

Multiple-choice questions

132

References and end-notes

133

Answers to multiple-choice questions

135

7 Motivating

136

Jerome Kiley

Purpose of this chapter

136

Learning outcomes

136

7.1 Introduction

137

7.2 What is motivation?

138

7.3 The needs and expectations of employees

138

7.3.1 Individual differences

138

7.3.2 The needs of individuals

139

7.3.2.1 Maslow's hierarchy of needs

139

7.3.2.2 Alderfer's ERG Theory

140

7.3.2.3 McClelland's Needs Theory

141

Table of contents

7.3.3 The expectations of employees

142

7.3.3.1 Expectancy Theory

142

7.3.3.2 Equity Theory

143

7.4 Managing employee's motivation

143

7.4.1 Directly influencing employee behaviour

143

7.4.1.1 Goal-setting Theory

143

7.4.1.2 Behavioural modification (change)

144

7.4.2 Facilitating (helping to bring about) employees'

good performance

146

7.4.2.1 The quality-of-work-life approach

146

7.4.2.2 Herzberg's Two-Factor Theory

147

7.4.2.3 The job characteristics model

147

7.2.4.2 McGregor's Theory X and Theory Y, and the self-

fulfilling prophecy

148

7.5 Monitoring employee morale

149

7.6 Practical motivational strategies

149

Case study: SA's top employers as voted for by students

150

Summary

152

Glossary

153

Multiple-choice questions

156

References and end-notes

:

157

Answers to multiple-choice questions

158

8 Controlling

159

Theuns FJ Oosthuizen

Purpose of this chapter

159

Learning outcomes

159

8.1 Introduction

159

8.2 Types of control

160

8.2.1 Pre-control

160

8.2.2 Concurrent control

161

8.2.3 Post-control

162

8.3 Sources of control

163

8.3.1 Individual self-control

163

8.3.2 Group control

164

8.3.3 Organisational control

164

8.3.4 Stakeholder control

164

8.4 The control process

164

8.4.1 Developing performance standards

165

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