BUSINESS MANAGEMENT 621 Year 2 Semester

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BUSINESS ADMINISTRATION, MANAGEMENT &

COMMERCIAL SCIENCES

BUSINESS MANAGEMENT 621

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BUSINESS ADMINISTRATION, MANAGEMENT

& COMMERCIAL SCIENCES

STUDY GUIDE

MODULE: BUSINESS MANAGEMENT 621

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nd

_SEMESTER)

PC Training & Business College (Pty) Ltd Registration Number: 2000/000757/07

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10. Specimen Assignment Cover Sheet 12

11. Work Readiness Programme 14

12. Work Integrated Learning 15

SECTION B: BUSINESS MANAGEMENT 621 (1ST_SEMESTER)

TOPIC 1 : NATURE OF MANAGEMENT 15

1.1 Introduction 16

1.2 Role of business organisations 16

1.3 Components of the management process 17

1.4 Definition of management 19

1.5 Different levels and kinds of management in the organisation 21

1.6 Areas of management 24

1.7 The role distribution of managers 27

1.8 Managerial skills and competencies at various managerial levels 29

1.9 Management and organisational performance 34

1.10 The scope of management 35

TOPIC 2:THE EVOLUTION OF MANAGEMENT THEORY 41

2.1 Introduction 42

2.2 Why study management theory 42

2.3 Understanding the different management theories 43

2.4 The theories of management 43

2.5 Contemporary approaches 47

2.6 Total Quality Management 49

2.7 Current and near-future management realities 51

2.8 Summary 52

TOPIC 3: MANAGING IN A CHANGING ENVIRONMENT 55

3.1 Introduction 55

3.2 Concepts of systems theory 56

3.3 The composition of the management/business environment 57

3.4 The internal or micro-environment 58

3.5 The market/task environment 58

3.6 The macro-environment 59

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3.8 Was in which management can prepare for environmental changes 59

3.9 Summary 51

TOPIC 4: STRATEGIC PLANNING 62

4.1 Introduction 64

4.2 Strategic planning, what it encompasses 64

4.3 The strategic planning process 69

4.4 Grand strategies 93

4.5 Growth strategies 94

4.6 Decline strategies 98

4.7 The selection of Grand strategies 102

4.8 Factors affection strategic choice 110

TOPIC 5: PLANNING 111

5.1 Introduction 110

5.2 The nature and importance of planning 114

5.3 Kinds of organisational plan 117

5.4 The time – frame for planning 120

5.5 Steps in the planning process 122

5.6 Barriers of effective planning 125

5.7 Planning tools 127

5.8 Goal formulation 132

5.9 The process of goal setting 135

5.10 Techniques for goal setting 137

TOPIC 6: MANAGERIAL DECISION MAKING 145

6.2 The relationship between problems, problem solving, & decision making 146

6.3 Types of managerial decision-making 147

6.4 Levels of decision making 150

6.5 Decision-making process 151

6.6 Group decision making 151

6.7 Techniques for improving group decision making 151

6.8 Tools for decision making 152

6.9 Summary 152

TOPIC 7: INFORMATION MANAGEMENT 153

7.2 The link between decision making and information 154

7.3 What is an information system 155

7.4 Characteristic of useful information 157

7.5 Organising information system 158

7.6 Classification of information systems 159

7.7 Developing an information system 166

TOPIC 8 ORGANISING AND DELEGATION 173

8.2 Organising, organisation, and organisational structure 174

8.3 Reasons for organising 174

8.4 The process of organising 174

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8.6 Authority 174

8.7 Organisational design 177

8.8 Job design 178

8.9 Delegation 179

Addendum 621 (A): Case study for Tutorial Discussion 183

Addendum 621 (B): Assignment Questions 184

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SECTION A: PREFACE

1.

WELCOME

Welcome to the Department of Business, Economics Management Sciences at Richfield Graduate Institute of Technology. We trust you will find the contents and learning outcomes of this module both interesting and insightful as you begin your academic journey and eventually your career in the business world.

This section of the study guide is intended to orientate you to the module before the commencement of formal lectures.

The following lectures will focus on the common study units described:

SECTION A: WELCOME & ORIENTATION

Study unit 1: Orientation Programme

Introducing academic staff to the learners by academic head. Introduction of institution policies.

Lecture 1

Study unit 2: Orientation of Learners to Library and Students Facilities

Introducing learners to physical structures

Lecture 2

Study unit 3: Distribution of tablets and orientation to the textbooks and

prescribed Materials Lecture 3

Study unit 4: Discussion on the objectives and outcomes of Business

Management 621 Lecture 4

Study unit 5: Orientation and guidelines to completing assignments

Review of Study units 1-4

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2.

TITLE OF MODULES, CODE, NQF LEVEL, CREDITS & MODE OF DELIVERY

1st_Semester concept of a Business Strategy as a holistic concept. The academic content must, therefore, be seen as one concept, the elements of which are presented in two modules.

3.2Business Management 621 (1st_Semester)

This module, Business Management 621, forms an integral part of the Richfield Graduate Institute of Technology’s Diploma programme and serves to introduce the student to the fundamentals of leading. In so doing, the module explores leadership, motivation, the use of groups and teams in organisations, and political behaviour prevalent in organisations.

This module builds on Business Management at year one level of the Diploma programme, and serves to study the topic of leadership in greater depth. The student is encouraged to consider authors, and their impact on the management theory within the context of their particular time-period and country.

Leadership is dynamic and evolving, and the student is encouraged to consider how the theories in this module may be applied in the South African context. The student is encouraged to use additional resources, like the Internet, academic journals and other professional books to explore the subject in greater depth, and remain conversant with contemporary management issues.

4.

LEARNING OUTCOMES

On completion of these modules the student will be able to:

 Analyse the evolution of management theories

 Apply the practice of managing in a changing environment

 Explain the importance of strategic planning

 Evaluate the importance of managerial decision making

 Understand the theory & practice of Information Management

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 Apply the principles of production & operations management in a company

5.

METHOD OF STUDY

The sections that have to be studied are indicated under each topic. These form the basis for tests, assignments and examination. To be able to do the activities and assignments for this module, and to achieve the learning outcomes and ultimately to be successful in the tests and examination, you will need an in-depth understanding of the content of these sections in the learning guide and prescribed book.

In order to master the learning material, you must accept responsibility for your own studies. Learning is not the same as memorising. You are expected to show that you understand and are able to apply the information. Use will also be made of lectures, tutorials, case studies and group discussions to present this module.

6.

LECTURES AND TUTORIALS

Learners must refer to the notice boards on their respective campuses for details of the lecture and tutorial time tables. The lecturer assigned to the module will also inform you of the number of lecture periods and tutorials allocated to a particular module. Prior preparation is required for each lecture and tutorial. Learners are encouraged to actively participate in lectures and tutorials in order to ensure success in tests, assignments and examinations.

7.

NOTICES

All information pertaining to this module such as tests dates, lecture and tutorial time tables, assignments, examinations etc. will be displayed on the notice board located on your campus. Learners must check the notice board on a daily basis. Should you require any clarity, please consult your lecturer, or programme manager, or administrator on your respective campus.

8.

PRESCRIBED & RECOMMENDED MATERIAL

8.1Prescribed Textbook

Smit, P., J., Cronje, G.J., Brevis, T. and Vrba, M., J. (2013). Management Principles: A

Contemporary edition for Africa.5th_ed._{Cape Town. Juta & Company Ltd}

The purchasing of prescribed books is for the learner’s own account and is compulsory for all learners. This guide will have limited value if not accompanied by the prescribed text books.

8.2Recommended Material

Cronje, Du Toit, Marais and Motlatla (2008). Introduction to Business Management, 7th

Edition. Cape Town: Oxford University Press

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Ehlers, T. and Lazenby, K. (2014). Strategic Management: South African concepts and cases Pietermaritzburg. Van Schaik Publishers

8.3Independent Research:

The student is encouraged to undertake independent research

8.4Library Infrastructure

The following services are available to you:

 Each campus keeps a limited quantity of the recommended reading titles and a larger variety of similar titles which you may borrow. Please note that learners are required to purchase the prescribed materials.

 Arrangements have been made with municipal, state and other libraries to stock our recommended reading and similar titles. You may use these on their premises or borrow them if available. It is your responsibility to safe keeps all library books.

 Richfield Graduate Institute of Technology has also allocated one library period per week as to assist you with you formal research under professional supervision.

 Richfield Graduate Institute of Technology has dedicated electronic libraries for use by its learners. The computers laboratories, when not in use for academic purposes, may also be used for research purposes. Booking is essential for all electronic library usage.

9.

ASSESSMENT

Final Assessment for this module will comprise two CA tests, an assignment and an examination. Your lecturer will inform you of the dates, times and the venues for each of these. You may also refer to the notice board on your campus or the Academic Calendar which is displayed in all lecture rooms.

9.1CA Tests

There are two compulsory tests for each module (in each semester).

9.2Assignment

There is one compulsory assignment for each module in each semester. Your lecturer will inform you of the Assessment questions at the commencement of this module.

9.3Examination

There is one two hour examination for each module. Make sure that you diarize the correct date, time and venue. The examinations department will notify you of your results once all administrative matters are cleared and fees are paid up.

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The examination department will make available to you the details of the examination (date, time and venue) in due course. You must be seated in the examination room 15 minutes before the commencement of the examination. If you arrive late, you will not be allowed any extra time. Your learner registration card must be in your possession at all times.

9.4Final Assessment

The final assessment for this module will be weighted as follows:

CA Test 1

CA Test 2 40%

Assignment 1

Examination 60%

Total 100%

9.5Key concepts in assignments and examinations

In assignment and examination questions you will notice certain key concepts (i.e.

words/verbs) which tell you what is expected of you. For example, you may be asked in a

question to list, describe, illustrate, demonstrate, compare, construct, relate, criticize,

recommend or design particular information / aspects / factors /situations. To help you to

know exactly what these key concepts or verbs mean so that you will know exactly what is

expected of you, we present the following taxonomy by Bloom, explaining the concepts and

stating the level of cognitive thinking that theses refer to.

9.6Key concepts in assignments and examinations

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11 Competence Skills Demonstrated

Knowledge

observation and recall of information knowledge of dates, events, places knowledge of major ideas

mastery of subject matter Question

Cues

list, define, tell, describe, identify, show, label, collect, examine, tabulate, quote, name, who, when, where, etc.

Comprehension

understanding information grasp meaning

translate knowledge into new context interpret facts, compare, contrast order, group, infer causes

predict consequences Question

Cues

summarize, describe, interpret, contrast, predict, associate, distinguish, estimate, differentiate, discuss, extend

Application

use information

use methods, concepts, theories in new situations solve problems using required skills or knowledge Questions

Cues

apply, demonstrate, calculate, complete, illustrate, show, solve, examine, modify, relate, change, classify, experiment, discover

Analysis

analyze, separate, order, explain, connect, classify, arrange, divide, compare, select, explain, infer

Synthesis

use old ideas to create new ones generalize from given facts

relate knowledge from several areas predict, draw conclusions

Question Cues

combine, integrate, modify, rearrange, substitute, plan, create, design, invent, what if?, compose, formulate, prepare, generalize, rewrite

Evaluation

compare and discriminate between ideas assess value of theories, presentations make choices based on reasoned argument verify value of evidence recognize subjectivity Question

Cues

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10.

WORK READINESS PROGRAMME (WRP)

In order to prepare learners for the world of work, a series of interventions over and above the formal curriculum, are concurrently implemented to prepare learners.

These include:

 Soft skills

 Employment skills

 Life skills

 End –User Computing (if not included in your curriculum)

The illustration below outlines some of the key concepts for Work Readiness that will be included in your timetable.

It is in your interest to attend these workshops, complete the Work Readiness Log Book and prepare for the Working World.

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11.

WORK INTEGRATED LEARNING (WIL)

Work Integrated Learning forms a core component of the curriculum for the completion of this programme. All modules making of the Bachelor of Business Administration will be assessed in an integrated manner towards the end of the programme or after completion of all other modules.

Prerequisites for placement with employers will include:

 Completion of all tests & assignment

 Success in examination

 Payment of all arrear fees

 Return of library books, etc.

 Completion of the Work Readiness Programme.

Learners will be fully inducted on the Work Integrated Learning Module, the Workbooks & assessment requirements before placement with employers.

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Good luck with your studies…

TOPIC 1 : NATURE OF MANAGEMENT

Lecture 1

1.1 Introduction

1.2 Definition of management

1.3 Different levels and kinds of management in the organisation 1.4 Areas of management

1.5 The role distribution of managers

1.6 Managerial skills and competencies at various managerial levels 1.7 Management and organisational performance

1.8 The scope of managerial

TOPIC 2: THE EVOLUTION OF MANAGEMENT THEORY

Lecture 2

2.1 Introduction

2.2 Why study management theory

2.3 Understanding the different management theories 2.4 The theories of management

Lecture 3

2.5 Current and near-future management realities 3.4 The internal or micro-environment

3.5 The market/task environment 3.6 The macro-environment

3.7 Interfaces between the organisation and the environment

3.8 Was in which management can prepare for environmental changes

TOPIC 3: MANAGING IN A CHANGING ENVIRONMENT Lecture 4

3.1 Introduction

3.2 Concepts of systems theory

3.3 The composition of the management/business environment 3.4 The internal or micro-environment

3.5 The market/task environment 3.6 The macro-environment

Lecture 5

3.7 Interfaces between the organisation and the environment

3.8 Was in which management can prepare for environmental changes

TOPIC 4: STRATEGIC MANAGEMENT

4.1 Introduction Lecture 6

4.2 Strategic planning, what it encompasses 4.3 The strategic planning process

4.4 Grand strategies Lecture 7

4.5 The selection of Grand strategies 4.6 Factors affection strategic choice

TOPIC 5: PLANNING

Lecture 8

5.1 Introduction

5.2 The nature and importance of planning 5.3 Kinds of organisational plan

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5.6 Barnes of effective planning

Lecture 9

5.7 Planning tools 5.8 Goal formulation

5.9 The process of goal setting 5.10 Techniques for goal setting

TOPIC 6: MANAGERIAL DECISION MAKING

Lecture 10

6.1 Introduction

6.2 The relationship between problems, problem solving, and decision making

6.7 Techniques for improving group decision making 6.8 Tools for decision making

TOPIC 7: INFORMATION MANAGEMENT

Lecture 12

7.1 Introduction

7.2 The link between decision making and information 7.3 What is an information system

7.4 Characteristic of useful information

8.2 Organising, organisation, and organisational structure 8.3 Reasons for organising

Addendum 621 (A): Case study for Tutorial Discussion Lecture 15

Addendum 621 (B): Assignment Questions Lecture 16

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INTERACTIVE ICONS USED IN THIS LEARNER GUIDE

Learning Outcomes Study Read Writing Activity

Think Point Research Glossary Key Point

Review Questions Case Study Bright Idea Problem(s)

Multimedia

Resource

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TOPIC 1:

1. THE NATURE OF MANAGEMENT

After studying this topic, you should be able to

 Explain the important role that business organisations play in modern economy

 Discuss the components that make up the management process.

 Describe the different levels and kinds of management in an organisation.

 Explain managerial roles performed by managers

 Explain what ‘management competencies’ encompasses

 Discuss the managerial skills needed at the different levels of management

 Explain what ‘management competencies’ encompasses

 Recommend ways in which to master management skills and competencies

 Analyse the major challenges faced by management in South Africa, Africa and abroad

Research

Before ploughing the text of this chapter find out the

meanings and examples of the following concepts

 Controlling

 Decision making role

 Information role

 Interpersonal role

 Leading

 Management

 Management competencies

 Complex needs of society

 Management ethics

 Management process

 Management skills

 Organising

 Planning

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1.1 INTRODUCTION

Organisation acquire human, financial, physical and information resources in order to

produce a product or render a service for which there is a need in society. Society depends

on business organisations that satisfy the complex needs of society. Government

organisations such as hospitals and clinics provide health care; the South African Police

Services provide protection against crime; and municipalities provide water and electricity.

Non-profit organisations also help to satisfy society’s needs.

1.2 THE ROLE OF BUSINESS ORGANISATIONS IN A MODERN SOCIETY

All the organisations, whether private of state provide for the

complex needs of society through the utilisation of resources,

namely:

 People (human resources with specific knowledge, skills,

abilities and so on)

 Money (capital of financial resources)

 Raw materials (physical resources)

 Knowledge (information resources)

Different combinations of these resources produce different products and services to meet

the needs of society.

Managers follow a specific process in order to reach the organisation’s mission and goals. All managers, regardless of their skills or the level at which they are involved, perform four

fundamental management functions:

 Planning

 Organising

 Leading

 Controlling.

The fundamental functions of a manager link up in a specific sequence to form a process,

which comprises planning, organizing, leading and controlling.

T H I N K P O I NT

H o w a n d w h y b u s i n e s s e s m u s t f u l f i l t h e s o c i e t a l n e e d s - t h i s q u e s t i o n i s

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Table 1.1: Basic resources of an organisation

Organisation Human resources Financial resources

Joe’s Bicycle Shop Owner manager, members of

1.3 COMPONENTS OF THE MANAGEMENT PROCESS

Figure 1.1 illustrates the process as a logical sequence of decisions performed managers. It is

meaningless to perform the four management functions in any other sequence, since

managers cannot decide to do something before:

 they know what has to be done;

 they cannot order a job to be done before they decide how it should be done;

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Figure 1.1: The four fundamental management functions

Source: Smith, et al. (2013:7)

Review questions

 Depict and discuss the components that make up the management process. Support

your answer with suitable examples.

 What is the significance of performing the management functions in a logical sequence

of decisions?

It is important to realize that the functions of management do not occur in a tidy

step-by-step sequence. Managers do not plan on Mondays, organize on Tuesdays, lead on

Wednesdays, control on Thursdays and take corrective action on Fridays. At any given time,

a manager is likely to be engaged in several management functions simultaneously.

However, in order to simplify the complex process of management, it is depicted in a model.

The solid lines indicate how, in theory, the functions of management are performed. The

dotted lines represent the true reality of management. Organising

Leading Planning

Controlling Resources

 Human

 Financial  Physical  Information

Performance

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The external environment

Figure 1.2 The interactive nature of the management process

1.4 A DEFINITION OF MANAGEMENT

Follow from the above introductory remarks about (1) how organisations try to satisfy the

ever-changing needs of society (2) by utilizing its scarce resources as productively as possible

and (3) through decisions made by its managers, management can now be described as the

process of planning, organizing, leading, and controlling the scarce resources of the organisation to achieve the organisation’s mission and goals as productively as possible. A concise description of each of the fundamental management functions will further explain

the concept of management and the nature of the management process. Planning (Part II)

Managers determine the organisation’s vision, mission, and goals and decide on a strategy to achieve them

Organising (Part lll)

Manager’s group activities

together, establish authority, allocate resources, and

delegate Controlling (Part V)

Managers monitor progress and take corrective steps to reach the mission and goals

Leading (Part IV)

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Planning is the management function that determines where the organisation wants to be in

future: in other words, its vision, mission and goals. A car manufacturer may see its future in

the manufacturing of eco-friendly cars that are able to drive themselves.

The manufacturer then has to identify ways (called ‘strategies’) in which it can reach its mission and goals, and find the resource needed for this challenging task. The plan to

manufacture eco-friendly cars that drive themselves is called a strategic plan. Strategic plans

are made by top management. In large organisations, such as Toyota, long-term plans of five

to ten years mean that management could (and often does), commit billions of rands to

achieve a certain future position. Strategic plans are translated into tactical plans. Tactical

plans are made by functional managers (such as financial, human resources, research and

development, marketing, and operations managers) to support the organisation’s strategic

plan.

Tactical plans are translated into operational plans. Operational plans are made by lower management (often called ‘first-line’ or ‘supervisory management’) and these are shorter term plans which might have daily, weekly and monthly schedules.

Organizing is the second step in the management process. Once the goals and plans have been determined, management has to allocate the organisation’s human and other resources to relevant departments or sections. Tasks, roles, and responsibilities have to be

defined to ensure that each person knows what he or she is responsible for within the

organisation. Thus organizing involves the development of a frame work or organizational

structure to indicate how and where people and other resources should be deployed to

achieve the set goals.

The success of an organisation lies in directing the various resources towards the

achievement of a common set of goals. The better these resources are organized and

coordinated, the more successful the organisation will be. Because organisations have

different missions, goals and resources, it stands reason that each one should have its own

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Leading refers to directing the human resources of the organisation and motivating them in

such a way that they will be willing to work productively to reach the organisation’s mission

and goals. Managers are responsible for getting things done through other people – they

collaborate with their superiors, peers, and subordinates, with individuals and groups, in

order to reach the goals of the organisation. Leading the organisation means making use of

influence and power to motivate employees to achieve organizational goals.

Controlling means that managers should constantly make sure that the organisation is on

the right course to reach its goals. The aim of control is therefore to monitor actual results

against planned results. For instance, an organisation might have as one of its goals (planned

result) plans to increase its sales by ten per cent within one year.

However, after the first three months, management determines that the organisation’s sales

have declined (actual result) by two per cent. Management then has to rectify the deviation

in order to control the performance. To do this, management may decide to appoint more

sales managers, give discounts to certain clients or it may even decide to adapt its goals.

The management process – obviously including the four management functions – is

performed by managers at all levels of the organisation (top, middle and lower

management) and in all departments and sections of an organisation. However, the

complexity of the decisions made by top, middle and lower management differs

considerably. These differences will be looked at briefly.

1.5 DIFFEFENT LEVELS AND KINDS OF MANAGEMENT IN THE ORGANISATION

Against the background of the explanation of management, the term ‘manager’ is used to include anyone who carries out the four fundamental functions of management, namely

planning, organizing, leading, and controlling. The four management functions must be

performed in all organisations, but managers are responsible for different departments;

they work at different levels and deal with different challenges.

Managers are usually classified into two categories:

 According to their levels in the organisation (the top, middle, and lower or first-line

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 By the functional or specialist area of management for which they are responsible (the

functional managers). Figure 1.3 (p.30 below) indicates how managers within an

organisation can be differentiated according to level and functional area.

1.5.1 Top management

Top management represents the relatively small group of managers who lead the

organisation and with whom the final authority and responsibility rests for performing the

management process successfully. This level of management comprises, for example, the

board of directors, partners, the managing director, chief executives, as well as management

committees (consisting mainly of members of top management). Top management is usually

responsible for the organisation as a whole, as well as for determining its vision, mission,

goals, and overall strategies of the entire organisation. Top management is concerned

mainly with long – term planning, designing the organisation’s broad organizational

structure, leading the organisation (through the top executive), and monitoring (controlling)

its overall performance.

Web Resource

The annual reports of organisations usually depict the topic management structure of the

organisation. You can access many of these reports on each organisation’s website, such as:

www.kumbaresources.co.za

www.edcon.co.za

1.5.2 Middle management

Middle management is responsible for specific departments of the organisation and is

primarily concerned with implementing the strategic plan formulated by top management.

Middle management normally includes the functional heads, such as the financial manager,

marketing manager, the purchasing manager, and the human resources manager. Middle

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term planning, organizing functional areas, leading by means of the departmental heads,

and controlling the management activities of the middle managers’ own departments.

Middle managers also continually monitor environmental influences that may affect their

own departments. The head of the finance department must monitor the environment for

possible changes in tax legislation; the marketing manager must monitor the environment

for possible new competitors that may enter the market; the human resource manager must

be aware of competitors that may enter the market; the human resource manager must be

aware of changes in legislation regarding overtime work, while the operations manager

must be aware of new technologies that could replace old machines in the future.

1.5.3 Lower/first-line management

Lower or first-line management is responsible for even smaller segments of the

organisation, namely the different sections within an organisation. The marketing

department, for instance, could be subdivided into the product design section, the

marketing communication section, and so on. Lower management also includes supervisors

or foremen. Mining companies such as Kumba Resources refer to their first-line managers as ‘supervisors’.

First-line managers deal with the monthly, weekly and daily management of their sections.

They have to ensure that the plans made by middle managers are implemented. For

example, the operations manager in a manufacturing plant may have a goal to replace all of

the old machines and equipment with more environmentally friendly ones within three

years; the first-line managers will then have to ensure that monthly, weekly and daily plans

are in place to ensure proper maintenance of the old machines for the following three years.

The primary concern of a supervisor is to apply policies, procedures, and rules to achieve a

high level of productivity in his/her section, to provide technical assistance, to motivate subordinates, and to ensure that the section’s goals are reached. First-time managers typically spend a large portion of their time supervising the work of subordinates. Because

of this, first-line management holds the power to increase or decrease the productivity of

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For the sake of clarity and convenience, we have distinguished only three levels of

management. Obviously, the size of an organisation plays an important role in the number

of levels encountered in practice. This is because one person can manage only limited

number of people, a consideration that will be discussed in more detail later. A one-person

business, therefore, has only one level of management and the owner embodies top,

middle, and lower management. However, large organisations with thousands of employees

have many more levels of management. We shall deal with this issue in greater detail, in the

discussion of the organizational structure.

Although we have distinguished different levels of management, the four fundamental

functions of management are still performed at each level of management, but in different

combinations. The time spent on the different management functions can also differ from

one organisation to another or between different industries.

Research

Analyse an organisation of your choice and determine the fundamental

functions of managers in relation to the three levels reflected in the

previous text.

1.6AREAS OF MANAGEMENT

Another factor that influences the classification of managers is the type of activity they

manage. Almost all organisations will have a general manager, as well as marketing, finance,

human resource and operations (production) managers. Organisations in the mining

industry will also have safety, health and environment managers (SHE). A pharmaceutical

company may have a research and development manager. Some organisations, especially

larger ones, may have public relations managers.

The general manager focuses on the entire organisation. He or she is responsible for

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decide on strategic issues that impact the entire organisation. A decision to expand the

facilities of the hotel will have an impact on the financial manager; the human resources

manager must also decide on a structure for the entire organisation, must lead from the top

and must monitor and control the activities of the entire organisation.

The marketing function entails the marketing strategy by segmenting the market, and

determining the target market and positioning of the organisation in relation to its

competitors. The marketing manager is also responsible for making decisions regarding the

product, such as its design and packaging, price, promotion (advertising, personal selling and

so on) and distribution. The financial manager has to make decisions regarding issues such

as how to finance a new project and how to invest its funds to ensure that the organisation

prospers. The financial manager is also responsible for reporting on the financial

performance of the organisation. A major challenge for a financial manager is to manage the

cash flow of the organisation.

The production or operations management functions includes that group of activities

concerned with the physical production of products, namely the establishment and layout of

the production unit and the conversion of raw materials and semi-finished products into

finished products for the market. Operations management also examines problems related to the supply of services. In Toyota’s production plant in Durban, the production manager is responsible for, amongst other things, ensuring that the layout of the plant is optimized and

that all processes required to assemble the cars are well aligned. The purchasing function

entails the acquisition of all products and materials required by the business to function

profitably, namely raw materials, components, tools, equipment, and, in the case of a

dealer, the inventory.

The purchasing manager has to be in contact with suppliers, must be aware of new

products, and must know the prices at which goods can be bought. The purchasing manager

must be a good negotiator. He or she also has to keep the inventory up to date to ensure

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The research and development function is responsible for developing new products and

improving old products. This function plays a crucial role in organisations that operate in

fast-changing industries, such as information technology, communications, and the

pharmaceutical industry. The human resource function entails finding the right people for

the job, training and developing them and ensuring fair remuneration/compensation for

each worker.

Finding the right people means that the human resource manager must recruit candidates,

select the best one for the job and appoint that person. In South Africa laws govern this

process to the human resource manager has to be well-formed about these laws. To ensure

that employees and managers are suitably skilled, the human resource manager must

ensure that a sound performance management system is in place and that performance

appraisal is done regularly and fairly. Assessing the performance of employees helps the

human resource managers to design training and development opportunities for them.

Finally, the human resource manager must ensure fair remuneration for each employee and

manager. Remuneration is more than paying a salary. It includes other benefits such as paid

annual and maternity leave, free transport to and from work and a healthy and safe work

environment. The public relations function aims to create a favourable, objective image of

the organisation and establish good relations with those directly or indirectly concerned

with the business and its products or services. In organisations where safely is an issues,

such as a mining company, one will also find a safety, health and environment (SHE)

function.

This function is responsible for looking after the mental health of employees, such as

Worker Street and burnout, and for ensuring that programmes are in place to assist

employees who may need them. It is also responsible for managing safety in the workplace.

The management of health includes managing HIV/AIDS in the environment are ‘healthy’

places in which to work.

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other functional managers perform the same management functions as the general

manager. However, the focus and time horizons that their planning, organizing, leading and

controlling decisions cover differ from those of the general manager.

The general manager focuses on the long-term success of the entire organisation; a functional manager focuses on their own department’s performance.

1.7THE ROLE DISTRIBUTION OF MANAGERS

During the course of their work, managers are required to perform certain roles in addition

to the management functions. Henry Mintzberg, a famous management theorist, has

studied the activities of a group of managers and came to the conclusion that managers play

about ten different roles, which, can be classified into three overlapping groups, namely an

interpersonal role, an information role, and a decision-making role. As far as the

interpersonal role is concerned, three groups of activities can be distinguished.

Firstly, all managers have to perform duties that are ceremonial and symbolic in nature.

When the mine manager of platinum mine delivers a speech at the opening of a new mine,

he or she acts as a figurehead for the mine. The supervisor who takes the attendees on a

tour of the plant after the opening is also acting in a figurehead role. Second, all managers

have a role to play as a leader. This role includes motivating employees, and dismissing

employees who do not perform. The third role within the set of interpersonal roles is liaison,

which aims at maintaining good relations within and outside the organisation. In a

production plant, the maintenance manager must make continual contact with the

production manager to ensure proper maintenance of the equipment; the maintenance

manager must also make contact with outside suppliers of the equipment used in the

maintenance process to ensure availability.

The managers’ information role enables them to obtain information from colleagues, subordinates, and department heads, as well as outside stakeholders, which they can use to

make sound decisions. This information role of the manager involves monitoring or

gathering information on trends and passing on relevant information to colleagues,

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communication process. The manager’s information role also entails acting as a spokesperson for the department or for the organisation as a whole.

The third set of managerial roles is grouped into what is known as the decision making role.

A manager is regarded as an entrepreneur, using the information that he or she obtain to

identify new business opportunities or threats. Secondly, in this decision-making role, a

manager also has to deal with and solve problems such as how to improve on low

productivity, which actions to take to minimize the chances of strikes, and which

departments to restructure.

Thirdly, managers must make decisions about the resources available to the organisation.

Resource allocation, or deciding to whom resources such as money, people, and equipment

are to be assigned, is often a critical management decision. In their role as negotiators,

managers often have to negotiate with individuals, other departments or organisations, and

trade unions about goals, standards of performance, and the allocation of resources. The

role distribution framework is especially useful in explaining why managers cannot move

systematically from planning, to organizing to leading and ultimately to controlling. The

volatility of their environment requires a more flexible managerial style.

Figure 1.3 The overlapping role distribution of managers

Information role Monitor Analyser Spokesperson Decision-making role

Entrepreneur, Problem solver, Allocator of resources, Negotiator

Interpersonal role Figurehead

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1.8MANAGERIAL SKILLS AND COMPETENCIES AT VARIOUS MANAGERIAL LEVELS

Although management is found at all levels and in all departments and sections of an

organisation, the management skills required at the different levels (top, middle and lower

management levels) differ. Figure 1.6 depicts the different skills needed at top management

level, versus those required at middle and lower level management. It also shows how these

skills differ from the dominant skills required by non-managers (workers).

The three major skills needed by managers at all levels and in all departments and sections

of an organisation are:

 Conceptual

 Interpersonal

 Technical

The following three main skills are identified as prerequisites for sound management.

Conceptual skills refer to the mental ability to view the organisation and its parts holistically. Conceptual skills involve the manager’s thinking and planning abilities to ensure that the organisation is prepared for the future. They also include the manager’s ability to think strategically about the organisation and how it will exploit opportunities and minimize

threats cause by a changing business environment.

Interpersonal skills refer to the ability to work with people. It stands to reason that if

managers spend about 60 per cent of their time working with people, a manager should be able to communicate clearly, understand people’s behaviour, resolve conflict, optimize diversity and motivate both groups and individuals. Technical skills refer to the ability to use

knowledge or techniques of a specific discipline to reach specific goals.

Knowledge of accountancy, or engineering, or currency trading is an example of a technical

skill that can be used to perform a task. A manager at a lower level in particular required a

sound knowledge of those technical activities (such as accounting) that he or she must

supervise. The time spent on technical activities decreases, however, when a first-line

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Figure 1.4 Managerial skills needed at various managerial levels

The major difference between non-managers and managers is the shift from technical skills

to interpersonal and conceptual skills. Promotion from the non-manager level – where

technical expertise is essential – to the lower and even middle management level is often

the result of high achievement based on technical ability.

An engineer who is excellent in his job as engineer – and promoted to a management

position purely because he or she is a good manager. This is often the case in South Africa

because of the severe shortage of suitably skilled managers. Because of this, new managers

often mistakenly continue to rely on the technical skills with which they are familiar, rather

than on interpersonal skills to deal with involve communication skills, motivation and

negotiation skills and the skills to deal with conflict in the workplace. Top

Management

Middle Management

Non-managers (Workers) Lower

Management

Conceptual

Conceptual Conceptual Conceptual

Interpersonal Interpersonal

Interpersonal

Technical

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It is, therefore, essential that management training be provided to non-managers when they are promoted to managerial positions. A recent approach to defining to manager’s job and the competencies needed to do the job focuses on what a manager has to be able to do in

the workplace – rather than what he or she needs to know or simply the skills that are

required to do the job. This competency – based approach to defining a manager’s job forms

the basis of the Management Charter Initiative (MCI), which originated in the United

Kingdom (UK). Based on an analysis of management functions, and focusing on what

effective managers should be able to do (rather than what they should know), the MCI sets

generic standards for management competence at first-line, middle, and top management

levels. For each area of competence in the MCI there is a related set of specific standard that

defines effectiveness in that area. For instance, one area of competence at middle management level is: ‘… to initiate and implement change and improvement in services, products, and systems….’. The MCI standards are attracting global interest and the developers of the MCI believe that the standards can be applied to management jobs

world-wide and in any industry.

A competency refers to the relevant (1) knowledge, (2) skills, and (3) value orientation that are required to do the job of a manager. A manager is considered ‘competent’ if he or she can apply these in a work situation. To learn more about SAQA and the NQF, you should visit

the following website: www.saqa.org.za

Is South Africa the National Qualifications Framework (NQF), through the work of

standards-generating bodies (SGBs), defines management competence in terms of eight levels of

competence. (These eight levels have recently been changed to ten.) Each level clearly

specifies what a manager must know, what the skills are that the manager must have, and

what value orientation the manager must have to be declared ‘competent’ at that level. ‘Competent’ means that the manager must demonstrate that he or she can apply the competence in a work situation. Level eight was the most advanced level of competence on

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1.8.1 The difficult transition from non-manager to

manager

New managers often mistakenly continue to rely on

technical skills rather than concentrating on management

skills. Indeed, some people fail to become managers at all

because they let technical skills take precedence over

interpersonal skills. Consider George Mthombeni, who has a Bachelor’s degree and has worked for five years as a computer programmer for a motor manufacturer. In four

short years, he has more new software programs to his

credit than anyone else in the department. He is highly

creative and widely respected for his programming skills.

However, George is impulsive and has little tolerance for whose word is less creative, He

does not offer to help co-workers and, because of this, they are reluctant to ask. George is

also slow to cooperate with other departments in meeting their needs, because he works

primarily to enhance his own software-writing ability. He spends evenings and weekends

working on his programmes. George is a hard-working programmer, but he sees little need

to interact with his colleagues.

George received high merit increase, but was passed over for promotion to a management

position and does not understand why. His lack of interpersonal skills, lack of consideration

for co-workers, and failure to cooperate with other departments severely limit his potential

as a supervisor. George has great technical skills, but his interpersonal skills are simply

inadequate to make the transition from worker to supervisory management level.

1.8.2 Stress in the workplace

Business owners across the world, including South Africa, were asked about the major cause

of workplace stress. The most common cause globally during 2009 was the economic

climate with 38% of respondents globally citing this as one of their major causes of stress.

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This was followed by pressure on cash flow (26%), competitor activities (21%) and heavy

workload (19%).

Web Resource

For further insight on the subject matter you can go to

http://www.moneyweb.co.za/mw/view/mw/en/page292681?oid=481724&sn=2009%20Det

ail.

The previous discussion on the different skills and competencies that managers must be

understood against the background of the specific environment in which a manager works. It is probably true to say that manager’s experience more pressure today than in the past, and therefore need supplementary skills to deal with situations. In the 1960 organisations

queued for the service of graduates, such as MBAs graduates. However, the situation has

changed profoundly.

Modern organisation finds itself in a different environment. Never have the executives been

better rewarded, but there has never been so much change in the form of new technologies,

diseases to cope with in the workplace, currency collapses, new wars, legislation, labour

movements, crimes and corruption. Additional pressure in South Africa is caused by crime,

violence, corruption, shortage of skilled people at all levels, and a loss of investor

confidence.

Managers are required to learn and educate themselves continually in a large number of disciplines. This means that today’ managers must prepare themselves physically, mentally, and spiritually for their tasks. Furthermore, this calls for additional skills. Coaches and

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1.9MANAGEMENT AND ORGANISATIONAL PERFOMANCE

It was explained in the introduction that the business organisation can be best satisfy the unlimited needs of the society by means of the productive use of the community’s limited resources. Achieving the highest possible satisfaction of needs with scarce resources is known as the `fundamental economic principle’. The task of management in a free-market economy is to manage in such way that the organisation makes a sustainable profit, that is,

earns the highest possible income with lowest possible costs.

In America literature on business management in particular, the productivity of

management or the performance of management has, in the past, been expressed

somewhat simplistically as efficiency and effectiveness. Efficiency means doing something

right, whereas effectiveness means that the right thing is done. However, the fact remains

that the management of a business organisation operate in the free-market economy must

adhere to the economic principle and run the organisation as productively (and therefore as

profitably) as possible. Of course, this should be done with due consideration of the social

responsibility of the organisation towards the community in which it operates, as well as the

environment for which it needs to care (called the `triple bottom line,).

The term `efficiency’ and `effectiveness’ can cause major confusion and are often used interchangeably due to lack of clarity as to what they mean. An example will hopefully help

to clarify the difference between the two.

If a manufacturer manufactures the highest quality ox wagon for commercial use in

Gauteng, it can be called `efficient’ as it is `doing things right’ by delivering high-quality

products.

However, there is no need in business for an ox wagon and therefore the manufacturer is not `effective’, meaning it is not `doing the right things’ with its scarce resources.

Against the background of these brief remarks about the purpose of management, it is clear

that management is an important contemporary social institution. Judging by the search for

improved standard of living in society world-wide, management continues to grow in

stature. There are, however, many challenges facing management in a changing

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1.10 THE SCOPE OF MANAGEMENT

The study of management traditionally focused on business management and, therefore,

the management of business organisations. This does not mean, however, that the practice

of management is limited to large business organisations only. Effective and efficient

management practice is equally important in smaller business organisations as well as in

non-profit organisations such as government departments, organisations, municipalities,

universities and schools, sports clubs, and even political parties. In fact, good management

practice is applicable to every organisation where one, two or more people work together to

achieve a set of goals. The scope of management practice is virtually unlimited and

necessary to the success of all kinds and sizes of organisation.

1.10.1 Large business organisations

Any successful nation needs large business organisation with necessary resources to

compete globally. PricewaterhouseCoopers (PwC) surveyed 50 large South African

companies, which include South African Breweries, Sasol and MTN, and found that the large

corporations contributed about 10% of total taxes received by government. The 50

companies paid on average 8.7 different taxes including corporation tax, secondary tax on

companies, fuel levy, and excise and property taxes. Management training and

development is therefore imperative for large South African Business organisation because

of important role these play nationally, and internationally, to earn much needed foreign

currency for domestic development.

1.10.2 Small business organisations

Management training and development for small and medium-sized business organisation

(SMEs) is also essential for a variety of reasons. In the economically successful countries of

the world, SMEs provide as much as 85 per cent of the job opportunities and are therefore

important economically. South African SMEs need to play a greater role in the economy

because their current contribution to GDP is far less than that of similar organisation in

Japan, Singapore, the USA, and other countries. Various reasons why management training

and development for small business should be apriority are highlighted in a World Bank

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Latin America, and West Africa, the rate at which surviving businesses graduate from being

micro-enterprises to dynamic small and medium enterprises is, on average, 50 per cent. In

East Africa and southern Africa it is only about ten per cent. Improved management skills

would increase the capability of black managers and entrepreneurs in particular and help

them to deal with constraints on business development.

1.10.3 Non-profit organisations

Although non-profit organisations such as government-subsidised universities and schools,

health-care facilities, and charity organisations may not have to be profitable to attract

investors, they must still employ sound management principles if they are to survive and achieve their goals. South Africa’s vast new government structure, which involves a central government, nine provincial governments, and thousands of local governments, schools,

clinics, and service centres, make tremendous demands on scarce resources and pose a real

challenge to management.

1.10.4 Poverty in South Africa

There is direct relationship between level of education and poverty in South Africa. People

with low levels of education are much more likely to be poor than those with higher

qualifications. A survey revealed that poverty affected 66.3% of those who had no schooling

and 59.9% of those who had not completed primary schooling. By contrast, poverty was rare

amongst those who had obtained a post-matric certificate or diploma/degree: in these

groups the poverty rates were 4,6% and 1,2% respectively.

South Africa, with its desperate need to overcome poverty and improve the standard of

living of its citizens, can be successful only if it improves its level of management skills and

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Review questions

Question One

Essay Type Questions

1.1 Identify the nature and size of organisations which typify the scope of management in

different industries as well as provide their principle objectives.

1.2 In less than 600 words, describe what the job of a general manager of a medium-sized

hotel entails.

Question Two

Read the case study below and answer the questions that follows:

South African Breweries (SAB) price rule ‘sank my business’

A former wholesaler of SAB products told the Competition Tribunal Yesterday that his business failed after just four months because he did not know beforehand he would be have to buy beer at the same price as his intended customers.

Gerrie Mofokeng opened a warehouse in Springs in October 2005. It closed in February 2006, after he had spent about R1.3m on stock and sold it at cost to move the product, he said. Mr Mofokeng said in response tom questioning by Competition Commission advocate Richard Mkhabela that he became aware SAB gave all independent distributors the same price on stock only after opening his business.

`I had a huge problem when I started this business. When I got to buy stock at SAB, I was buying with the retailers, the people I must sell to. When I wanted to make a mark-up, it was not possible,’ he said.

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Having obtained the distributor licence, rather than the retail one that would allow him to sell beer to shebeens that accounts for 40% of the beer drunk in SA, and unable to compete effectively with distributors that sold a wider range, Mr Mofokeng was left without a viable business.

He wrote to SAB managing director at the time, Tony van Kralinger, in February 2006 requesting a better price, but was told he would not get one.

Source: http//: www.businessday.co.za/articles/Content.aspx?id=118315

Case study questions

2.1 Based on the information provided on the case study above, would you consider Mr Mofokeng a good manager? Provide reasons for your answer.

2.2 What plan should Mr Mofokeng have had in place in order to ensure that his business survived in the long term?

2.3 If you were Mr Mofokeng, on which key performance areas would you have focused in the first few months to ensure that the business survived?

2.4 Despite the pricing issue discussed in the case study, how could Mr Mofokeng have created a competitive advantage for his business?

Question Three: multiple choice questions

3.1 Managers are responsible for utilising the scarce resources of an organisation, namely ________to ensure that the organisation reaches its goals.

A. Peoples

B. People, finance and information C. Finance

D. People, finance, physical resources, information

3.2 Managers are responsible for _______.

A. The physical production of the products B. Planning, organising, and leading

C. Ensuring that the organisation makes profit in the short term D. Planning, organising, leading and controlling

3.3 Planning, organisation, leading and controlling are called ____________.

A. Managerial roles B. Management functions C. 1 and 2

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3.4 First National Bank has decided to close down its non-profitable branches in the Limpopo and Mpumalanga provinces. This is an example of a __________ decision.

A. Strategic B. Tactical C. Operational D. Policy

3.5 How many of the following statements are correct:

 Only managers at top management level plans, organise, lead, and control

 Middle managers need conceptual, interpersonal and technical in skills order to manage professionally

 First-line managers are also called supervisors

 The dominant skills needed by a middle manager are interpersonal skills A. One

B. Two C. Three D. Four

3.6 Segmenting the market, targeting specific market segment and positioning the organisation are responsibilities of the __________ manager.

A. Public relations B. Operations C. Marketing D. General

3.7 Despite the managerial functions for which managers are responsible, Mintzberg has also identified certain roles that they must fulfil. These roles_____________.

A. Planning and interpersonal roles B. Negotiating and information sharing

C. Interpersonal, decision-making and information sharing D. None of the above

3.8 The latest NQF comprises ________ levels.

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3.10We produce the lowest-cost electricity to people of Southern Africa through our extensive

infrastructure’ is an example of a______________.

A. vision statement B. mission statement C. strategy

D. policy

Question Four

Short Questions

4.1 Briefly explain the role of business organisations in a market-driven economy.