Study in business management
The study of business management / administration is of prime importance to two seemingly distinct groups of persons:
(1) those who are already running, or who propose to run, their own businesses, and
(2) those who are already running, or who have the ambition to run, businesses on behalf of others, that is, as salaried managers/administrators.
The distinction is not always as clear-cut it may seem to be at first sight, as many of those in the first group may already have been employed in managerial positions in businesses, whilst many of those already holding managerial posts in businesses may hope, one day, to establish their own businesses.
In many cases those who have held, or who still hold, managerial positions within businesses – whether they were promoted to the posts or whether they were employed specifically to fill the posts – have one thing in common, and that is experience of working in established businesses. They may therefore lack the fundamental knowledge of how businesses are established and the factors which have to be considered by those involved in the establishment of a new business. We need to therefore consider the factors concerned; not only because they are of interest to the prospective business owner/manager, but also because many of them do not simply ‘fade away’ once a business is established, but remain key factors for consideration by managers/administrators of established businesses.
Planning entails deciding how the predetermined objectives of an enterprise, or a section or department of it, should be achieved in the most efficient and economical way in accordance with policy.
Basically, objectives are the goals which an enterprise aims to achieve; in fact their attainment is the principal reason for the existence of that enterprise. Before any business is started or established a person or a group of people has to decide what that business is going to do. Is it going to manufacture something – if so what? Is it going to buy and sell – if so what? Is it going to provide a service – if so what? In some cases the answer is fairly straightforward, for example a person may decide to open a bookshop, or an experienced painter/decorator may decide to setup on his own instead of working for others.
However, in other cases considerable thought and research may be necessary before deciding to produce or to provide something not already available or which is likely to be able to compete successfully with similar goods or services already available. Numerous factors – such as finance and resources available or which can be made available, the market potential facilities which will be required, and so on – may have to be considered before a decision on viable objectives of a business is finally reached.
In a private sector, the specific objectives of a business are combined with the objective of profit; the result of achieving the specific objectives of the business must be that its owners gain money. Some people do not hold the ‘profit motive’ in esteem, and it is therefore worth considering what profit is and how it arises – after all, the performance of many managers will be assessed by the profits earned by the enterprises by which they are employed.
A simple example will help to make things clear: (to be continued…)