CH1: Intro to Business Management Flashcards
Why is it important to study business management?
Studying business management helps individuals understand how organizations operate and make decisions, even if they’re not business owners. It enables people to contribute more effectively in their roles as employees, managers, or consumers, and improves their appreciation of how businesses impact the economy and society.
What is business management?
Business management is the coordinated process of planning, organizing, leading, and controlling an organization’s resources—including people, finances, and materials—to achieve its goals efficiently and effectively, usually through the efforts of other people.
Name the five functional areas of business management.
- Production & Operations Management – Involves transforming inputs into finished goods or services. 2. Marketing Management – Focuses on understanding customer needs and promoting products/services. 3. Financial Management – Manages the acquisition, control, and use of financial resources. 4. Human Resources Management – Deals with hiring, training, and managing personnel. 5. Public Relations – Manages communication between the business and its stakeholders.
Can functional areas of management operate in isolation?
No. While they can be analyzed independently, in practice, all functional areas are interconnected and must collaborate to ensure the business achieves its strategic goals. For example, production relies on finance for capital and on marketing for demand forecasting.
What are the four traditional factors of production?
- Land – Includes natural resources like minerals, water, and raw materials. 2. Capital – Financial resources used to buy tools, equipment, buildings, etc. 3. Labour – Physical and mental effort provided by humans. 4. Entrepreneurship – The vision, risk-taking, and decision-making to combine the other three into a functioning business.
What role does entrepreneurship play in production?
Entrepreneurship involves identifying market opportunities, taking calculated risks, and innovatively combining land, labour, and capital to create products or services that meet consumer needs. Entrepreneurs are essential for economic growth and job creation.
What is the purpose of the value chain model?
The value chain model is a tool used to analyze every step in the business process to determine how each activity adds value to the product or service. It helps businesses identify areas of efficiency or weakness and develop strategies to gain competitive advantage by improving customer value or reducing costs.
What are the two main categories of the value chain?
- Primary Activities – Directly involved in the production and delivery of products/services (e.g., logistics, operations, marketing). 2. Support Activities – Provide the infrastructure that supports primary activities (e.g., HR, finance, information systems).
Name the primary activities in a value chain and briefly describe each.
- Inbound Logistics: Receiving, storing, and managing inputs from suppliers. 2. Operations: Transforming inputs into the final product or service. 3. Outbound Logistics: Distributing the product to customers. 4. Marketing & Sales: Identifying customer needs and persuading them to buy. 5. Customer Service: Supporting the customer before and after the sale, including training, service, and handling complaints.
How does management achieve goals through others?
Managers delegate tasks, coordinate team efforts, provide leadership, and create an environment where employees can work efficiently toward organizational objectives.
Why are conceptual skills more important at top management levels?
Because top managers need to understand complex systems, make strategic decisions, and align all departments with long-term goals. They rely on big-picture thinking and long-term planning rather than operational detail.
How do organizations create value through business management?
By converting inputs into outputs more effectively than competitors—either by increasing output value or reducing input costs—using strategic management, functional integration, and skilled leadership.
Why is it important for managers to understand their roles and skills within the organization?
Because the effectiveness of an organization depends on how well managers can apply their roles and skills to adapt, lead teams, solve problems, and make value-driven decisions across all levels and functions.
What are the core functions of management, and how does Mintzberg’s view differ from the traditional POLC framework?
The traditional core functions of management are Planning, Organizing, Leading, and Controlling (POLC). Mintzberg challenged this view by identifying ten managerial roles divided into interpersonal, informational, and decisional roles. He argued that management is more dynamic and fragmented than the structured POLC model suggests, and that these roles are inseparable in practice.
What are the three levels of management, and what are their main functions and time orientations?
The three levels are: 1. Top Management – Focuses on strategic planning and long-term goals. 2. Middle Management – Translates strategy into operational plans and coordinates departments. 3. Lower Management – Oversees day-to-day activities and short-term objectives.
What are Mintzberg’s managerial roles and why are they considered inseparable?
Mintzberg’s roles are grouped into: - Interpersonal: figurehead, leader, liaison - Informational: monitor, disseminator, spokesperson - Decisional: entrepreneur, disturbance handler, resource allocator, negotiator He argued these roles are inseparable because real-life management requires switching roles constantly to respond to dynamic demands.
