CH1: Introduction 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.
- Marketing Management – Focuses on understanding customer needs and promoting products/services.
- Financial Management – Manages the acquisition, control, and use of financial resources.
- Human Resources Management – Deals with hiring, training, and managing personnel.
- 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.
- Capital – Financial resources used to buy tools, equipment, buildings, etc.
- Labour – Physical and mental effort provided by humans.
- 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).
- 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.
- Operations: Transforming inputs into the final product or service.
- Outbound Logistics: Distributing the product to customers.
- Marketing & Sales: Identifying customer needs and persuading them to buy.
- Customer Service: Supporting the customer before and after the sale, including training, service, and handling complaints.
Name the support activities in a value chain and briefly describe their value.
- Financial Management: Ensures sufficient funding and cost control.
- Human Resources Management: Recruits and develops the workforce to drive productivity.
- Communication: Manages internal and external messaging to maintain alignment and reputation.
- Information Management & E-business: Streamlines operations, decision-making, and customer service via digital platforms.
- General Management: Provides leadership, strategy, and coordination across all areas.
What are the core functions of management?
- Planning: Setting goals and deciding how to achieve them.
- Organizing: Allocating resources and assigning tasks.
- Leading: Motivating and directing staff.
- Controlling: Monitoring performance and making adjustments.
What are the three levels of management in an organization?
- Top-Level Management – Sets vision, long-term strategies, and organizational direction (e.g., CEO, Board).
- Middle-Level Management – Translates strategic plans into departmental actions (e.g., HR or Marketing Manager).
- Lower-Level Management – Oversees day-to-day operations and supervises staff (e.g., Team Leads, Supervisors).
What is the main function and time orientation of each management level?
- Top Management: Strategic management; long-term focus.
- Middle Management: Implements policies and plans; medium-term focus.
- Lower Management: Applies procedures and ensures productivity; short-term focus.
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.
What are Mintzberg’s three interpersonal roles, and what do they involve?
Figurehead: Performs ceremonial duties (e.g. award ceremonies).
Leader: Motivates, trains, and manages subordinates to achieve departmental goals.
Liaison: Builds relationships outside formal authority (e.g. with suppliers or partners) to maintain networks and secure resources.
What are Mintzberg’s informational roles and their functions?
Monitor: Scans internal and external environments to gather key information.
Disseminator: Shares relevant information with internal stakeholders.
Spokesperson: Represents the organization and communicates externally (e.g. to media or stakeholders).
What are the four decisional roles in Mintzberg’s framework and their functions?
Entrepreneur: Initiates innovation and adapts the organization to changes.
Disturbance Handler: Solves crises and unplanned issues (e.g. labor disputes).
Resource Allocator: Decides how to distribute resources across departments.
Negotiator: Participates in bargaining with stakeholders or employees over key decisions.
Why does Mintzberg argue that managerial roles are inseparable?
Because all roles are part of a single, integrated system. A manager’s authority and interpersonal interactions provide access to information, which informs decision-making. Roles blend together in real-world scenarios, not as isolated tasks.
How does Mintzberg’s role-based view differ from the traditional POLC framework?
Unlike the structured, linear POLC model, Mintzberg’s view recognizes that managerial work is dynamic, overlapping, and shaped by constant pressure, requiring agility and holistic awareness.
What are the three key categories of managerial skills, and how do they differ?
Conceptual Skills: Ability to view the organization as a whole, strategize, and make decisions in uncertain situations—most important at top levels.
Technical Skills: Practical, specialized skills (e.g., using machinery, accounting systems)—most important for first-line managers.
Interpersonal Skills: Communicating, motivating, and resolving conflict—required at all levels to manage people effectively.
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.
