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GENERAL MANAGEMENT
CHECK POINT 1: THE GENERAL MANAGEMENT PROCESS (OVERVIEW)

Please Select Any Topic In Check Point 1 Below And Click.

1. what is management?
2. four prime management functions
3. four important management roles
4. classification of managers
5. time allocation by managers
6. five main operational areas in a company
7. entrepreneurship and management science
8. The Lean Business Management Method
9. Lean Management
10. Principles Of Decision Making In Business
11. Business Environment And Organizational Culture
12. The Planning Process
13. Strategic Planning
14. Implementation Of Strategic Plans
15. Management by Objectives
16. Operational Planning
17. Business Plan
18. The Organizing Process
19. Organizational Departmentalization
20. Management Structure
21. Organizational Design, Development, And Change
22. The Leading Process
23. Principles Of Communication
24. The Controlling Process
25. Managerial Ethics
26. what is a small business?
27. how can you succeed in your small business?
28. for serious business owners only
29. the latest information online
 

DO I NEED TO KNOW THIS CHECK POINT?

 

WELCOME TO CHECK POINT 1

TUTORIAL 1 General Management TUTORIAL 2 Human
Resources Management
TUTORIAL 3 Financial Management TUTORIAL 4 Operations Management TUTORIAL 5 Marketing
And Sales Management
1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96
2 7 12 17 22 27 32 37 42 47 52 57 62 67 72 77 82 87 92 97
3 8 13 18 23 28 33 38 43 48 53 58 63 68 73 78 83 88 93 98
4 9 14 19 24 29 34 39 44 49 54 59 64 69 74 79 84 89 94 99
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
 

HOW CAN YOU BENEFIT FROM CHECK POINT 1?

 
The main purpose of this check point is to provide you and your management team with a brief overview of the entire Tutorial 1 - General Management which contains twenty check points.
 
In this check point you will be introduced to:
 
• Prime management functions and important management roles.
• Main areas of functional operational activities.
• Entrepreneurship and management science.
• The lean business engineering method and lean management.
• Principles of decision making in business.
• Business environment and organizational culture.
• The basic steps in the strategic and operational planning processes.
• The management by objectives method and process.
• The organizing process and organizational departmentalization.
• The basic elements of the management structure... and much more.
 

LEAN MANAGEMENT GUIDELINES FOR CHECK POINT 1

 
You and your management team should become familiar with the basic Lean Management principles, guidelines, and tools provided in this program and apply them appropriately to the content of this check point.
 
You and your team should adhere to basic lean management guidelines on a continuous basis:
 
Treat your customers as the most important part of your business.
Provide your customers with the best possible value of products and services.
Meet your customers' requirements with a positive energy on a timely basis.
Provide your customers with consistent and reliable after-sales service.
Treat your customers, employees, suppliers, and business associates with genuine respect.
Identify your company's operational weaknesses, non-value-added activities, and waste.
Implement the process of continuous improvements on organization-wide basis.
Eliminate or minimize your company's non-value-added activities and waste.
Streamline your company's operational processes and maximize overall flow efficiency.
Reduce your company's operational costs in all areas of business activities.
Maximize the quality at the source of all operational processes and activities.
Ensure regular evaluation of your employees' performance and required level of knowledge.
Implement fair compensation of your employees based on their overall performance.
Motivate your partners and employees to adhere to high ethical standards of behavior.
Maximize safety for your customers, employees, suppliers, and business associates.
Provide opportunities for a continuous professional growth of partners and employees.
Pay attention to "how" positive results are achieved and constantly try to improve them.
Cultivate long-term relationships with your customers, suppliers, employees, and business associates.

1. WHAT IS MANAGEMENT?

DEFINITION OF MANAGEMENT

You must be familiar with essential management guidelines if you really want to succeed in business. About 70% of all business startups fail after 12 years in business. Why? Because many business owners donít know what they don't know. You should not follow them...

"Management is the art of getting things done through people."

In this definition by Mary Parker Follett:

"One category of people, known as managers, should achieve their organizational objectives by arranging others, known as subordinates to carry out the necessary tasks instead of performing those tasks themselves."

TWO TYPES OF MANAGEMENT STYLES

Western-Style
Management

Eastern-Style
(Lean) Management

Modern “Western-style” management originated in the U.S. and Europe during the last century. It is based on traditional Western management values, principles, and methods which are discussed in detail in this program.
Modern “Eastern-style” management originated in Japan during the last century. It is based on lean management values, principles, and methods which are discussed in detail in this program.
 
 
The Main Purpose Of Management is defined below, based on two management styles.
 

THE MAIN PURPOSE OF MANAGEMENT

Based On “Western-Style”
Management Guidelines

Based On “Eastern-Style”
(Lean)
Management Guidelines

The main purpose of management is to create a suitable environment in which people can perform productively and coordinate individual efforts toward achieving organizational goals, namely: creating satisfied customers and maximizing all-around operational performance and profitability of the business organization.
The main purpose of lean management is to offer the best possible value of products and services, based on quality, reliability, and price, to customers while minimizing waste and using fewer resources in an effort to maximize the all-around operational performance and profitability of the business organization.
 
 
There are two types of Business Owners and Managers who are engaged in the business of “management” and each type has its own “special attitude”. Please ask yourself to which category you belong.
 

TWO TYPES OF BUSINESS OWNERS AND MANAGERS

Business Owners And Managers
Who Want To Learn More

Business Owners And Managers
Who "Know Everything"

This category includes successful and open-minded business owners and managers, who are aware of their personal strengths and weaknesses in various areas of business management and are motivated to improve their business knowledge. These people understand that learning about management, just like any other type of learning, is a never-ending process which can only lead toward improved business performance and results.
This category includes business owners and managers, who erroneously assume that they know enough about business management to succeed in business, while in reality they don’t. Unfortunately, these people don’t realize that they only know what they know and they definitely don’t know what they don’t know. This type of attitude often leads to insufficient business knowledge, subsequent poor business performance, and potential failure.
 
 

WHY SHOULD BUSINESS MANAGEMENT KNOWLEDGE BE IMPORTANT TO YOU?

 
According to the U.S. Small Business Administration (SBA):

About 70% of all small business startups fail after 12 years in business.

Moreover, according to the American Bankruptcy Institute:

About 43,000 businesses per year filed for bankruptcy during a 1994 - 2011 period.

This means that tens of thousands of businesses close their doors every year despite all efforts by their owners to be successful. For this reason, if you plan to start a business or if you are already in business, you probably want to maximize your chances for business success and find out what you really need to know about business management to succeed in business. So, if you are ready to start this process, please sit down at your computer – you are in for a special “mind-opening” journey.
 

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Krassimir Petrov:

Principles Of Management - Lecture 1 By Krassimir Petrov.
Principles Of Management - Lecture 2 By Krassimir Petrov.
Principles Of Management - Lecture 3 By Krassimir Petrov.
Principles Of Management - Lecture 4 By Krassimir Petrov.
Principles Of Management - Lecture 5 By Krassimir Petrov.
Additional Lectures On Principles Of Management On YouTube.

© 2013 Krassimir Petrov. All rights reserved.

2. FOUR PRIME MANAGEMENT FUNCTIONS

DEFINITION OF MANAGEMENT FUNCTIONS

 
Are you familiar with four prime management functions?
 
There were several management pioneers who contributed substantially to the development of Management Science and the definition of Management Functions. Two of the most prominent management pioneers, or “management gurus”, are:

Henri Fayol, a French mining engineer and author, who published 14 Principles Of Management and General And Industrial Management in 1929 (translated from French). Henry Fayol was also instrumental in the development of Fayolism.

Frederick Winslow Taylor, an American engineer, who is regarded as the father of Scientific Management and published his Principles Of Scientific Management in 1911.

 
Definitions developed by these management science pioneers and other experts, who followed in their footsteps, were narrowed down to Four Prime Management Functions presented below.
 

FOUR PRIME MANAGEMENT FUNCTIONS

1. Planning Function.
Planning the development of specific organizational objectives and the appropriate actions to achieve those objectives. This enables management to pursue its goals in a systematic manner instead of relying on chance.
2. Organizing Function.
Organizing the company's human and material resources into a workable structure to ensure cost-effective organizational performance. This entails coordinating all working activities into an integrated operational framework, creating functional positions, and staffing them with suitable employees.
3. Leading Function.
Leading the company's employees toward accomplishment of organizational objectives. This entails directing and influencing subordinates in performing their designated duties in the most cost-efficient manner.
4. Controlling Function.
Controlling the performance of the company's employees and ensuring that the organization is progressing toward achieving its goals. This entails establishing standards of performance, measuring actual performance, comparing it against established standards, and taking action to correct any significant deviations.
 
You should also study Lean Management Guidelines and apply these guidelines in your organization whenever appropriate to maximize your business performance.

ADDITIONAL INFORMATION ONLINE

Four Functions Of Management By Larry Flick.
Management By Matt Alanis, Alanis Business Academy.
The Management Process By Matt Alanis, Alanis Business Academy.
Four Functions Of Management By Sherry Hartzell, Education Portal.
Top 10 Differences Between Managers And Leaders By Scott Williams.

3. FOUR IMPORTANT MANAGEMENT ROLES

MANAGEMENT ROLES

Are you familiar with four most important management roles?

Henry Mintzberg has been a major contributor to the development of management science during the second half of the 20th century and is still actively involved in writing and teaching management science in Montreal, Canada. He authored several Management Books during the last forty years and received world-wide recognition for his efforts.

According to Henry Mintzberg, business owners and managers must not only follow four prime management functions, outlined above, but they must also perform additional important Management Roles outlined below. (1)

FOUR IMPORTANT MANAGEMENT ROLES

1.

Leadership Role.
Managers usually act as figureheads on behalf of their company and liaison between their company and various outside organizations. Managers also act as leaders and are constantly involved in hiring training, training, motivating, and disciplining subordinates.

2.

Informational Role.
Managers constantly monitor information obtained from various external sources, such as newspapers, magazines, and business reports. Managers also disseminate essential information among employees within their organization.

3.

Decisional Role.
Managers constantly make decisions related to their company’s activities. Managers also face a broad range of problems and conflict which must be resolved to ensure successful company performance.

4.

Entrepreneurial Role.
Managers are often taking risks in undertaking new projects, investing company funds into new ventures, and developing new products and services.

 
Hopefully, this will help you better understand what you are really supposed to do and what roles you are supposed to play in your business. You should also study Lean Management Guidelines and apply these guidelines in your organization whenever appropriate to maximize your business performance.

4. CLASSIFICATION OF MANAGERS

HOW MANY MANAGERS DO YOU NEED?

How many managers do you need to help you run your business effectively?

The number of Managers in your organization will depend upon the type and size of your organization and your specific business needs and objectives.

If you are a One-Person Business, or a “Micro-Business”, you must be prepared to perform all management functions within your business and get ready to become the “Chef and the chief bottle washer”.
If you are the owner of a Small Business with 1 to 100 employees, you will certainly need to have several managers to help you manage your business to ensure effective performance.
If you are the owner of a Medium-Sized Business with 101 – 500 employees or more, you will definitely need to develop a strong management team to ensure that your organization is managed effectively and it is meeting its business objectives.

Depending upon the size of the organization, managers can be classified into three Management Types outlined below.

CLASSIFICATION OF MANAGERS

Business Owners And Top Managers

These include company president and vice-presidents.

Middle-Level Managers

These include heads of departments.

First-Level Managers

These include supervisors and foremen.

5. TIME ALLOCATION BY MANAGERS

TIME IS MONEY

Do you know how business owners and managers allocate their time?

If you really want to succeed in business – you must be prepared to work “25 hours per day!” How do you do that? Well, you will need to get up one hour earlier every morning...

You must always keep in mind that in business “Time is money!” For this reason, you should use your valuable time efficiently and depending upon the type and size of your business organization, decide wisely how much time you want to spend on performing four major management functions outlined below.

Results of the recent research indicate that managers allocate their time to various activities according to their status within the organization as illustrated below.

TIME ALLOCATION BY THREE LEVELS OF MANAGERS

Activity

Business Owners
And
Top Managers

Middle Managers

First-Level Managers

Planning 20% - 30%

10% - 20%

10% - 20%
Organizing

30% - 40%

30% - 40%

20% - 30%

Leading 20% - 30%

30% - 40%

50% - 60%

Controlling 10% - 20% 10% - 20%

10% - 20%

6. FIVE MAIN OPERATIONAL AREAS IN A COMPANY

OPERATIONAL ACTIVITIES

Do you feel that your challenges in business are unique?

Most likely, your answer will be “Yes”. However, in reality most small and medium-sized businesses usually face common challenges and are involved in similar operational activities. The only real differences are the types of business, namely: merchandising (wholesale or retail), service, manufacturing, project or contract management, and the size of the business organization.

Most activities within any small and medium-sized organization may be allocated to one of the five functional areas of Operational Activities outlined below. You just need to decide which of these activities are relevant to your specific business operation.

You should also study Lean Management Guidelines and apply these guidelines to your operational activities whenever appropriate to maximize your business performance and results.

FIVE AREAS OF OPERATIONAL ACTIVITIES IN A COMPANY

General Management Activities

Human
Resources Management Activities

Financial Management Activities

Operations Management Activities

Marketing
And Sales Management Activities

 
GENERAL MANAGEMENT ACTIVITIES
 
Applying lean management guidelines to general management activities.
Developing effective internal environment and a positive organizational culture.
Making sound business management decisions.
Developing and implementing realistic strategic plans.
Formulating effective policies, procedures, and rules
Implementing management by objectives procedures
Developing and implementing attainable operational plans
Formulating a plan of management
Organizing human and material resources into a workable structure
Developing a strong management team
Leading employees toward achieving the company’s objectives
Establishing clear lines of communication
Controlling management and employee performance
Promoting ethical behavior by management and employees
Monitoring company's results and taking corrective actions
 
HUMAN RESOURCES MANAGEMENT ACTIVITIES
 
Applying lean management guidelines to human resources management activities.
Conducting job analysis for various jobs
Preparing job descriptions and job specifications
Planning and forecasting employee requirements
Recruiting and hiring employees
Screening and testing applicants
Conducting employment interviews
Conducting employee orientation
Training and developing employees
Motivating and compensating employees
Conducting employee performance appraisals
Maintaining employee career management
Establishing sound labor-management relations
Resolving interpersonal conflicts
Ensuring employee safety and health
 
FINANCIAL MANAGEMENT ACTIVITIES
 
Applying lean management guidelines to financial management activities.
Maintaining a bookkeeping system
Collaborating with accountants in preparing financial statements
Evaluating the company's financial performance
Preparing operating, capital expenditure, and cash budgets
Formulating tax strategies
Identifying suitable sources of finance
Maintaining internal control and cash management
Maintaining control of purchases and disbursements
Maintaining credit control
Maintaining inventory management and control
Maintaining capital assets management and control
Maintaining payroll accounting
Determining  actual costs of products, services, projects, and contracts
Developing pricing methods for products, services, projects, and contracts
Preparing management accounting reports
Managing computerized accounting program
 
OPERATIONS MANAGEMENT ACTIVITIES
 
Applying lean management guidelines to operations management activities.
Maintaining product selection, design, and standardization
Maintaining process design
Managing the design office
Evaluating, selecting, and purchasing equipment
Developing plant layout
Maintaining and replacing equipment
Managing tool purchasing and control
Estimating product, service, project, and contract costs
Planning and controlling operations
Maintaining supply chain and material management
Purchasing materials and services
Maintaining inventory control, storage, and dispatch
Maintaining quality control
Developing lean operations including kaizen and just-in-time methods
Managing service operations
Managing projects and contracts
 

MARKETING AND SALES MANAGEMENT ACTIVITIES

 
Applying lean management guidelines to marketing and sales management activities.
Gathering marketing information
Implementing target marketing
Measuring and forecasting market potential
Formulating effective marketing strategies
Developing and implementing product, pricing, promotional, and distribution strategies
Developing and implementing effective direct marketing strategies
Preparing effective marketing plans
Initiating the sales process.
Preparing realistic sales plans and budgets
Developing the sales organization
Recruiting, training, and motivating sales personnel
Allocating, compensating, and controlling the sales force

7. ENTREPRENEURSHIP AND MANAGEMENT SCIENCE

ENTREPRENEURSHIP

Are you an entrepreneur?

According to Webster dictionary:

Entrepreneur is one who organizes and directs a business undertaking, assuming the risk for the sake of profit.

Entrepreneurship is the cornerstone of a free market economy system all over the world and it represents the driving force behind the U.S. economy. About 28 million entrepreneurs provide substantial contribution to the $16.2 Trillion U.S. Gross Domestic Product (GDP) and create approximately 60% of all new jobs in the U.S. every year.

Entrepreneurs, or Business Owners, are people who are highly determined and goal-oriented, have a strong personality, want to control their own destiny, and remain independent at any price. These people are willing to pursue their passion and dreams, think “outside the box”, develop new ideas, create new products and services, start new businesses, take chances and financial risks, and invest their valuable time in what they really believe in.

The majority of entrepreneurs usually start a small business as a “one-person show” with the intention of developing their business into something much bigger. Some entrepreneurs succeed far beyond their expectations, while others remain small and continue to struggle for many years.

According to the U.S. Small Business Administration (SBA):

About 70% of all small business startups fail after 12 years in business.

One of the main reasons for business failure is lack of business management knowledge and experience. Another important reason for business failure relates to the fact that not everybody is actually “cut out” to be in business. For this reason, you are strongly advised to self-evaluate your personal suitability for business success and complete a free Entrepreneurship Test online.

MANAGEMENT SCIENCE

Are you familiar with the basic elements of management science?

All trade and professional people must possess specific knowledge and use appropriate tools to achieve their objectives. There is no exception to this rule, and for this reason it also applies to entrepreneurs.

One of the most important tools, which enable you and your management team to achieve your business objectives, is business management knowledge. This knowledge is embodied in various elements of Management Science and it will provide you with the best guarantee for your long-term success in business.

The modern management science has been developed over the last century and it is represented by two distinctive management styles presented below.

TWO STYLES OF MANAGEMENT SCIENCE

Western-Style
Management Science

Eastern-Style
Management Science

The modern “Western-style” management science was developed during the last century in U.S. and Europe and it provides the foundation for traditional Western-style management.
The modern “Eastern-style” management science was developed during the last century in Japan and it provides the foundation for lean management. This style has also gained strong popularity in the U.S. and the West.
 

Entrepreneurship And Management Science are discussed in detail in Tutorial 1.

* Note:

Any reference to gender means "he" or "she" throughout this program.

8. THE LEAN BUSINESS ENGINEERING METHOD

THE IRONY ABOUT THE PROFESSION CALLED “SMALL BUSINESS OWNER”

There is a certain irony about the “profession” called Small Business Owner because:

The majority of people in business don't have business management education, while the majority of people with business management education are not in business!

People who want to become doctors, engineers, or attorneys, for example, must go to college or university, study hard for many years, and pass numerous difficult tests before they can start their own professional practice. Entrepreneurs, conversely, can start a small business without any formal business education virtually “overnight”, but unfortunately only 30% remain successful in the long term.

There are many Business Colleges and Business Schools which provide various business management courses and offer Master Of Business Administration (MBA) degrees in business management. However, the majority of MBA graduates usually look for a job in large corporations. According to CNN, Fortune & Money only 16% of MBA graduates actually start their own business.

30% SMALL BUSINESS SURVIVAL RATE

According to the U.S. Small Business Administration (SBA) and the U.S. Bureau Of Labor Statistics:

About 30% of all small business startups survive after 12 years in business.

Moreover, according to Small Business Trends, low survival rates for startups clearly indicate that thousands of business owners experience serious problems and struggle to stay in business. One of the main reasons for low business startup survival rates is that many business owners lack basic knowledge and experience in various areas of business management.

THE LEAN BUSINESS ENGINEERING METHOD

Are you familiar with the lean business engineering method?

The Lean Business Engineering Method is a unique management method, designed to enhance your chances for success in business. This method will provide you and your management team with practical solutions in business management and enable you to improve your knowledge in various areas of business management on a do-it-your-self basis.

The lean business engineering method was developed during the last 25 years and it is designed to provide you with comprehensive business management guidelines and a cost-effective alternative to spending tens of thousands of dollars and several years in a university to get an MBA degree. The term “business engineering” was first introduced by Joseph Shetzen in 1990 in his two-volume book: Maximum Performance: The Dow Jones-Irwin Complete Guide To Practical Business Management published by Dow Jones-Irwin, currently the McGraw-Hill Companies, Inc. in 1990

The lean business engineering method is at the core of the Lean Business 2100 Management Program and it incorporates two main components presented below.

TWO COMPONENTS OF THE LEAN BUSINESS ENGINEERING METHOD

The Business Engineering Method

Lean Management

The prime purpose of the business engineering method is to provide cross-functional management guidelines, designed to enable business people to maximize business performance, based on “Western-style” business management values, methods, and principles originated in the U.S. and in Europe.
The prime purpose of lean management is to provide practical and cost effective management guidelines to business people, designed to enable them to maximize business performance, based on “Eastern-style” business management values, methods, and principles originated in Japan.
 
 

UNIVERSAL MANAGEMENT TOOL

This Lean Business 2100 Management Program provides a knowledge-based foundation for the lean business engineering method and it is designed as a Universal Management Tool which can be used as follows:

Learning Tool for MBA students.
Management Tool for professional managers.
Be-Your-Own-Management-Consultant Tool for small and medium-sized business owners.
Professional Management Tool for management consultants and pro-active CPAs.

The Lean Business 2100 Management Program represents a practical and comprehensive Mini-MBA Course for small business owners, professional managers, management consultants, CPAs, and MBA students alike. This program prescribes cross-functional self-training for business owners and managers and provides detailed operational guidelines in various areas of business management.

The Lean Business Engineering Method is discussed in detail in Tutorial 1.

9. LEAN MANAGEMENT

WHAT IS LEAN?

Are you familiar with lean management?

Lean represents a unique methodology designed to maximize customer value while minimizing waste and using fewer resources.

Lean embodies some of the best management concepts, principles, methods, and values which are critical in developing an effective business organization and improving every aspect of its performance on a continuous basis. Various elements of lean were developed in Japan and for this reason lean represents “Eastern-style” school of management. Lean has many practical applications in all areas of operational activities and it can be used very effectively by a one-person business owner or by any type of small, medium-sized, and large business organization.

The term “Lean” was first introduced by John Krafcik in his 1988 article, ”Triumph Of The Lean Production System”, based on his master's thesis at MIT. Initially, this term applied exclusively to manufacturing processes in a large scale production environment. However, later lean concepts, methods, and tools have been expanded to cover a broad range of manufacturing and non-manufacturing processes alike in companies of all sizes.

WHAT IS LEAN MANAGEMENT?

The main purpose of Lean Management is to provide customers with a perfect value of products and services by developing a perfect value-creation process that has zero or minimal waste.

Lean management is a practical management process designed to enable any business organization to become a “lean organization” and implement “lean values, principles, and guidelines” in the most cost-effective manner. Lean management methods are quite different from the traditional “Western-style” business management methods which you may be using at present.

Modern lean management has its origin with Toyota Production System (TPS) developed in Japan and it has evolved gradually over the last sixty years. The main purpose of lean management is to maximize the all-around operational performance and profitability of any business organization by offering the best possible value of products and services, based on quality, reliability, and price, to customers while minimizing waste and using fewer resources.

CRITICAL LEAN MANAGEMENT VALUES AND PRINCIPLES

The most critical Lean Management Values And Principles are:

Your customers are the most important part of your business.
Offer your customers the best possible value and purchasing experience.
Treat your customers in the best possible way at present and in the future.
Develop long-term mutually beneficial relationships with your customers.
Treat your employees with genuine care, dignity, and respect.
Reward and compensate your employees fairly based on their performance.
Identify operational inefficiencies and waste in a timely manner.
Maximize value-added activities and minimize non-value-added activities.
Improve all operational processes and activities on a continuous basis.
Maximize quality at the source of all operational processes and activities.
Create a continuous flow environment based on a customer-driven “pull” sequence.
Ensure maximum safety for all customers and employees.
Motivate all employees to adhere to high ethical standards of behavior.
Maintain effective communication with employees, suppliers, and customers.
Whatever you do - do it right the first time around.
Motivate all employees to participate in operational improvement processes.
Keep an “open mind” and encourage all employees to do the same.
Never “rest on your laurels” and always strive for continuous improvement.
 

MAIN ELEMENTS OF LEAN MANAGEMENT

Hoshin Kanri

Kaizen

Just-In-Time

Jidoka (Autonomation)

Total Productive Maintenance (TPM)

         
 
Lean management offers numerous benefits to business owners and managers as outlined below.
 

WHAT CAN LEAN MANAGEMENT DO FOR YOU?

1.

Lean management represents a universal tool for business owners and managers.

2.

Lean management includes cost-effective management methods.

3.

Lean management provides practical management guidelines.

4.

Lean management makes good business sense.

5.

Lean management represents a strong and positive business culture.

6.

Lean management provides comprehensive solutions in business management.

Lean Management is discussed in detail in Tutorial 1.

10. PRINCIPLES OF DECISION MAKING IN BUSINESS

PRINCIPLES OF DECISION MAKING IN BUSINESS

Are you familiar with the basic principles in the decision-making process?

The ability of small business owners to make good Decisions is of paramount importance to the success of any organization, irrespective of its size. Small business owners are faced with making decisions on a daily basis and this represents an integral part of the business process.

Unfortunately, many small business owners often make poor decisions and subsequently, their companies suffer in different ways. Many business owners frequently make one common error in the management decision-making process. They are usually looking for the right answers and often reach wrong conclusions based on erroneous assumptions.

The key to an effective Decision-Making Process is not to look for correct answers, but to ask correct questions regarding the company’s performance and activities. These questions should relate to the company’s planning activities, organizing activities, leading activities, and controlling activities in all operational areas.

It is essential that you and your management team understand the Principles Of Decision Making to ensure successful performance and growth of your organization. Moreover, it is important that you become familiar with the basic Steps In The Decision-Making Process outlined below.

STEPS IN THE DECISION-MAKING PROCESS

1.

Evaluate the existing situation.

2.

Define problems and identify root causes.

3.

Develop and evaluate optional strategies.

4.

Select the most suitable strategies and develop a plan of action.

5.

Assign the responsibility for implementing the plan of action.

6.

Implement the plan of action.

7.

Evaluate results and make adjustments.

8.

Repeat the process whenever necessary.

You should also study Lean Management Guidelines and apply these guidelines to your organization during the decision-making process whenever appropriate to maximize your business performance.
Principles Of Decision Making are discussed in detail in Tutorial 1.

11. BUSINESS ENVIRONMENT AND ORGANIZATIONAL CULTURE

BUSINESS ENVIRONMENT AND ORGANIZATIONAL CULTURE

Are you familiar with the basic elements of business environment?

Some business owners don’t pay enough attention to various elements of Business Environment, nor develop a proper Organizational Culture within their companies. To them, these issues are not as important as, for example, cash flow and profitability.

The reality, however, is quite different. All business owners are influenced by business environment which plays a critical role in the success or failure of every business. Business environment consists of two basic elements outlined below.

ELEMENTS OF BUSINESS ENVIRONMENT

External Environment Internal Environment
 
 
The External Business Environment consists of several elements outside of an organization which influence its development and performance in the marketplace. It is essential, that you and your management team get a better understanding of various elements of external environment, which play a paramount role in your business.
 

FIVE TYPES OF EXTERNAL BUSINESS ENVIRONMENT

Economic
Environment
Social
Environment
Technological
Environment
Competitive
Environment
Global Business
Environment
         
 
Each type of the external business environment is discussed in detail in this program.
 

CRITICAL ELEMENTS OF EXTERNAL BUSINESS ENVIRONMENT

Customers Suppliers Banks Laws And Regulations
       
 
It is also important that you and your management team get a better understanding in developing and cultivating Internal Resources within your organization outlined below.
 

MAIN ELEMENTS OF THE INTERNAL ENVIRONMENT

Human
Resources
Financial
Resources
Operational
Resources
Marketing
Resources
Organizational
Culture
         
 
You and your management team must be knowledgeable and well-prepared to carry out specific Management Tasks, directly related to these resources to ensure their cost-effective utilization within your organization. This, in turn, will enable you to secure a profitable long-term organizational performance.
 

IMPORTANCE OF ORGANIZATIONAL CULTURE

Are you familiar with the basic elements of organizational culture?

Some business owners have no idea what Organizational Culture is really all about. Obviously, if you are a “one-person business”, you just need to apply your personal values to your daily business activities and do your best on a continuous basis. However, when your company starts to grow, it will be of paramount importance to set basic guidelines for ethical and effective organizational culture. A properly developed organizational culture in any organization is as important as a solid foundation of any building. According to James Sinegal, co-founder of Costco:

“Culture is not the most important thing, it’s the only thing”.

Unfortunately some business owners don’t pay any attention to the development of the organizational culture within their business. In fact, they usually feel that this is a “waste of time”. In reality, however, absence of a well-defined organizational culture often becomes one of the biggest reasons for business failure in many organizations, irrespective of their size.

Business Environment And Organizational Culture are discussed in detail in Tutorial 1.

12. THE PLANNING PROCESS

THE PLANNING PROCESS

Are you familiar with the basic steps in the planning process?

Planning is the first essential managerial responsibility in any organization. The Planning Process, therefore, represents the foundation of all operational activities within the company. Small business owners must be engaged in the planning process regarding all aspects of their company’s operational activities outlined below.

THE PLANNING PROCESS IN FIVE AREAS OF OPERATIONAL ACTIVITIES

General Management Activities

Human Resources Management Activities

Financial Management Activities

Operations Management Activities

Marketing
And Sales Management Activities

         
 

CRITICAL IMPORTANCE OF THE PLANNING PROCESS

Planning is critically important in every organization because without proper planning everybody will start “running in circles” and the entire business operation will become totally unproductive. Unfortunately, many small business owners don’t spend enough time in planning their company’s operational activities in a professional manner and this causes many businesses to perform poorly and lose money in the process.

You and your management team must pay serious attention to the planning process and become familiar with two basic types of planning outlined below.

TWO TYPES OF PLANNING

Strategic Planning

Operational Planning

Strategic planning deals with long-term and medium-term planning activities (between one to five years) on organization-wide basis and involves the top management team. The main purpose of strategic planning is to develop an overall long-term direction for the business organization to ensure its successful performance.
Operational planning deals with short-term planning activities for a period of up to one year and involves managers who are responsible for meeting specific operational objectives. The main purpose of operational planning is to ensure cost-effective implementation of practical solutions on the organization-wide basis.
 
 
Main Steps In The Planning Process are outlined below.
 

STEPS IN THE PLANNING PROCESS

1.

Identify the opportunities in the market place.

2.

Establish objectives.

3.

Develop the premises.

4.

Identify alternative courses of action.

5.

Evaluate alternative courses of action.

6.

Select the most suitable course of action.

7.

Formulate supporting plans.

8.

Summarize financial plans.

 

DON’T FORGET LEAN MANAGEMENT GUIDELINES

All information about the planning process, including strategic and operational planning presented in this check point, is based on Western-style management guidelines and it provides critical foundation to every business owner and manager. However, it is equally important to learn about the Hoshin Kanri, which is based on lean management guidelines and presented in this program. Hoshin Kanri is designed to enable business owners and managers to develop and implement effective long-term and short-term plans on a company-wide basis and involve employees on all levels in this process.

The Planning Process is discussed in detail in Tutorial 1.

13. STRATEGIC PLANNING

IMPLEMENTATION OF STRATEGIC PLANS

Are you familiar with the basic steps in the strategic planning process?

Strategic Planning represents the foundation of the entire planning process in every business organization. Strategic planning, in fact, represents the most critical factor in determining the company’s overall long-term direction, just like a GPS helps the captain to navigate a ship in the ocean.

Many small business owners erroneously assume that strategic planning is designed to be used only by managers in large organizations. They couldn’t be more mistaken. Strategic planning is equally important for all companies, irrespective of their size, just like a GPS is equally important for a small fishing boat, as well as a large ocean liner.

For this reasons you and your management team must realize the importance of strategic planning and become familiar with the basic principles of the Strategic Planning Process. This will be the only way to enable you to navigate your business toward successful long-term performance and profitability.

Steps in the strategic planning process are outlined below.

STEPS IN THE STRATEGIC PLANNING PROCESS

1.

Define your company’s mission.

2.

Establish your company’s objectives.

3.

Conduct your company’s situational analysis.

4.

Develop and evaluate alternative strategies.

5.

Select the most suitable strategy.

6.

Develop supporting plans.

7.

Implement strategy and supporting plans.

8.

Evaluate strategy and supporting plans.

Strategic Planning is discussed in detail in Tutorial 1.

14. IMPLEMENTATION OF STRATEGIC PLANS

IMPLEMENTATION OF STRATEGIC PLANS

Are you familiar with the implementation of strategic plans?

The ultimate result of any planning process lies not in its development, but in its effective implementation. Some business owners prepare sophisticated strategic business plans for their companies, but in the end these plans remain buried in filing cabinets. Effective Implementation Of Strategic Plans, therefore, represents the ultimate planning objective of every business owner, irrespective of the company’s size.

The implementation of strategic plans, which by definition are long-term plans, must be supported by several short-term plans to ensure effective results. The supporting short-term elements of a strategic plan are outlined below.

 

SUPPORTING SHORT-TERM ELEMENTS OF A STRATEGIC PLAN

Tactics

Policies

Procedures

Rules

       

Some business owners assume that these short-term supporting plans are specifically designed to be used by large organizations. This assumption, however, is incorrect.

It is essential therefore that you and your management team consider several types of short-term plans outlined above and use these plans in accordance with your company’s specific requirements.

The implementation of strategic plans will also depend upon your company’s specific internal situation and overall business conditions. Subsequently, you will be able to consider several Strategic Long-Term Options outlined below.

STRATEGIC LONG-TERM OPTIONS

1.

Limited growth.

2.

Expansion.

3.

Retrenchment through consolidation.

4.

Retrenchment through divestment.

5.

Retrenchment through liquidation.

6.

Combination of the above strategies.

 

COMPANY POLICIES AND RULES

Are you familiar with the development of company policies and rules?

If you own a small or medium-sized company, you should develop specific Company Policies related to various areas of your company’s operational activities. These policies should cover the following areas of operational activities: general administration, human resources, finance and accounting, operations, marketing and sales.

Finally, you should also develop Company Rules designed to spell out specific guidelines for employee behavior within your organization. In reality, unfortunately, some small businesses don’t have any written rules, and this, in turn, often causes poor operational performance.

Implementation Of Strategic Plans is discussed in detail in Tutorial 1.

15. MANAGEMENT BY OBJECTIVES

MANAGEMENT BY OBJECTIVES

Are you familiar with the management by objectives process?

Management By Objectives (MBO) represents a very useful management tool widely used by many business owners and managers. The importance of this tool can’t be overstated, since it represents one of the most practical ways to improve any company’s performance in a relatively short period of time.

The prime purpose of management by objectives is to take advantage of positive attitudes of employees, to create a suitable atmosphere within the organization, to enable managers and subordinates to evaluate their performance and compare actual results, to ensure effective control of performance, and to improve overall performance results within the organization in the long run.

As a small or medium-sized business owner, you and your management team should apply the Management By Objectives Process (The MBO Process) within your company. This process entails several steps outlined below.

STEPS IN THE MANAGEMENT BY OBJECTIVES PROCESS

1.

Set goals.

2.

Plan action.

3.

Implement action.

4.

Review action.

5.

Repeat steps 1 – 4 above on a regular basis.

 

IMPLEMENTATION OF THE MANAGEMENT BY OBJECTIVES PROCESS

Implementation of the MBO in your organization is a simple process and it can be effectively introduced to each member of your management team. The key to successful implementation of the MBO process requires full commitment to this process by each member of your management team. During the MBO process, managers and subordinates set joint objectives related to various operational activities. Each participant must have sufficient autonomy in producing planned results to ensure an effective implementation process. Finally, the MBO process entails frequent review of the program performance and evaluation of results.

Management By Objectives is discussed in detail in Tutorial 1.

16. OPERATIONAL PLANNING

OPERATIONAL PLANNING

Are you familiar with the basic steps in the operational planning process?

Operational Planning represents an integral part of the overall planning process. If strategic planning provides the boundaries and the overall direction in which the company is heading in the long run, then the operational planning deals with the actual day-to-day operational activities within and outside the organization.

Operational planning represents a very important function of any small business owner and senior management within the company. If strategic planning is designed to provide answers regarding where the organization is heading, then operational planning is designed to provide answers regarding how the company plans to get there and when it plans to achieve specific organizational objectives.

Business owners should also be aware of the following steps in the Operational Planning Process outlined below.

STEPS IN THE OPERATIONAL PLANNING PROCESS

1.

Establish an objective or a set of objectives.

2.

Define the present situation.

3.

Identify operational methods.

4.

Develop a plan or a set of actions to achieve the company’s objectives.

 

OPERATIONAL PLANNING IN A SMALL BUSINESS

Operational planning in a small or medium-sized business can be done on the following basis:

• Daily planning.
• Weekly planning.
• Quarterly planning.
• Semi-annual planning.
• Annual planning.

Operational planning relates to five management areas within the organization presented below.

FIVE AREAS OF OPERATIONAL PLANNING IN A SMALL BUSINESS

General Management Guidelines

Human Resources Management Guidelines

Financial Management Guidelines

Operations Management Guidelines

Marketing
And Sales Management Guidelines

         

Operational Planning is discussed in detail in Tutorial 1.

17. BUSINESS PLAN

BUSINESS PLAN

Are you familiar with the basic elements of a business plan?

A well-defined Business Plan represents the final result of all planning activities undertaken by management within any organization. Business plans are used very effectively for internal purposes by providing the management team with comprehensive guidelines for running their business. Business plans are also used for external purposes by providing various lending institutions with critical information about an organization during a loan application process.

In order for the business plan to be effective, each element of the planning process has to be implemented in a professional manner. This, in fact, represents one of the most important tasks and the biggest challenge for every business owner irrespective of the company's size.

The business plan comprises various elements derived from the strategic planning, operational planning, and management by objectives activities undertaken by management. A professionally managed organization, therefore, should have the following Elements Of The Business Plan outlined below.

ELEMENTS OF THE BUSINESS PLAN

1.

The company’s values and mission statement.

2.

Summary of the company’s strategic objectives.

3.

The company’s situational analysis summary.

4.

Summary of the company’s opportunities and threats in the marketplace.

5.

The company’s strategic plan.

6.

The company’s supporting plans.

7.

The company’s operational plan of action.

8.

The company’s budgets.

 

THE BUSINESS PLAN COVERAGE

A well-prepared business plan represents the ultimate responsibility of your entire management team. A comprehensive business plan should adequately cover the following areas of your company's Operational Activities presented below.

Absence of a sound business plan, on the other hand, will lead your company in a wrong direction and may cause poor operational performance and potentially serious financial losses in the long term.

THE BUSINESS PLAN MUST COVER FIVE OPERATIONAL AREAS

General Management Plan

Human Resources Management Plan

Financial Management Plan

Operations Management Plan

Marketing
And Sales Management Plan

         

Business Plan is discussed in detail in Tutorial 1.

18. THE ORGANIZING PROCESS

THE ORGANIZING PROCESS

Are you familiar with the basic steps in the organizing process?

Organizing is the second essential managerial responsibility, after Planning of various operational activities, within the organization. The implementation of the Organizing Process, therefore, represents a vital step in converting the company’s plan of management into reality. You and your entire management team are responsible for ensuring that the organizational process is implemented in your company in a professional manner.

If the planning process is designed to provide answers regarding where the company is heading, what needs to be accomplished by the company and when it needs to be accomplished, then the organizing process is designed to provide answers regarding how the organization plans to accomplish these tasks through a specific organizational structure.

The organizing process in a company of any size entails a number of steps outlined below.

STEPS IN THE ORGANIZING PROCESS

1.

Identify and classify activities which must be carried out in accordance with the strategic and operational plans.

2.

Group all required activities in light of the available resources and current environment.

3.

Create organizational structure and departmentalize all activities.

4.

Develop an organizational chart and create functional positions within the organization.

5.

Assign authority, responsibility and accountability to every functional position.

6.

Establish and coordinate the relationships among all functional positions.

The organizing process must be professionally implemented in the following areas of company’s operational activities presented below.

ORGANIZING IS REQUIRED IN FIVE OPERATIONAL AREAS

General Management Activities

Human Resources Management Activities

Financial Management Activities

Operations Management Activities

Marketing
And Sales Management Activities

         

The Organizing Process is discussed in detail in Tutorial 1.

19. ORGANIZATIONAL DEPARTMENTALIZATION

ORGANIZATIONAL DEPARTMENTALIZATION

Are you familiar with the basic elements of organizational departmentalization?

Organizational Departmentalization represents one of the first steps in the organizing process in any company. Small business owners and the entire management team are responsible for ensuring a professionally conducted organizational departmentalization.

Obviously, a one-person operation does not require this type of organizing, since the business owner will be the “chef and the chief bottle-washer”. However, growing small businesses certainly need to develop an effective organizational structure to ensure effective operational performance.

You and your management team should also be aware of three types of Organizational Structures presented below.

THREE TYPES OF ORGANIZATIONAL STRUCTURES

   

Functional
Structure

 

Divisional
Structure

 

Matrix
Structure

 

ORGANIZATIONAL STRUCTURES USED BY MANY SMALL BUSINESSES

The majority of small business owners commonly use a Functional Structure in designing their operational activities. Based on this method of departmentalization and depending upon the number of employees, a small business owner will be in charge of the general administration department, and several members of the management team will be in charge of human resources, finance and accounting, operations, and marketing and sales departments.

When the company grows in size and volume of operations, management may consider a Divisional Structure for departmentalization of operational activities. This type of structure may offer management three different options presented below.

THREE METHODS OF ORGANIZATIONAL DEPARTMENTALIZATION

   

Departmentalization
By
Product Or Service

 

Departmentalization
By
Market Or Customer

 

Departmentalization
By
Territory

A Matrix Structure is often used by business owners in specialized product or project management organizations.

Organizational Departmentalization is discussed in detail in Tutorial 1.

20. MANAGEMENT STRUCTURE

MANAGEMENT STRUCTURE

Are you familiar with the basic elements of management structure?

Effective Management Structure is of paramount importance to any successful business organization. This applies to small, medium-sized, and large companies alike. The development of an effective management structure represents, therefore, a critical management responsibility of every business owner.

Obviously, the management structure in a very small company is often limited to one or two key members of the company’s management team, which may include the business owner and an associate, or two partners, or two spouses. However, when the company begins to grow, the management team may grow as well and this is when the structured approach becomes very important.

AUTHORITY, RESPONSIBILITY, AND ACCOUNTABILITY

The development of a management structure is usually based on the company’s operational activities and organizational goals. Each manager in a well-defined management structure must be assigned a certain level of Authority, Responsibility, and Accountability to ensure that the company’s objectives are met in a cost-efficient manner.

It is also important that the company’s management team adheres to the Unity Of Command Principle to avoid any confusion among employees within the company. Moreover, it is important that the management team understand the differences between Line Relationships and Staff Relationships within the organization to ensure cohesive relationships between managers and employees.

ORGANIZATIONAL CHART

The ultimate outcome of the management structure development process is an Organizational Chart. This chart represents a “Management Driving Map”, which you can use for effective delegation of authority, responsibility and accountability within your organization. The organizational chart is also very helpful in developing clear lines of communication and avoiding confusion between management and other employees.

One of the main reasons for business failure is that business owners often don’t pay enough attention to the development of an effective management structure. Many business owners have no idea what an organizational chart is, and those who are aware of this chart still run their business without it. There are also many business owners who are pre-occupied with their own “ego-trip” and by micro-managing their business they often become the biggest “bottleneck” within their own organization. You definitely don’t want to follow their bad example.

Management Structure
is discussed in detail in Tutorial 1.

21. ORGANIZATIONAL DESIGN, DEVELOPMENT, AND CHANGE

ORGANIZATIONAL DESIGN, DEVELOPMENT, AND CHANGE

Are you familiar with the basic elements of organizational design, development, and change?

The process of Organizational Design, Development, And Change begins with the completion of the Organizational Chart. This chart provides the management team with a Management Driving Map which shows how authority, responsibility and accountability are allocated to managers and employees and how communication should flow between all managers and employees within the organization.

Organizational design, development, and change do not happen in isolation from other managerial activities. There are four key elements that affect the organizational design and they include the following factors outlined below.

FOUR KEY ELEMENTS THAT AFFECT ORGANIZATIONAL DESIGN

1.

Company strategy.

2.

Company environment.

3.

Company technology.

4.

Company employees.

Business owners also need to take into account the nature of the External Environment, in which their organization has to operate. This may include stable environment, changing environment, or turbulent environment.

Moreover, it is essential to take into account the specific Type Of Operations presented below.

TYPES OF OPERATIONS THAT AFFECT ORGANIZATIONAL DESIGN

Manufacturing
Operations

Service
Operations

Merchandising
Operations

Project Management And Contractors

Larry E. Greiner developed the Greiner Curve and identified six important Phases Of Organizational Growth that need to be taken into account by business owners during the process of organizational design and development as outlined below.

SIX PHASES OF ORGANIZATIONAL GROWTH

1.

Growth through creativity.

2.

Growth through direction.

3.

Growth through delegation.

4.

Growth through coordination.

5.

Growth through collaboration.

6.

Growth through alliances.

The final element of this process is Change Management which represents a structured approach designed to facilitate a smooth and successful transition by individuals, teams, and organizations from their current state to a desired future state to maximize the organizational performance and results.

Organizational Design, Development, And Change is discussed in detail in Tutorial 1.

22. THE LEADING PROCESS

THE LEADING PROCESS

Are you familiar with the basic steps in the leading process?

Leading is the third essential managerial responsibility after Planning and Organizing various operational activities within the organization. The implementation of the Leading Process, therefore, represents another vital step in converting the company’s plan of management into reality. Small business owners and the entire management team are responsible for ensuring that the leading process is implemented in a professional manner.

Some business owners frequently confuse the concept of a Manager with the concept of a Leader. These two concepts are not really the same and it is important to understand the difference between them. Managers can be trained and they are usually appointed to perform specific tasks within the organization, while leaders usually do not require a special appointment. Many business owners may act as strong leaders by taking the initiative in starting a business and taking subsequent action. However, they often need to get additional business education to become good managers.

You and your management team should be aware of two specific Leadership Styles presented below.

TWO TYPES OF LEADERSHIP STYLES

 

Task-Oriented
Leadership Style

 

Employee-Oriented
Leadership Style

You should also be aware of three important factors which influence leadership styles. These factors are outlined below.

FACTORS WHICH INFLUENCE LEADERSHIP STYLES

1.

Management.

2.

Subordinates.

3.

Organizational situation.

Paul Hersey and Ken Blanchard developed a Situational Leadership Theory which suggests that there is no single “best” style of leadership that leadership style may undergo several evolution stages outlined below.

FOUR EVOLUTION STAGES RELATED TO LEADERSHIP STYLES

1.

“Telling” leadership style.

2.

“Selling” leadership style.

3.

“Participating” leadership style.

4.

“Delegating” leadership style.

The Leading Process is discussed in detail in Tutorial 1.

23. PRINCIPLES OF COMMUNICATION

PRINCIPLES OF COMMUNICATION

Are you familiar with the basic principles of effective communication?

Nothing can happen within any organization without good communication. It is essential, therefore, that business owners and managers learn and understand the Principles Of Communication to ensure the successful performance of their company.

Communication is critical in establishing and communicating organizational objectives, developing functional plans, selecting, developing and appraising employees, leading, motivating and controlling the performance of employees, arranging and utilizing physical resources, purchasing materials and services, and dealing with customers, suppliers and various organizations in the most efficient manner.

You and your management team should be aware that an ordinary Communication Process entails six basic components outlined below.

SIX COMPONENTS OF THE COMMUNICATION PROCESS

1.

Sender or source.

2.

Message.

3.

Channel.

4.

Receiver.

5.

Feedback.

6.

Noise.

You and your management team should also be aware that there can be different Types Of Communication within any organization outlined below.

FOUR TYPES OF COMMUNICATION

1.

Vertical downward communication.

2.

Vertical upward communication.

3.

Horizontal communication.

4.

Diagonal communication.

American Management Association (AMA) has developed the Ten Commandments Of Good Communication, which should be very helpful for all business owners and employees alike. Moreover, since communication is a two-way process, listening skills are also vitally important in an effective communication process. The Ten Commandments Of Effective Listening are also included in this program.

Principles Of Communication are discussed in detail in Tutorial 1.

24. THE CONTROLLING PROCESS

THE CONTROLLING PROCESS

Are you familiar with the basic steps in the controlling process?

Controlling is the fourth essential managerial responsibility after Planning, Organizing, and Leading various operational activities within the organization. The implementation of the Controlling Process, therefore, represents the ultimate step in converting the company’s plan of management into reality. Small business owners and the entire management team are responsible for ensuring that the controlling process is implemented in a professional manner.

You and your management team should be aware that the controlling process in your organization entails four basic steps as outlined below.

FOUR STEPS IN THE CONTROLLING PROCESS

1.

Establish the required standards and methods for measuring performance.

2.

Measure the actual performance.

3.

Compare the actual performance with the required standards and measure the variance between them.

4.

Take corrective action if there is a variance and repeat the process.

You should also know that there can be different Types Of Management Control within any organization as outlined below.

THREE TYPES OF MANAGEMENT CONTROL

1.

Feed-forward control.

2.

Concurrent control.

3.

Feedback control.

One of the main reasons for business failure is that business owners and managers don’t pay enough attention to the controlling function within their organization. Many business owners and managers are often not fully aware of the real feelings among employees and customers alike. They are mainly pre-occupied with the company’s financial issues and profitability and frequently neglect the most important aspects of the business, namely, its customers and employees.

There are also many business owners and managers who are so pre-occupied with their own narrow-ranged priorities that they often miss the reality of the “big picture” and subsequently their companies produce poor results.

The Controlling Process is discussed in detail in Tutorial 1.

 

25. MANAGERIAL ETHICS

MANAGERIAL ETHICS

How critical are managerial ethics in your organization?

Parents always teach their children to be honest and ethical when dealing with other children and adults. However, when these children grow up and become small business owners, some of them simply forget about the basic elements of honesty and decent behavior. They erroneously assume that they can make more money through unethical behavior.

You and your management team should be aware that Managerial Ethics are an integral element of any successful organization and ethical behavior will always “pay dividends” in the long run. There are several factors which influence Ethical Behavior in the marketplace outlined below.

FACTORS WHICH INFLUENCE ETHICAL BEHAVIOR

1.

Government regulations.

2.

Industry ethical codes.

3.

Social pressures.

4.

Organizational framework.

5.

Company culture.

6.

Individual’s characteristics.

Some unscrupulous business owners, managers and employees alike often use Common Excuses to justify their unethical behavior as presented below.

EXAMPLES OF COMMON EXCUSES

1.

“It’s not really illegal or immoral”.

2.

“Since nobody knows, it’s OK”.

3.

"This is not in my personal interests".

4.

“This is not in my company’s interests”.

5.

“This is in my company’s interests, although I am personally against it”.

6.

"Since my action helps my company, I can do it".

Business owners and managers must understand that ethical behavior could be instrumental in improving morale and the overall performance of all employees and ensuring a higher level of the company’s profitability. Ultimately, business owners and managers will realize that higher ethical standards could actually be “good for business”.

Managerial Ethics are discussed in detail in Tutorial 1.

26. WHAT IS A SMALL BUSINESS?

DEFINITION OF A SMALL BUSINESS

U.S. Small Business Administration (SBA) defines Small Business as follows:

" Small business is any organization with fewer than 500 employees."

According to the Internal Revenue Service (IRS):

99.9% of about 27.9 million businesses in United States can be categorized as "small" businesses. These businesses include sole proprietorships, partnerships, corporations, and limited liability companies.

We prefer to categorize businesses and companies of various sizes into four categories illustrated below.

CLASSIFICATION OF BUSINESSES AND COMPANIES BASED ON SIZE

     

Micro-
Business

 

Small
Business

 

Medium-Sized Company

 

Large
Company

One-person business.   Between one and 100 employees and annual sales about $2 million U.S. Dollars.   Between 101 and 500 employees and annual sales between $2 million to $20 million U.S. Dollars.   Over 500 employees and annual sales over $20 million U.S. Dollars.
About 21.7 Million micro-businesses in the U.S.   Small, medium-sized, and large businesses in the U.S.:
About 6.2 million businesses with one to 500 paid employees.
• About 20,000 businesses with over 500 paid employees.
 
INTERESTING STATISTICS ABOUT SMALL BUSINESS ONLINE
 
Small businesses play a major role in the U.S. economy. The U.S. Bureau Of Labor Statistics provides the following information related to small business activities during 1994 – 2010 period:
 
About 500,000 to 650,000 new business startups per year.

About 2.5 million to 4.7 million new jobs per year created by new business startups.

About 30% survival rate for new business startups after 12 years in business.

 
You may find additional useful information about Small Businesses In The U.S. online.

27. HOW CAN YOU SUCCEED IN A SMALL BUSINESS?

REASONS FOR SMALL BUSINESS FAILURE

Every small business owner would like to succeed in business and, if possible, make a lot of money in the process. Unfortunately however:

About 70% of all small business startups fail after 12 years in business.

There are several reasons why small business owners fail in business. The main reasons for the Small Business Failure include:

• Lack of business management knowledge and experience.
• Insufficient financial, human, and material resources.
• Inefficient operational performance.
• Poor quality of products and services.
• Poor motivation of employees.
• Competition in the marketplace.
• Challenging economic conditions.
• Family problems.

Many small business owners become discouraged and often give up their business ambitions after experiencing their first failure. Others, on the other hand, learn from their tough experience, and become stronger and better prepared for their next business challenge.

It is essential, therefore, that you develop full appreciation for real reasons which may cause business failure and take pro-active steps to ensure that this will not happen to you and your business.

SECRET BUSINESS WEAPONS

Your success in business will depend primarily upon your Business Knowledge, Experience, and Will to succeed, Patience, Perseverance, and Discipline in getting the job done, readiness for Sacrifice to achieve your objectives, and Focus on the final goal. However, all of this will strongly depend upon the overall Attitude exhibited by you, your management team, and your employees.

Please remember, therefore, that Attitude plays a paramount role in achieving results in any company, market, or business situation!

ATTITUDE

Charles Swindoll said it best:

"The longer I live, the more I realize the impact of attitude on life.

Attitude, to me, is more important than facts. It is more important than the past, than education, than money, than circumstances, than failures, than successes, than what others think, or say or do.

It is more important than appearance, giftedness, or skill. It will make or break a company...a church...a home. The remarkable thing is we have a choice every day regarding the attitude we will embrace for that day.

We can’t change the inevitable. The only thing we can do is play on the one string we have, and that is our attitude... I am convinced that life is 10% what happens to me and 90% how I react to it. And so it is with you!”

Always keep a positive attitude!


THE FINAL SECRET WEAPON WHICH WILL HELP YOU TO SUCCEED IN YOUR BUSINESS

Please invest a portion of your valuable time and listen to the world renowned author Jack Canfield:

Secret To Success - Live The Life You Want

Jack Canfield is also the co-author of the Chicken Soup For The Soul series, which has more than 250 titles and 500 million copies in print in over 40 languages. He is also a founding member of the Transformational Leadership Council.

You may also benefit from Jack Canfield's brilliant audio book published by We Audiobooks:

The Success Principles: How To Get From Where You Are To Where You Want To Be.

Once you combine the knowledge contained in the Lean Business 2100 management program with a positive attitude and apply Jack Canfield's wisdom - you will certainly increase your chances for success in your business and in your life too!

28. FOR SERIOUS BUSINESS OWNERS ONLY

ARE YOU SERIOUS ABOUT YOUR BUSINESS TODAY?

Reprinted with permission.

29. THE LATEST INFORMATION ONLINE

WOULD YOU LIKE TO LEARN MORE?

Would you like to learn how to improve your personal business management knowledge and maximize your business performance through Lean Business Club?

When you are ready:

1.

Learn about the Membership Benefits, join Lean Business Club, and never feel lonely at the top again.

2.

Complete the Membership Form, or the Student Membership Form, and receive your free first-year membership.

3.

Save up to 75% off the regular subscription rate for complete access to the Lean Business 2100 Management Program online.

If you are U.S. Veteran, your membership in Lean Business Club and complete access to the Lean Business 2100 Management Program online will be available to you free of charge for an unlimited period.

 

LESSON FOR TODAY:
Yes, We Can!

President Barack Obama