For unlimited access to Textbook Notes, a Class+ subscription is required.
Chapter 6 – Managing the Business Enterprise
6.1 The Management Process
Management is the process of planning, organizing, leading, and controlling an
enterprise’s financial, physical, human, and information resources to achieve the
organization’s goals of supplying various products and services.
Efficiency means achieving the greatest level of output with a given amount of input.
Effectiveness means achieving the organizational goals that have been set.
- Planning is the process of determining the firm’s goals and developing a strategy for
achieving them. It has five steps:
Step 1: goals are established for the organization
Step 2: managers identify whether a gap exists between the company’s
desire and actual position
Step 3: managers develop plans to achieve the desired goals
Step 4: the plans that have been decided upon are implemented
Step 5: the effectiveness of the plan is assessed
- Prediction markets is a tool that helps managers assess future possibilities. It involves
creating a market where people can buy “shares” in various answers to important
questions that need to be answered.
A Hierarchy of Plans
Plans can be made on three general levels:
Strategic plans, which are set by top management, reflect decisions about
resource allocations, company priorities, and the steps needed to meet
Tactical plans are shorter-range plans concerned with implementing specific
aspects of the company’s strategic plans. They typically involve upper and
Operational plans, which are developed by middle and lower-level
managers, set short-term targets for daily, weekly, or monthly performance.
- Organizing involves mobilizing the resources that are required to complete a particular
Leading (or directing) involves interactions between managers and their subordinates
as they both work to meet the firm’s objectives.
Controlling is the process of monitoring a firm’s performance to make sure that it is
meeting its goals.
6.2 Types of Managers
Levels of Management
Top Managers are those managers who are responsible for a firm’s overall performance
and effectiveness and for developing long-range plans for the company.
Middle Managers occupy positions between top and first-line managers and are
responsible for implementing the decisions made by top managers.
First-Line Managers spend most of their time working with and supervising the
employees who report to them.
Areas of Management
Human Resources Managers provide assistance to other managers when they are hiring
employees, training them, evaluating their performance, and determining their
Operations Managers are responsible for the production systems that create goods and
services. These include production control, inventory control, and quality control,
Information Managers are responsible for designing and implementing systems that
gather, process, and disseminate information.
Marketing Managers are responsible for getting products and services to buyers.
Financial Managers are responsible for planning and overseeing a company’s financial
6.3 Basic Management Skills
Technical Skills are skills associated with performing specialized tasks within a company.
Human Relations Skills
Human Relations Skills enable managers to understand and get along with other