BUSINESS MANAGEMENT 621 Year 2 Semester

COMMERCIAL SCIENCES BUSINESS MANAGEMENT 621

Year 2

Semester 1

BUSINESS ADMINISTRATION, MANAGEMENT & COMMERCIAL SCIENCES

STUDY GUIDE MODULE: BUSINESS MANAGEMENT 621 (2 nd SEMESTER)

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All rights reserved; no part of this publication may be reproduced in any form or by any means, including photocopying

machines, without the written permission of the Institution.

TABLE OF CONTENTS TOPIC

PAGE NO. SECTION A: PREFACE

1. Welcome

2. Title of Module

3. Purpose of Module

4. Learning outcomes

5. Methods of Study

6. Lectures and Tutorials

7. Notices

8. Prescribed and Recommended Materials

9. Assessment and Key Concepts in Assignment and Examinations

10. Specimen Assignment Cover Sheet

11. Work Readiness Programme

12. Work Integrated Learning

SECTION B: BUSINESS MANAGEMENT 621 (1 ST SEMESTER) TOPIC 1 : NATURE OF MANAGEMENT

1.2 Role of business organisations

1.3 Components of the management process

1.4 Definition of management

1.5 Different levels and kinds of management in the organisation

1.6 Areas of management

1.7 The role distribution of managers

1.8 Managerial skills and competencies at various managerial levels

1.9 Management and organisational performance

1.10 The scope of management

TOPIC 2:THE EVOLUTION OF MANAGEMENT THEORY

2.2 Why study management theory

2.3 Understanding the different management theories

2.4 The theories of management

2.5 Contemporary approaches

2.6 Total Quality Management

2.7 Current and near-future management realities

TOPIC 3: MANAGING IN A CHANGING ENVIRONMENT

3.2 Concepts of systems theory

3.3 The composition of the management/business environment

3.4 The internal or micro-environment

3.5 The market/task environment

3.6 The macro-environment

3.7 Interfaces between the organisation and the environment

3.8 Was in which management can prepare for environmental changes

TOPIC 4: STRATEGIC PLANNING

4.2 Strategic planning, what it encompasses

4.3 The strategic planning process

4.4 Grand strategies

4.5 Growth strategies

4.6 Decline strategies

4.7 The selection of Grand strategies 102

4.8 Factors affection strategic choice 110

TOPIC 5: PLANNING

5.1 Introduction 110

5.2 The nature and importance of planning 114

5.3 Kinds of organisational plan 117

5.4 The time – frame for planning 120

5.5 Steps in the planning process 122

5.6 Barriers of effective planning 125

5.7 Planning tools 127

5.8 Goal formulation 132

5.9 The process of goal setting 135

5.10 Techniques for goal setting 137

TOPIC 6: MANAGERIAL DECISION MAKING

6.1 Introduction 145

6.2 The relationship between problems, problem solving, & decision making 146

6.3 Types of managerial decision-making 147

6.4 Levels of decision making 150

6.5 Decision-making process 151

6.6 Group decision making 151

6.7 Techniques for improving group decision making 151

6.8 Tools for decision making 152

6.9 Summary 152

TOPIC 7: INFORMATION MANAGEMENT

7.1 Introduction 153

7.2 The link between decision making and information 154

7.3 What is an information system 155

7.4 Characteristic of useful information 157

7.5 Organising information system 158

7.6 Classification of information systems 159

7.7 Developing an information system 166

TOPIC 8 ORGANISING AND DELEGATION

8.1 Introduction 173

8.2 Organising, organisation, and organisational structure 174

8.3 Reasons for organising 174

8.4 The process of organising 174

8.5 Principles of organising 174

8.6 Authority 174

8.7 Organisational design 177

8.8 Job design 178

8.9 Delegation 179 Addendum 621 (A): Case study for Tutorial Discussion

183 Addendum 621 (B): Assignment Questions

184 Addendum 621 (C): Examination Questions& marking guidelines

188

SECTION A: PREFACE

1. WELCOME

Welcome to the Department of Business, Economics Management Sciences at Richfield Graduate Institute of Technology. We trust you will find the contents and learning outcomes of this module both interesting and insightful as you begin your academic journey and eventually your career in the business world.

This section of the study guide is intended to orientate you to the module before the commencement of formal lectures.

The following lectures will focus on the common study units described:

SECTION A: WELCOME & ORIENTATION Study unit 1: Orientation Programme Introducing academic staff to the learners by academic head. Introduction of Lecture 1

institution policies.

Study unit 2: Orientation of Learners to Library and Students Facilities Lecture 2

Introducing learners to physical structures Study unit 3: Distribution of tablets and orientation to the textbooks and

Lecture 3

prescribed Materials Study unit 4: Discussion on the objectives and outcomes of Business

Lecture 4

Management 621

Study unit 5: Orientation and guidelines to completing assignments

Review of Study units 1-4

Lecture 5

2. TITLE OF MODULES, CODE, NQF LEVEL, CREDITS & MODE OF DELIVERY

1 st Semester

Title Of Module:

Business Management 621

Code:

DBA_BMN_621

NQF Level:

Credits:

Mode of Delivery:

Contact

3. PURPOSE OF MODULE

3.1 Business Management 621

The special emphasis of Business Management in the second year study is to explore the concept of a Business Strategy as a holistic concept. The academic content must, therefore,

be seen as one concept, the elements of which are presented in two modules.

3.2 Business Management 621 (1 st Semester)

This module, Business Management 621, forms an integral part of the Richfield Graduate Institute of Technology ’s Diploma programme and serves to introduce the student to the fundamentals of leading. In so doing, the module explores leadership, motivation, the use of groups and teams in organisations, and political behaviour prevalent in organisations.

This module builds on Business Management at year one level of the Diploma programme, and serves to study the topic of leadership in greater depth. The student is encouraged to consider authors, and their impact on the management theory within the context of their particular time-period and country.

Leadership is dynamic and evolving, and the student is encouraged to consider how the theories in this module may be applied in the South African context. The student is encouraged to use additional resources, like the Internet, academic journals and other professional books to explore the subject in greater depth, and remain conversant with contemporary management issues.

4. LEARNING OUTCOMES

On completion of these modules the student will be able to:  Analyse the evolution of management theories  Apply the practice of managing in a changing environment  Explain the importance of strategic planning  Evaluate the importance of managerial decision making  Understand the theory & practice of Information Management  Organising

 Apply the principles of production & operations management in a company

5. METHOD OF STUDY

The sections that have to be studied are indicated under each topic. These form the basis for tests, assignments and examination. To be able to do the activities and assignments for this module, and to achieve the learning outcomes and ultimately to be successful in the tests and examination, you will need an in-depth understanding of the content of these sections in the learning guide and prescribed book.

In order to master the learning material, you must accept responsibility for your own studies. Learning is not the same as memorising. You are expected to show that you understand and are able to apply the information. Use will also be made of lectures, tutorials, case studies and group discussions to present this module.

6. LECTURES AND TUTORIALS

Learners must refer to the notice boards on their respective campuses for details of the lecture and tutorial time tables. The lecturer assigned to the module will also inform you of the number of lecture periods and tutorials allocated to a particular module. Prior preparation is required for each lecture and tutorial. Learners are encouraged to actively participate in lectures and tutorials in order to ensure success in tests, assignments and examinations.

7. NOTICES

All information pertaining to this module such as tests dates, lecture and tutorial time tables, assignments, examinations etc. will be displayed on the notice board located on your campus. Learners must check the notice board on a daily basis. Should you require any clarity, please consult your lecturer, or programme manager, or administrator on your respective campus.

8. PRESCRIBED & RECOMMENDED MATERIAL

8.1 Prescribed Textbook

Smit, P., J., Cronje, G.J., Brevis, T. and Vrba, M., J. (2013). Management Principles: A Contemporary edition for Africa. 5 th

ed. Cape Town. Juta & Company Ltd

The purchasing of prescribed books is for the learner ’s own account and is compulsory for all learners. This guide will have limited value if not accompanied by the prescribed text books.

8.2 Recommended Material

Cronje, Du Toit, Marais and Motlatla (2008). Introduction to Business Management, 7 th Edition. Cape Town: Oxford University Press Rao, C. A., Rao, B.P. and Sivaramakrishna. (2008). Strategic management: Business Policy

Ehlers, T. and Lazenby, K. (2014). Strategic Management: South African concepts and

cases Pietermaritzburg. Van Schaik Publishers

8.3 Independent Research:

The student is encouraged to undertake independent research

8.4 Library Infrastructure

The following services are available to you:  Each campus keeps a limited quantity of the recommended reading titles and a larger

variety of similar titles which you may borrow. Please note that learners are required to purchase the prescribed materials.

 Arrangements have been made with municipal, state and other libraries to stock our recommended reading and similar titles. You may use these on their premises or borrow them if available. It is your responsibility to safe keeps all library books.

 Richfield Graduate Institute of Technology has also allocated one library period per week as to assist you with you formal research under professional supervision.

 Richfield Graduate Institute of Technology has dedicated electronic libraries for use by its learners. The computers laboratories, when not in use for academic purposes, may also

be used for research purposes. Booking is essential for all electronic library usage.

9. ASSESSMENT

Final Assessment for this module will comprise two CA tests, an assignment and an examination. Your lecturer will inform you of the dates, times and the venues for each of these. You may also refer to the notice board on your campus or the Academic Calendar which is displayed in all lecture rooms.

9.1 CA Tests

There are two compulsory tests for each module (in each semester).

9.2 Assignment

There is one compulsory assignment for each module in each semester. Your lecturer will inform you of the Assessment questions at the commencement of this module.

9.3 Examination

There is one two hour examination for each module. Make sure that you diarize the correct date, time and venue. The examinations department will notify you of your results once all administrative matters are cleared and fees are paid up.

The examination may consist of multiple choice questions, short questions and essay type questions. This requires you to be thoroughly prepared as all the content matter of lectures, tutorials, all references to the prescribed text and any other additional documentation/reference materials is examinable in both your tests and the examinations.

The examination department will make available to you the details of the examination (date, time and venue) in due course. You must be seated in the examination room 15 minutes before the commencement of the examination. If you arrive late, you will not be allowed any extra time. Your learner registration card must be in your possession at all times.

9.4 Final Assessment The final assessment for this module will be weighted as follows:

CA Test 1 CA Test 2

9.5 Key concepts in assignments and examinations

In assignment and examination questions you will notice certain key concepts (i.e. words/verbs) which tell you what is expected of you. For example, you may be asked in a question to list, describe, illustrate, demonstrate, compare, construct, relate, criticize, recommend or design particular information / aspects / factors /situations. To help you to know exactly what these key concepts or verbs mean so that you will know exactly what is expected of you, we present the following taxonomy by Bloom, explaining the concepts and stating the level of cognitive thinking that theses refer to.

9.6 Key concepts in assignments and examinations

In assignment and examination questions you will notice certain key concepts (i.e. words/verbs) which tell you what is expected of you. For example, you may be asked in a question to list, describe, illustrate, demonstrate, compare, construct, relate, criticize, recommend or design particular information / aspects / factors /situations. To help you to know exactly what these key concepts or verbs mean so that you will know exactly what is expected of you, we present the following taxonomy by Bloom, explaining the concepts and stating the level of cognitive thinking that theses refer to.

Competence

Skills Demonstrated

observation and recall of information knowledge of dates, events, places knowledge of major ideas mastery of subject matter

Knowledge

Question Cues

list, define, tell, describe, identify, show, label, collect, examine, tabulate, quote, name, who, when, where, etc. understanding information grasp meaning translate knowledge into new context interpret facts, compare, contrast order, group, infer causes

Comprehension

predict consequences

Question Cues

summarize, describe, interpret, contrast, predict, associate, distinguish, estimate, differentiate, discuss, extend use information use methods, concepts, theories in new situations solve problems using required skills or knowledge

Application

Questions Cues

apply, demonstrate, calculate, complete, illustrate, show, solve, examine, modify, relate, change, classify, experiment, discover seeing patterns organization of parts recognition of hidden meanings identification of components

Analysis

Question Cues

analyze, separate, order, explain, connect, classify, arrange, divide, compare, select, explain, infer use old ideas to create new ones generalize from given facts relate knowledge from several areas predict, draw conclusions

Synthesis

Question Cues

combine, integrate, modify, rearrange, substitute, plan, create, design, invent, what if?, compose, formulate, prepare, generalize, rewrite

compare and discriminate between ideas assess value of theories, presentations make choices based on reasoned argument verify value of evidence recognize subjectivity

Evaluation

Question Cues

assess, decide, rank, grade, test, measure, recommend, convince, select, judge, explain, discriminate, support, conclude, compare, summarize

10. WORK READINESS PROGRAMME (WRP)

In order to prepare learners for the world of work, a series of interventions over and above the formal curriculum, are concurrently implemented to prepare learners.

These include:

 Soft skills  Employment skills  Life skills  End –User Computing (if not included in your curriculum)

The illustration below outlines some of the key concepts for Work Readiness that will be included in your timetable.

SOFT SKILLS LIFE SKILLS

 Time Management

 Manage Personal Finance

 Working in Teams

 Driving Skills

 Problem Solving Skills

 Basic Life Support & First

 Attitude & Goal Setting

Aid

 Etiquettes & Ethics  Communication Skills  Entrepreneurial skills

 Counselling skills

WORK READINESS PROGRAMME EMPLOYMENT SKILLS

 CV Writing  Interview Skills

 Presentation Skills  Employer / Employee Relationship

 End User Computing  Email & E-Commerce  Spread Sheets  Data base

 Presentation  Office Word

It is in your interest to attend these workshops, complete the Work Readiness Log Book and prepare for the Working World.

11. WORK INTEGRATED LEARNING (WIL)

Work Integrated Learning forms a core component of the curriculum for the completion of this programme. All modules making of the Bachelor of Business Administration will be assessed in an integrated manner towards the end of the programme or after completion of all other modules.

Prerequisites for placement with employers will include:

 Completion of all tests & assignment  Success in examination  Payment of all arrear fees  Return of library books, etc.  Completion of the Work Readiness Programme.

Learners will be fully inducted on the Work Integrated Learning Module, the Workbooks & assessment requirements before placement with employers. The partners in Work Readiness Programme (WRP) include:

Good luck with your studies…

TOPIC 1 : NATURE OF MANAGEMENT

1.1 Introduction

1.2 Definition of management

Lecture 1

1.3 Different levels and kinds of management in the organisation

1.4 Areas of management

1.5 The role distribution of managers

1.6 Managerial skills and competencies at various managerial levels

1.7 Management and organisational performance

1.8 The scope of managerial

TOPIC 2: THE EVOLUTION OF MANAGEMENT THEORY

2.1 Introduction

Lecture 2

2.2 Why study management theory

2.3 Understanding the different management theories

2.4 The theories of management

2.5 Current and near-future management realities

Lecture 3

3.4 The internal or micro-environment

3.5 The market/task environment

3.6 The macro-environment

3.7 Interfaces between the organisation and the environment

3.8 Was in which management can prepare for environmental changes

TOPIC 3: MANAGING IN A CHANGING ENVIRONMENT

3.1 Introduction

Lecture 4

3.2 Concepts of systems theory

3.3 The composition of the management/business environment

3.4 The internal or micro-environment

3.5 The market/task environment

3.6 The macro-environment

3.7 Interfaces between the organisation and the environment

Lecture 5

3.8 Was in which management can prepare for environmental changes

TOPIC 4: STRATEGIC MANAGEMENT

4.1 Introduction

Lecture 6

4.2 Strategic planning, what it encompasses

4.3 The strategic planning process

4.4 Grand strategies

Lecture 7

4.5 The selection of Grand strategies

4.6 Factors affection strategic choice

TOPIC 5: PLANNING

5.1 Introduction

5.2 The nature and importance of planning

Lecture 8

5.3 Kinds of organisational plan

5.4 The time – frame for planning

5.5 Step in the planning process

5.6 Barnes of effective planning

5.7 Planning tools

Lecture 9

5.8 Goal formulation

5.9 The process of goal setting

5.10 Techniques for goal setting

TOPIC 6: MANAGERIAL DECISION MAKING

6.1 Introduction

6.2 The relationship between problems, problem solving, and decision

Lecture 10

making

6.3 Types of managerial decision-making

6.4 Decision-making conditions

6.5 Decision-making models

Lecture 11

6.6 Group decision making

6.7 Techniques for improving group decision making

6.8 Tools for decision making

TOPIC 7: INFORMATION MANAGEMENT

7.1 Introduction

7.2 The link between decision making and information

7.3 What is an information system

Lecture 12

7.4 Characteristic of useful information

7.5 Organising information system

7.6 Classification of information systems

7.7 Developing an information system

Topic 8 Organising and delegation

8.1 Introduction

Lecture 13

8.2 Organising, organisation, and organisational structure

8.3 Reasons for organising

8.4 The process of organising

8.5 Principles of organising

8.6 Authority

Lecture 14

8.7 Organisational design

8.8 Job design

8.9 Delegation Addendum 621 (A): Case study for Tutorial Discussion

Lecture 15 Addendum 621 (B): Assignment Questions

Lecture 16 Addendum 621 (C): Examination Questions

Lecture 17

INTERACTIVE ICONS USED IN THIS LEARNER GUIDE

Learning Outcomes

Study

Read

Writing Activity

Key Point Think Point

Research

Glossary

Review Questions

Case Study

Bright Idea

Problem(s)

Multimedia Web Resource Resource

TOPIC 1:

1. THE NATURE OF MANAGEMENT

LEARNING OUTCOMES After studying this topic, you should be able to

 Explain the important role that business organisations play in modern economy  Discuss the components that make up the management process.  Describe the different levels and kinds of management in an organisation.  Explain managerial roles performed by managers  Explain what ‘management competencies’ encompasses  Discuss the managerial skills needed at the different levels of management  Explain what ‘management competencies’ encompasses  Recommend ways in which to master management skills and competencies  Analyse the major challenges faced by management in South Africa, Africa and abroad

Research

Before ploughing the text of this chapter find out the meanings and examples of the following concepts

 Controlling  Complex needs of society  Decision making role

 Management ethics  Information role

 Management process  Interpersonal role

 Management skills  Leading

 Management competencies  Resources systems approach

1.1 INTRODUCTION

Organisation acquire human, financial, physical and information resources in order to produce a product or render a service for which there is a need in society. Society depends on business organisations that satisfy the complex needs of society. Government organisations such as hospitals and clinics provide health care; the South African Police Services provide protection against crime; and municipalities provide water and electricity. Non- profit organisations also help to satisfy society’s needs.

1.2 THE ROLE OF BUSINESS ORGANISATIONS IN A MODERN SOCIETY

All the organisations, whether private of state provide for the complex needs of society through the utilisation of resources, namely:

 People (human resources with specific knowledge, skills,

T H I N K P O I NT

abilities and so on)

How and why businesses

 Money (capital of financial resources)

must fulfil the societal

 Raw materials (physical resources) needs- this question is

incomplete

 Knowledge (information resources) Different combinations of these resources produce different products and services to meet

the needs of society.

Managers follow a specific process in order to reach the organisation’s mission and goals. All managers, regardless of their skills or the level at which they are involved, perform four

fundamental management functions:  Planning

 Organising  Leading  Controlling.

The fundamental functions of a manager link up in a specific sequence to form a process, which comprises planning, organizing, leading and controlling.

Table 1.1: Basic resources of an organisation

Organisation Human resources Financial

University of Lectures and

Expertise in South Africa

State subsidies,

Buildings,

distance learning, staff

administrative

investment

libraries, lecture

income, student

rooms,

research reports,

fees

computers,

annual reports

conferencing equipment

Toyota South Managers,

Assembly plants, Market trends, Africa

Shareholders,

environmental technicians,

engineers,

loans, profit

buildings,

information, administrative

equipment,

statistics, skills in staff, workers

computers

car manufacturing City Council of

Engineers, jurists, Municipal taxes, Buildings, power Statistics on Tshwane

town planners,

urban population, technical and

fines, fees

stations,

annual reports, administrative

waterworks,

pipelines, vehicles budgets, staff, councillors

expertise in town management

Joe’s Bicycle Shop Owner manager,

Counters, shelves, Knowledge of members of

Owner’s equity,

tools, equipment models, price, family, labourer

profits, loans

lists

Source: Smith, et al. (2013:7)

1.3 COMPONENTS OF THE MANAGEMENT PROCESS

Figure 1.1 illustrates the process as a logical sequence of decisions performed managers. It is meaningless to perform the four management functions in any other sequence, since managers cannot decide to do something before:

 they know what has to be done;  they cannot order a job to be done before they decide how it should be done;  and they certainly cannot control the results before the order has been given.

Organising

Resources Performance

 Achieve  Human

 goals

Planning

 Financial  Products

 Productivity  Information  Profit

Controlling

Figure 1.1: The four fundamental management functions

Source: Smith, et al. (2013:7)

Review questions

 Depict and discuss the components that make up the management process. Support your answer with suitable examples.

 What is the significance of performing the management functions in a logical sequence of decisions?

It is important to realize that the functions of management do not occur in a tidy step-by- step sequence. Managers do not plan on Mondays, organize on Tuesdays, lead on Wednesdays, control on Thursdays and take corrective action on Fridays. At any given time,

a manager is likely to be engaged in several management functions simultaneously. However, in order to simplify the complex process of management, it is depicted in a model. The solid lines indicate how, in theory, the functions of management are performed. The dotted lines represent the true reality of management.

The external environment

Planning (Part II)

Managers determine the organisation’s vision, mission,

and goals and decide on a strategy to achieve them

Organising (Part lll) Controlling (Part V)

Manager’s group activities Managers monitor progress

together, establish authority, and take corrective steps to

allocate resources, and reach the mission and goals

delegate

Leading (Part IV) Managers direct and motivate members of the organisation to achieve the mission and goals

Figure 1.2 The interactive nature of the management process Source: Smith, et al. (2013:8)

1.4 A DEFINITION OF MANAGEMENT

Follow from the above introductory remarks about (1) how organisations try to satisfy the ever-changing needs of society (2) by utilizing its scarce resources as productively as possible and (3) through decisions made by its managers, management can now be described as the process of planning, organizing, leading, and controlling the scarce resources of the organisation to achieve the organisation’s mission and goals as productively as possible. A concise description of each of the fundamental management functions will further explain the concept of management and the nature of the management process.

Planning is the management function that determines where the organisation wants to be in future: in other words, its vision, mission and goals. A car manufacturer may see its future in the manufacturing of eco-friendly cars that are able to drive themselves.

The manufacturer then has to identify ways (called ‘strategies’) in which it can reach its mission and goals, and find the resource needed for this challenging task. The plan to

manufacture eco-friendly cars that drive themselves is called a strategic plan. Strategic plans are made by top management. In large organisations, such as Toyota, long-term plans of five to ten years mean that management could (and often does), commit billions of rands to achieve a certain future position. Strategic plans are translated into tactical plans. Tactical plans are made by functional managers (such as financial, human resources, research and development, marketing, and operations managers) to support the organisation’s strategic plan.

Tactical plans are translated into operational plans. Operational plans are made by lower management (often called ‘first-line’ or ‘supervisory management’) and these are shorter term plans which might have daily, weekly and monthly schedules.

Organizing is the second step in the management process. Once the goals and plans have been determined, management has to allocate the organisation’s human and other resources to relevant departments or sections. Tasks, roles, and responsibilities have to be

defined to ensure that each person knows what he or she is responsible for within the organisation. Thus organizing involves the development of a frame work or organizational structure to indicate how and where people and other resources should be deployed to achieve the set goals.

The success of an organisation lies in directing the various resources towards the achievement of a common set of goals. The better these resources are organized and coordinated, the more successful the organisation will be. Because organisations have different missions, goals and resources, it stands reason that each one should have its own organizational structure to accommodate its particular needs. Management must match the organisation’s structure to its strategies. This process is called ‘organisational design’.

Leading refers to directing the human resources of the organisation and motivating them in such a way that they will be willing to work productively to re ach the organisation’s mission and goals. Managers are responsible for getting things done through other people – they collaborate with their superiors, peers, and subordinates, with individuals and groups, in order to reach the goals of the organisation. Leading the organisation means making use of influence and power to motivate employees to achieve organizational goals.

Controlling means that managers should constantly make sure that the organisation is on the right course to reach its goals. The aim of control is therefore to monitor actual results against planned results. For instance, an organisation might have as one of its goals (planned result) plans to increase its sales by ten per cent within one year.

However, after the first three months, man agement determines that the organisation’s sales have declined (actual result) by two per cent. Management then has to rectify the deviation in order to control the performance. To do this, management may decide to appoint more sales managers, give discounts to certain clients or it may even decide to adapt its goals. The management process – obviously including the four management functions – is performed by managers at all levels of the organisation (top, middle and lower management) and in all departments and sections of an organisation. However, the complexity of the decisions made by top, middle and lower management differs considerably. These differences will be looked at briefly.

1.5 DIFFEFENT LEVELS AND KINDS OF MANAGEMENT IN THE ORGANISATION

Against the background of the explanation of management, the term ‘manager’ is used to include anyone who carries out the four fundamental functions of management, namely planning, organizing, leading, and controlling. The four management functions must be performed in all organisations, but managers are responsible for different departments; they work at different levels and deal with different challenges.

Managers are usually classified into two categories:  According to their levels in the organisation (the top, middle, and lower or first-line

managers) and

 By the functional or specialist area of management for which they are responsible (the functional managers). Figure 1.3 (p.30 below) indicates how managers within an organisation can be differentiated according to level and functional area.

1.5.1 Top management

Top management represents the relatively small group of managers who lead the organisation and with whom the final authority and responsibility rests for performing the management process successfully. This level of management comprises, for example, the board of directors, partners, the managing director, chief executives, as well as management committees (consisting mainly of members of top management). Top management is usually responsible for the organisation as a whole, as well as for determining its vision, mission, goals, and overall strategies of the entire organisation. Top management is concerned mainly with long – term planning, designing the organisation’s broad organizational structure, leading the organisation (through the top executive), and monitoring (controlling) its overall performance.

Web Resource

The annual reports of organisations usually depict the topic management structure of the organisation. You can access many of thes e reports on each organisation’s website, such as: www.kumbaresources.co.za www.edcon.co.za

1.5.2 Middle management

Middle management is responsible for specific departments of the organisation and is primarily concerned with implementing the strategic plan formulated by top management. Middle management normally includes the functional heads, such as the financial manager, marketing manager, the purchasing manager, and the human resources manager. Middle management is concerned with the near future and is therefore responsible for medium- Middle management is responsible for specific departments of the organisation and is primarily concerned with implementing the strategic plan formulated by top management. Middle management normally includes the functional heads, such as the financial manager, marketing manager, the purchasing manager, and the human resources manager. Middle management is concerned with the near future and is therefore responsible for medium-

Middle managers also continually monitor environmental influences that may affect their own departments. The head of the finance department must monitor the environment for possible changes in tax legislation; the marketing manager must monitor the environment for possible new competitors that may enter the market; the human resource manager must

be aware of competitors that may enter the market; the human resource manager must be aware of changes in legislation regarding overtime work, while the operations manager must be aware of new technologies that could replace old machines in the future.

1.5.3 Lower/first-line management

Lower or first-line management is responsible for even smaller segments of the organisation, namely the different sections within an organisation. The marketing department, for instance, could be subdivided into the product design section, the marketing communication section, and so on. Lower management also includes supervisors or foremen. Mining companies such as Kumba Resources refer to their first-line managers as

‘supervisors’.

First-line managers deal with the monthly, weekly and daily management of their sections. They have to ensure that the plans made by middle managers are implemented. For example, the operations manager in a manufacturing plant may have a goal to replace all of the old machines and equipment with more environmentally friendly ones within three years; the first-line managers will then have to ensure that monthly, weekly and daily plans are in place to ensure proper maintenance of the old machines for the following three years.

The primary concern of a supervisor is to apply policies, procedures, and rules to achieve a high level of productivity in his/her section, to provide technical assistance, to motivate subordinates, and to ensure that the section’s goals are reached. First-time managers typically spend a large portion of their time supervising the work of subordinates. Because of this, first-line management holds the power to increase or decrease the productivity of most organisations.

For the sake of clarity and convenience, we have distinguished only three levels of management. Obviously, the size of an organisation plays an important role in the number of levels encountered in practice. This is because one person can manage only limited number of people, a consideration that will be discussed in more detail later. A one-person business, therefore, has only one level of management and the owner embodies top, middle, and lower management. However, large organisations with thousands of employees have many more levels of management. We shall deal with this issue in greater detail, in the discussion of the organizational structure.

Although we have distinguished different levels of management, the four fundamental functions of management are still performed at each level of management, but in different combinations. The time spent on the different management functions can also differ from one organisation to another or between different industries.

Research

Analyse an organisation of your choice and determine the fundamental functions of managers in relation to the three levels reflected in the previous text.

1.6 AREAS OF MANAGEMENT

Another factor that influences the classification of managers is the type of activity they manage. Almost all organisations will have a general manager, as well as marketing, finance, human resource and operations (production) managers. Organisations in the mining industry will also have safety, health and environment managers (SHE). A pharmaceutical company may have a research and development manager. Some organisations, especially larger ones, may have public relations managers.

The general manager focuses on the entire organisation. He or she is responsible for providing direction to the entire organisation. The general manager of boutique hotel must The general manager focuses on the entire organisation. He or she is responsible for providing direction to the entire organisation. The general manager of boutique hotel must

The marketing function entails the marketing strategy by segmenting the market, and determining the target market and positioning of the organisation in relation to its competitors. The marketing manager is also responsible for making decisions regarding the product, such as its design and packaging, price, promotion (advertising, personal selling and so on) and distribution. The financial manager has to make decisions regarding issues such as how to finance a new project and how to invest its funds to ensure that the organisation prospers. The financial manager is also responsible for reporting on the financial performance of the organisation. A major challenge for a financial manager is to manage the cash flow of the organisation.

The production or operations management functions includes that group of activities concerned with the physical production of products, namely the establishment and layout of the production unit and the conversion of raw materials and semi-finished products into finished products for the market. Operations management also examines problems related

to the supply of services. In Toyota’s production plant in Durban, the production manager is responsible for, amongst other things, ensuring that the layout of the plant is optimized and

that all processes required to assemble the cars are well aligned. The purchasing function entails the acquisition of all products and materials required by the business to function profitably, namely raw materials, components, tools, equipment, and, in the case of a dealer, the inventory.

The purchasing manager has to be in contact with suppliers, must be aware of new products, and must know the prices at which goods can be bought. The purchasing manager must be a good negotiator. He or she also has to keep the inventory up to date to ensure continuity of functioning.

The research and development function is responsible for developing new products and improving old products. This function plays a crucial role in organisations that operate in fast-changing industries, such as information technology, communications, and the pharmaceutical industry. The human resource function entails finding the right people for the job, training and developing them and ensuring fair remuneration/compensation for each worker.

Finding the right people means that the human resource manager must recruit candidates, select the best one for the job and appoint that person. In South Africa laws govern this process to the human resource manager has to be well-formed about these laws. To ensure that employees and managers are suitably skilled, the human resource manager must ensure that a sound performance management system is in place and that performance appraisal is done regularly and fairly. Assessing the performance of employees helps the human resource managers to design training and development opportunities for them.

Finally, the human resource manager must ensure fair remuneration for each employee and manager. Remuneration is more than paying a salary. It includes other benefits such as paid annual and maternity leave, free transport to and from work and a healthy and safe work environment. The public relations function aims to create a favourable, objective image of the organisation and establish good relations with those directly or indirectly concerned with the business and its products or services. In organisations where safely is an issues, such as a mining company, one will also find a safety, health and environment (SHE) function.

This function is responsible for looking after the mental health of employees, such as Worker Street and burnout, and for ensuring that programmes are in place to assist employees who may need them. It is also responsible for managing safety in the workplace. The management of health includes managing HIV/AIDS in the environment are ‘healthy’ places in which to work.

Functional managers are responsible mainly for their department’s specific managerial activities. Financial managers, human resource managers, purchasing managers, and the Functional managers are responsible mainly for their department’s specific managerial activities. Financial managers, human resource managers, purchasing managers, and the

The general manager focuses on the long-term success of the entire organisation; a functional manager focuses on their own department’s performance.

1.7 THE ROLE DISTRIBUTION OF MANAGERS

During the course of their work, managers are required to perform certain roles in addition to the management functions. Henry Mintzberg, a famous management theorist, has studied the activities of a group of managers and came to the conclusion that managers play about ten different roles, which, can be classified into three overlapping groups, namely an interpersonal role, an information role, and a decision-making role. As far as the interpersonal role is concerned, three groups of activities can be distinguished.

Firstly, all managers have to perform duties that are ceremonial and symbolic in nature. When the mine manager of platinum mine delivers a speech at the opening of a new mine,

he or she acts as a figurehead for the mine. The supervisor who takes the attendees on a tour of the plant after the opening is also acting in a figurehead role. Second, all managers have a role to play as a leader. This role includes motivating employees, and dismissing employees who do not perform. The third role within the set of interpersonal roles is liaison, which aims at maintaining good relations within and outside the organisation. In a production plant, the maintenance manager must make continual contact with the production manager to ensure proper maintenance of the equipment; the maintenance manager must also make contact with outside suppliers of the equipment used in the maintenance process to ensure availability.

The managers’ information role enables them to obtain information from colleagues, subordinates, and department heads, as well as outside stakeholders, which they can use to make sound decisions. This information role of the manager involves monitoring or gathering information on trends and passing on relevant information to colleagues, superiors, and subordinates. The manager is, therefore, a vital link in the organisation’s The managers’ information role enables them to obtain information from colleagues, subordinates, and department heads, as well as outside stakeholders, which they can use to make sound decisions. This information role of the manager involves monitoring or gathering information on trends and passing on relevant information to colleagues, superiors, and subordinates. The manager is, therefore, a vital link in the organisation’s

The third set of managerial roles is grouped into what is known as the decision making role.

A manager is regarded as an entrepreneur, using the information that he or she obtain to identify new business opportunities or threats. Secondly, in this decision-making role, a manager also has to deal with and solve problems such as how to improve on low productivity, which actions to take to minimize the chances of strikes, and which departments to restructure.

Thirdly, managers must make decisions about the resources available to the organisation. Resource allocation, or deciding to whom resources such as money, people, and equipment are to be assigned, is often a critical management decision. In their role as negotiators, managers often have to negotiate with individuals, other departments or organisations, and trade unions about goals, standards of performance, and the allocation of resources. The role distribution framework is especially useful in explaining why managers cannot move systematically from planning, to organizing to leading and ultimately to controlling. The volatility of their environment requires a more flexible managerial style.

Interpersonal role

Figurehead Leader Relationship builder

Decision-making role Information role

Entrepreneur, Problem solver, Monitor Allocator of resources, Negotiator

Analyser Spokesperson

Figure 1.3 The overlapping role distribution of managers Source: Smith, et al. (2013:13)

1.8 MANAGERIAL SKILLS AND COMPETENCIES AT VARIOUS MANAGERIAL LEVELS

Although management is found at all levels and in all departments and sections of an organisation, the management skills required at the different levels (top, middle and lower management levels) differ. Figure 1.6 depicts the different skills needed at top management level, versus those required at middle and lower level management. It also shows how these skills differ from the dominant skills required by non-managers (workers). The three major skills needed by managers at all levels and in all departments and sections of an organisation are:

 Conceptual  Interpersonal  Technical

The following three main skills are identified as prerequisites for sound management. Conceptual skills refer to the mental ability to view the organisation and its parts holistically. Conceptual skills involve the manager’s thinking and planning abilities to ensure that the organisation is prepared for the future. They also include the manager’s ability to think strategically about the organisation and how it will exploit opportunities and minimize threats cause by a changing business environment.

Interpersonal skills refer to the ability to work with people. It stands to reason that if managers spend about 60 per cent of their time working with people, a manager should be able to communicate clearly, understand people’s behaviour, resolve conflict, optimize diversity and motivate both groups and individuals. Technical skills refer to the ability to use knowledge or techniques of a specific discipline to reach specific goals.