One definition of business management, three tasks, five jobs! Essence Summary

A definition of business management

"Business management is defining the mission of a business and motivating and organizing human resources to achieve that mission. Defining the mission is the task of the entrepreneur while motivating and organizing human resources is the domain of leadership, and the combination of the two is business management."

The three main tasks of business management

1. to set the specific objectives and mission of the business organization

2. Ensuring that work is productive and that employees are fulfilled and productive.

3. to manage the social impact of the organization and the social responsibility it should assume.

The five tasks of a business manager

1. Setting goals

A business manager begins by setting goals and considering the behaviors that should be taken to achieve them.

Setting goals is, for example, a question of balance: a balance between the achievement of business results and the realization of the principles in which one believes, between the current needs of the business and the needs of the future, between the goals to be achieved and the conditions that exist.

Setting objectives requires the ability to analyze and synthesize.

2. Measurement

Business managers establish metrics that are critical to the performance of the organization as a whole and the performance of individuals. Business managers need to define a standard of measurement for each individual.

Measurement must focus not only on the performance of the organization but also on the work of the individual. Measurement requires, first and foremost, analytical skills, but it also requires that measurement be used to enable self-control rather than as a tool to control others. Measurement is often misused and is therefore by far the weakest aspect of the work of business managers. Drucker advocates that the results of measurement should be communicated to the person concerned.

3. Organisation

Business managers are expected to analyze the activities, decisions, and relationships required. Developing people also requires analytical skills and integrity.

4. Motivation and communication

Business managers organize people who hold various positions into a team. Motivation and information exchange requires mainly skills in social aspects rather than analytical skills, integrity, and general competence. Here, integrity is much more important than analytical skills.

5. Developing people (including yourself)

A business manager's resource is people, and a resource like people is unique in that it requires special qualities from the people who use it. Using people means developing them, and the direction of this development determines whether they become more dynamic as a resource or eventually lose their vitality altogether.

Only by understanding their five tasks can business managers improve and enhance their performance. Managing a business is about balancing a wide range of requirements and objectives.

Eight areas where companies need to set goals

It is an obvious fact that a business cannot be managed without goals, just as one cannot travel if one does not know the destination.

So what exactly should you set goals for?

There is only one answer: any area where performance and results have a direct and pivotal impact on the survival and prosperity of the business needs to have objectives. Business management is business management of a set of carefully formulated goals. According to Drucker, companies should set goals in eight areas.

1. Innovation

There are essentially three types of innovation in every business: innovation in products or services; innovation in markets, consumer behavior, and consumer values; and innovation in the technologies and activities required to manufacture and market products and services. These innovations may be referred to individually as product innovation, social innovation (e.g. installment payments), and business management innovation.

These forecasts should ideally be organized into two parts: one that anticipates quite specific developments for the immediate future, which are simply the implementation of long-established innovations; and the other that targets possible developments for the more distant future.

2. Financial resources

Based on the need to modernize and expand, a company may need to have a long-term plan for its capital and also consider other financing methods, such as issuing bonds or taking out bank loans, and it is also important to invest in pension funds.

3. Human resources

If the objectives are to be achieved, it is necessary to build a suitable team, which should include different types of employees and business managers, as well as to introduce suitable working methods and form an effective team.

The main challenge facing human resources is to plan the creation of a competent and committed senior business management team, to attract young people and enable them to develop. Specific targets can be set, for example, to recruit 30 technicians and 20 business managers in a year.

The following 3 questions should always be asked in human resources: What must our work look like to attract and retain the talent we need and expect? What is the right talent in the market? What do we have to do to attract these talents?

4. Marketing

Take a publishing house as an example. What kind of books does a publishing house publish? There are all kinds of books, such as textbooks, novels, plays, art, encyclopedias, science and technology, medicine, literature, history, and philosophy. No publisher wants to publish all these types of books. Publishers should choose to publish a certain type of book (e.g. art) and must concentrate their resources on the art genre. This is a strategic market decision. The next thing to consider is market positioning.

If the publisher is only going to capture 1% of the market share of art books, then this is an untenable position. This is because the books published by the publisher will not attract attention and will soon go out of business. Conversely, trying to capture 95% of the market is also very dangerous. Because in the absence of competition, the publisher may publish books of poor quality and may end up suffering significant losses. Market positioning should be neither too low nor too high.

5. Productivity

Traditionally, productivity has been defined as output per person per hour or machine per hour, while Drucker defines productivity as "the balance between all factors of production". Productivity depends on a combination of several factors. The most useful measure is the ratio between the number of units of output and the number of knowledge workers on the payroll.

6. Physical resources

Any enterprise that produces material goods must have access to physical resources and must ensure that they are available. Physical facilities - plant, machinery, offices - are all necessary. Businesses often run short of physical resources, so planning to ensure that there is an adequate supply of resources in the future is necessary.

7. Profit requirements

Profit is a measure of the net benefit and correctness of the efforts made by a business and is the ultimate test of its performance. Profit serves three important purposes.

Firstly, profit is the test of the health of a business; a business that is not profitable for a long time is doomed;

Secondly, profit hedges the risks involved in business activity. The business environment is volatile, and a company can only survive the ups and downs of business if it has sufficient capital in reserve;

Thirdly, profits provide the capital needed for new jobs, new equipment, and new plants. The economy develops through the accumulation of capital and the return of capital.

8. Social responsibility

Social responsibility is a controversial issue. Friedman, a Nobel laureate in economics, argues that business is an economic organization and should not be socially responsible and that the primary goal of business - profit maximization - would be undermined if it were to take on social responsibility.

Drucker had a different view, arguing that businesses occupy a large number of resources, that they have a large impact on society, and that they must fulfill their social responsibility as a corporate objective, an idea that has become a new international standard for Drucker.