TOPIC 2

THE MANAGEMENT PROCESS

 INTRODUCTION AND AIM OF THE TOPIC
The aim of this topic is to describe the role of management in the business organisation
540

and examine the four fundamental tasks of the management process, namely planning,
organising, leading and control. We also explain the different levels and kinds of manage-
ment in the business and give an overview of the development of management theory.

Learning objectives
29

After completing this topic, you should be able to

 provide an overview of the role of management in a business by defining management

and supplying reasons why management is essential to any organisation
 analyse planning as a management task relevant to all management levels
 describe organising as a management task, including modern structuring and design
 analyse leading as a management task by focusing on culture, motivation
and communication
541

CONTENT
542 Topic 2 comprises five learning units:

LEARNING UNIT 6:
Introduction to general management
LEARNING UNIT 7:
Planning
TOPIC 2: LEARNING UNIT 8:
THE MANAGEMENT PROCESS Organising
LEARNING UNIT 9:
Leading
LEARNING UNIT 10:
Control

64
 MNB1501/1/2018–2020

Learning Unit 6
Introduction to general management

INTRODUCTION AND AIM OF THE UNIT

The society we live in consists of all types of organisations. All sorts of small and large
543

organisations such as businesses, schools, hospitals, sports clubs, churches and political
parties contribute to the functioning of a community. All these organisations need to be
managed. In this learning unit we are going to discuss the general principles involved in
the management of any of the above organisations. More specifically we will look at the
general management principles involved in running a business.

30 STUDY CHAPTER 6 (sections 6.2–6.7) IN ITBM

Contents of the learning unit:

 The role of management

 A definition of management
 The different levels and functional areas of management in businesses
 Skills at different managerial levels and the roles of managers
 Development of management theory
 Summary

Learning objectives
31

When you have worked through learning unit 6, you should be able to

 discuss the role of management in running a business

 evaluate the definitions of management and discuss the task of a manager
 describe the management process followed by managers by referring to the levels and
type of management, the skills needed to manage an organisation and the different roles
performed by managers in the organisation
 discuss the various schools of thought in management and look at the innovations that
have occurred in management thinking over the years
544

65
 KEY TERMS

conceptual skills lower management

contemporary approach management
contingency approach management principles
decision-making role management theory
information role middle management
interpersonal role top management
levels of management quantitative school

Refer to the end of chapter 6 in the prescribed book to familiarise yourself with the key
545

terms for this learning unit before continuing.

6.1 THE ROLE OF MANAGEMENT

As you will remember from topic 1, management operates in a dynamic environment. In
546

this learning unit we are going to take a look at how management manage the organisa-
tion in this changing environment.

Study section 6.2 in ITBM.

The reason for the establishment of a business is to achieve objectives that would be too
547

difficult for individuals to achieve on their own. If you could manufacture a product on your
own, you would have no need to establish an organisation. For example, think of all those
dressmakers who manufacture their product (dresses) without ever needing to form an
organisation. However, if you wanted to make dresses on a large scale and market them
throughout South Africa, you would not be able to do so on your own – you would have
to employ other dressmakers. In other words, you would have to form an organisation.

In this learning unit the word “organisation” is used quite extensively. Throughout our
548

discussion, the word “organisation” and the word “business” are used interchangeably.

It is important to remember that the success of any organisation depends almost entirely
549

on how the organisation is managed. Management in any enterprise is essential to

 direct the organisation towards its objectives

 set and keep the operations of the organisation on a balanced course
 keep the organisation in equilibrium with its environment
 attain its goals synergistically and productively
550

66
 MNB1501/1/2018–2020

One of the most common causes of business failure is poor management (see table 6.1
551

in the prescribed book). We now provide a more comprehensive overview of the task of
management by looking at a definition of what management entails.

6.2 A DEFINITION OF MANAGEMENT

552 Here are some of the various definitions of management:

 “the process or technique of managing (organising and operating) a business” (Web-

ster’s new world encyclopaedia 1992:704)
 “the process of planning, organising, leading and controlling the resources of the
organisation to achieve the stated goals as efficiently as possible”
553

Study section 6.3 in ITBM and look at the definition provided.

554 After reading this and the other definitions, complete the following activity:

Activity 6.1

You will agree that the above definitions and what was behind Bill Ford’s success with
the Ford Motor Company have something in common. Answer the questions below to
identify these common factors. You may have to refer back to the sections above before
answering the questions.
(1) What are the four basic management tasks? Look at the various definitions supplied
and see if they all include the basic management tasks that a manager must perform.

Feedback:
32

Contact your e-tutor via myUnisa for the answer to this activity.

6.3 THE DIFFERENT LEVELS AND FUNCTIONAL AREAS OF

MANAGEMENT IN BUSINESSES

33 Study section 6.4 in ITBM.

555

556 As far as the levels of management are concerned, it is essential to differentiate between the

67
 three levels of management, which are top management such as the CEO of the com-
pany, middle management (e.g. responsible for the human resource function of the
organisation) and lower management (e.g. managers at supervisory level in a factory)
 responsibilities of managers at those different levels
557

Levels
Note that some organisations will have only one or two levels of management (e.g. in a
558

sole proprietorship), whereas very large organisations may have as many as eight or more
levels of management. But even with so many levels of management, they can still be
classified into three broad categories of top, middle and lower management.

Types
As far as the types of management are concerned, it is necessary to distinguish between
559

the different functions. They are general management, marketing management, financial
management, production and operations management, purchasing management, human
resource management and public relations management. Since most of the first-year
course in Business Management is presented in terms of these functions, it is important
for you to know what the functions of a business are and how they work together to attain
the set objectives of the organisation.

Special reference must be made to the function of the general manager. General manage-
560

ment differs from other functions because every manager, regardless of the specialised
function in which he or she operates, exercises it.

We now consider in more detail the skills required of managers to carry out the manage-
561

ment process and the roles they play in business.

6.4 SKILLS AT DIFFERENT MANAGERIAL LEVELS AND THE

ROLES OF MANAGERS

Study sections 6.5 and 6.6 in ITBM and observe a manager of any business in
action.

Skills required
Note the different management skills required at different levels, particularly as illustrated
562

in figure 6.4 of the prescribed book. You must understand the management activities at
the various levels.

Figure 6.4 should be interpreted in terms of the size of the various “blocks” of skills next
563

to each level of management. This figure, for example, illustrates that top management

68
 MNB1501/1/2018–2020

require a few technical skills and interpersonal skills (compared with lower management),
but many conceptual skills and diagnostic/analytical skills. For lower management, the
skills requirement is the other way round, while middle management requires a relatively
equal proportion of all the listed skills. Some of the most famous managers moved through
the ranks: that is, they started out working at a technical level (lower management) and
worked themselves up into middle management and eventually top management posi-
tions. Jack Welch of General Electric was such a manager; he joined the company as a
management trainee.

Supporting roles
In addition to the four fundamental management activities, managers also have to play
564

a number of supporting roles: the interpersonal role, the decision-making role and the
information role. Within these major roles the manager also fulfils subroles, such as in the
case of the interpersonal role. Using Raymond Ackerman of Pick n Pay as an example, we
see that he is still the representative figure of the Pick n Pay group. He is often mentioned
in the newspapers and some customers still see Pick n Pay as Ackerman. He has a very
high profile in the South African public eye. He is definitely seen as the leader of the group,
even though Nic Badminton took over the position of CEO of the company a while ago.

Managerial problems
Since government has made it a priority to promote economic empowerment among
565

disadvantaged entrepreneurs, it is crucial to focus on assisting black-owned businesses.

Although these businesses are potentially a strong vehicle for increasing employment
and contributing to economic growth, many are in trouble because of a lack of business
training.

According to a Business Day report, businesses in the South African construction industry
566

were particularly vulnerable: 86% of construction businesses had exhausted their overdraft
facilities in the last six months of 2004. Formal businesses registered as sole proprietors
or partnerships were also found to fare poorly: 74% of these businesses had exhausted
their overdrafts in the same period as opposed to 45% of close corporations and 23% of
proprietary companies.

Business Day’s findings strongly suggest that, in order to effectively contribute to the
567

promotion of economic empowerment, a priority should be to improve the basic

administrative and managerial capabilities of black-owned businesses.

While efforts such as promoting growth, increasing access to finance, increasing market
568

share, or promoting the internationalisation of black-owned small and medium enterprises

are all important, if the firms’ underlying managerial weaknesses are not dealt with, much
of this effort and cost could be wasted.

69
 6.5 DEVELOPMENT OF MANAGEMENT THEORY

Study section 6.7 in ITBM.

Finally, we are going to examine the evolution of management thought in the past de-
569

cades, which will also help to explain the present status of management and the approach
followed in the prescribed book.

Theories
This section deals with the different approaches to management. It is essential for you
570

to understand the theories of the various schools of thought, because this will help you
understand the contemporary approaches to management. (See figure 6.7 on the evolu-
tion of management theory.) The process approach, which distinguishes four elements of
management and seven functions of a business, forms the basis of the prescribed book.

Schools
It is important to understand that these theories are not all in contrast to one another since
571

they deal with different aspects of management. The quantitative school, for example,
focuses on the ways managers make decisions, while the classical school focuses on the
various tasks (or processes) of management.

Scientific school
The scientific school tends to view workers rather like machines, who would all respond in
572

the same way if they were “tuned” correctly. For example, Taylor believed that an “expert”
should work out the best way to perform a task and workers should then be taught and
supervised to ensure that they work in the prescribed manner. There are many enterprises
in South Africa where employees are still managed along these lines.

Management process school

This school identifies the most important functional areas in the organisation, such as
573

the production/operations function, the marketing function and the financial function.

Behaviourist school
The human relations or behaviourist school sees workers as people who need to be
574

“treated” properly, that is, with respect and consideration. The assumption made by this
school of thought is that when workers are treated well and made to feel happy, they
will give their best.

70
 MNB1501/1/2018–2020

Quantitative school
This school sees the main function of management as using a system of mathematical
575

models and processes. One such example is in the field of marketing where marketers
would like to know the differences between different groups of people (target markets).
This information can be gained by doing discriminant analysis, which uses some aspects
of mathematics and statistics. Management, however, is much more than that and, at
most, quantitative techniques are no more than an aid to management.

Systems approach
This management school sees the organisation as a system of many parts that must be
576

managed in an integrated manner. All the functional areas in the organisation (e.g. finan-
cial department and marketing department) must work together to attain the objectives
of the organisation.

Contingency approach
The contingency approach suggests that it depends on the nature of the worker. Some
577

employees will be productive if their work procedures are clearly laid out for them; others
will give their best if they are treated like human beings; and others again will perform
well when they are given the opportunity to prove how good they are. According to this
approach, managers have to adapt their management style to the particular characteristics
of individual employees.

578 Take note of some contemporary approaches to management (section 6.7.2):

 TQM (Total Quality Management)

 the learning organisation and re-engineering of businesses
 diversity management
579

Management approaches and theories are important instruments to broaden knowledge.

580

Understanding the evolution of the management process gives us a broad perspective of

the vastness of the body of knowledge on research, principles and problems of manage-
ment and approaches to management from which managers can draw.

Activity 6.2

Look at the company where you work or ask a family member who is working and try
to answer the following question: How many nationalities, races and age groups are
represented in the organisation? Do you think it is easy to manage such a diverse group
of workers?

34

71
 Feedback:

Contact your e-tutor via myUnisa for the answer to this activity.

581

SUMMARY
You now have a basic insight into the role, definition, levels and types of management
582

in the organisation. In the next learning unit you will study the first management func-
tion: planning.

BUSINESS IN CONTEXT
Refer to the recommended book entitled Business Cases, in particular case study number
583

5 “General management: Edcon”. This is not compulsory for you to do, but merely a
business-in-context addition to your learning of business management.

SELF-ASSESSMENT QUESTIONS

584 Read this case study and then answer the questions that follow.

General Electric – the American company renowned for delivering managers of

585

distinction

The General Electric Company (GE) in the United States is renowned as a multination-
586

al company with world-famous strategic business units (SBUs). An SBU is an individual

branch or unit of the business of which the manager has some measure of autonomy
and independence as far as purchases, the appointment of personnel and marketing are
concerned. The manager of a branch is also responsible for the success of this branch. The
manager of a unit, such as the renowned jet engine unit, or the unit that manufactures
appliances such as refrigerators and washing machines, or the consumer finance company,
is a well-rounded manager who can manage any SBU in the group. GE became famous
under its previous chief executive officer (CEO) Jack Welch and its current CEO Jeff Immelt
as the company where managers are formed in the United States. Some of the successes
of GE can be ascribed to the following management tenets employed in this company:

 taking time to understand the company and the management team that you are
working with and then respect the corporate culture of the company
 using the Six Sigma programme, a complex quality control management tool
 creating autonomous units and rotating managers among these units
 increasing revenues while cutting costs at the same time
 cutting the bureaucracy in the organisation and letting more people report directly
to the CEO

72
 MNB1501/1/2018–2020

 getting a road map (i.e. set objectives) that everyone can understand and sticking
to these objectives
 believing that great people build great companies
587

588 QUESTION 1

589 Which of the following statements regarding GE is/are correct?

590

591 a It is clear that GE follows a scientific approach to management.

592 b GE adheres to the fundamentals of the human relations school in the way it manages
the organisation.
593 c GE uses the contingency approach to management.
594 d There is evidence that managers in GE make use of the quantitative school of thought.
595

596 1 d
597 2 cd
598 3 abd
599 4 abcd
600

601 QUESTION 2

The case study mentions that one of the tenets of GE is to reduce the amount of bureau-
602

cracy. From what has been said in the case study, how many of the following statements
would help to reduce the amount of bureaucracy in GE?

603 a Reduce the levels of management in the organisation.

604 b Let more managers report directly to the CEO.
605 c Increase revenues and cut costs simultaneously.
606 d Create autonomous SBUs and rotate managers among them.
607

608 1 None of them

609 2 All of them
610 3 ab
611 4 a
612

613 QUESTION 3

It is said that a manager has three overlapping roles: an interpersonal role, an information
614

role and a decision-making role. Looking at the management tenets used by GE, under
which role would you classify the seven tenets in the case study? (Write the seven tenets
down in table format and identify the relevant management role that each refers to.)

73
 35

THE ANSWERS TO THE SELF-ASSESSMENT QUESTIONS

615

616

617 Question 1

Three of the statements are correct. GE uses the scientific school of management because
618

its managers use scientific tools (e.g. Six Sigma) to improve their businesses. GE also uses
the behavioural school of thought in the way it utilises its human resources, for example
by rotating the managers and exposing them to new problems and opportunities. The
quantitative approach is also used if we look at the Six Sigma tool that has made GE
famous. GE does not use the contingency approach; it uses the universal principles of
management, such as planning and control.

619

620 Question 2

Bureaucracy can be described as the way an organisation is managed and is usually applied
621

in a negative manner, such as being inflexible or insensitive. Against this background we

can see that statements a and b are correct. If you reduce the number of levels or layers
of management in the organisation you get a flatter structure, which makes the time
span shorter for communication to flow from the lowest levels to the highest levels and
vice versa. Statements c and d are not directly linked to the reduction of bureaucracy. In
effect we may find that too many managers reporting to the CEO may result in informa-
tion overload, thus limiting the capabilities of the CEO.

622

623 Question 3

Tenets of GE Roles of the manager

1 Understand the business and the Information role. In order to understand the business
management team and respect the you must gather information about the business
corporate culture
2 Use Six Sigma approach (Six Sigma Decision-making role. Six Sigma can be seen as a
is a quality control approach that measurement technique on which management
emphasises the pursuit of higher-quality base their decisions for the future
products at lower costs)
3 Create autonomous units and rotate Decision-making role. Creating autonomous units
managers among them such as the GE jet engine unit and rotating managers
are examples of allocating resources
4 Increase revenues and reduce costs Decision-making role. This is a management decision
to improve the profitability of the organisation
5 Cut the bureaucracy Information role. Cutting the layers of management
and getting more people to report to the CEO help
everyone get management information more
quickly

74
 MNB1501/1/2018–2020

6 Identify objectives and adhere to them Decision-making role. Managers decide on

objectives in consultation with the relevant
participants and ensure that these objectives are
attained
7 Believe that great people build Interpersonal role. Especially the leading part of
great companies management helps to appoint the right people,
train them and motivate them to ensure that they
operate for the greater benefit of the organisation

625

626

627

75