LEAN BUSINESS 2100 MANAGEMENT PROGRAM

Tutorial 1

GENERAL MANAGEMENT

Check Point 1

THE GENERAL MANAGEMENT OVERVIEW

www.LeanBusinessClub.com

© Lean Business Club, Inc. 2016

THE GENERAL MANAGEMENT PROCESS OVERVIEW

What Will You Learn In Check Point 1?

1. What Is Management?2. Four Prime Management Functions3. Four Important Management Roles4. Classification Of Managers5. Time Allocation By Managers6. Five Main Operational Areas In A Company7. Entrepreneurship And Management Science8. The Lean Business Management Method9. Lean Management10. Principles Of Decision Making In Business11. Business Environment And Organizational Culture12. The Planning Process13. Strategic Planning14. Implementation Of Strategic Plans15. Management By Objectives

THE GENERAL MANAGEMENT PROCESS OVERVIEW

What Will You Learn In Check Point 1?

16. Operational Planning17. Business Plan18. The Organizing Process19. Organizational Departmentalization20. Management Structure21. Organizational Design, Development, And Change22. The Leading Process23. Principles Of Communication24. The Controlling Process25. Managerial Ethics26. What Is A Small Business?27. How Can You Succeed In Your Small Business?28. For Serious Business Owners Only29. The Latest Information Online

Do You Need To Know Check Point 1?

Level Your Management Level Yes Optional

1 I Am An MBA Student. V

2 I Am A Professional Manager In A Company. V

3 I Plan To Start A One-Person Business. V

4 We Plan To Start A Small Business Without Employees.

V

5 I/We Plan To Start A Small Business With Employees.

V

6 I Am A One-Person Business Owner. V

7 I Am A Small Business Owner With Employees. V

8 We Are Small Business Owners Without Employees.

V

9 We Are Small Business Owners With Employees.

V

10 I Am A Management Consultant Or A CPA. V

What Is Management?

“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 subordinatesto carry out the necessary tasks instead of performing those tasksthemselves."

What Are The Two Types Of Management?

”Western-Type” Management

”Eastern-Type” Management

Modern “Western-type” management originated in the U.S. and Europe during the last century.

This type of management is based on traditional Western management values, principles, and methods which are discussed in detail in Lean Business 2100 Management Program.

Modern “Eastern-type” management originated in Japan during the last century.

This type of management is based on lean management values, principles, and methods which are discussed in detail in Lean Business 2100 Management Program.

What Is The Main Purpose Of Each Management Type?

Based On “Western-Type” Management Guidelines

Based On “Eastern-Type” Lean Management Guidelines

The main purpose of the “Western-type” management is to create a suitable environment within the business organization in which employee can:

1. Perform productively in a

The main purpose of the “Eastern-Type” or lean management is to create a suitable environment within the business organization in which employee can:

1. Ensure high level of customer

well-organized manner.2. Coordinate individual efforts

toward achieving organizational goals.

3. Maximize the operational performance and profitability of the business organization.

4. Ensure customer satisfaction.

5. Assist the company in achieving short-term and medium-term goals.

satisfaction at all times.2. Offer the best possible value

of products and services to customers, based on quality, reliability, and price.

3. Minimize waste by using fewer resources, including materials, labor and time.

4. Maximize the operational performance and profitability of the business organization.

5. Assist the company in achieving medium-term and long-term goals.

What Are The 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 business people who typically:

Are open-minded. Have high self-confidence. Believe in the power of

This category includes business people who typically:

Are not very open-minded. Have high ego. Believe in the power of

knowledge over money. Are aware of their personal

strengths and weaknesses in various areas of business management.

Are motivated to improve their business knowledge.

Understand that learning about management is a never-ending process which will lead toward improved business performance and results.

money over knowledge. Are not aware of their

personal strengths and weaknesses in various areas of business management.

Assume that they know enough about business management to succeed in business.

Don’t realize that they only know what they know and they don’t know what they don’t know.

What Are The Four Prime Management Functions?

1. Planning Function.

Planning the development of specific organizational objectives and the appropriate actions to achieve those objectives.

2. Organizing Function.Organizing the company's human and material resources into a workable structure to ensure cost-effective organizational performance.

3. Leading Function.Leading the company's employees toward accomplishment of organizational objectives.

4. Controlling Function.

Controlling the performance of the company's employees and ensuring that the organization is progressing toward achieving its goals.

What Are The Four Important Management Roles?

Henry Mintzberg identified four important management roles (1):

1. Leadership Role.Managers act as leaders and are constantly involved in hiring training, training, motivating, and disciplining subordinates. Managers also act as figureheads on behalf of their company.

2. Informational Role.Managers constantly monitor information obtained from various external sources and disseminate essential information among employees within their organization.

3. Decisional Role.Managers constantly make decisions related to their company’s activities and face various problems 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.

What Are The Main Categories Of Managers?

Business Owners And Top Managers

These include a company’s CEO, president and vice-presidents.

Middle-Level Managers

These include heads of departments.

First-Level Managers

These include supervisors and foremen.

How Many Managers Do You Need In Your Business?

If You Are a One-Person Business or a “Micro-Business”

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 a Small Business with 1 to 100 employees

You will need to have several managers to help you manage your business to ensure effective performance.

If You Are A Medium-Sized Business With Up To 500 Employees

You will need a management team to ensure that your organization is managed effectively and it is meeting its business objectives.

How Do Managers Allocate Their Time?

Type Of

BusinessOwners

MiddleManagers

First-Level Managers

Activity And Top 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%

What Are The Five Areas Of Operational Activities In A Company?

General Management

HumanResources

Financial Management

Operations Management

Marketing And Sales

Activities Management Activities

Activities Activities Management Activities

The Main Focus Of Each Area Of Operational Activities

1. General Management Activities.This includes overall planning, organizing, leading and controlling of all company’s activities.

2. Human Resources Management Activities.This includes planning, organizing, leading and controlling the company’s human resources.

3. Financial Management ActivitiesThis includes planning, organizing, leading and controlling the company’s financial resources.

4. Operations Management ActivitiesThis includes planning, organizing, leading and controlling the company’s operational resources.

5. Marketing And Sales Management Activities.This includes planning, organizing, leading and controlling the company’s marketing and sales resources.

What Are 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.

What Are 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.

What Are 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.

What Are 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.

What Are 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.

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.”Did you know that:

• Entrepreneurship is the cornerstone of a free market economy system all over the world.

• Entrepreneurship represents the major driving force behind the U.S. economy.

• There are about 28 million entrepreneurs in the U.S. including about 6 million one-person business owners.

• Entrepreneurs provide major contribution to the $16.2 Trillion U.S. Gross Domestic Product (GDP).

• Entrepreneurs 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 destiny.• Want to remain independent at any price.

Are You Familiar With The Two Types Of Business Management?

”Western-Type” Management

”Eastern-Type” Management

• Developed during the last century in U.S. and Europe.

•Provides the foundation for traditional western-type management.

• Developed during the last century in Japan.

•Provides the foundation for lean management which became popular in U.S. and Europe.

What Is The Biggest Problem In Business Management?

The biggest problem in business management is that the majority of people in business are not trained in business management, while the majority of people, who are trained in business management, are not in business!

Is It Possible That This Is Your Problem Too?

If So, This Could Be Your Solution:

Lean Business 2100 Management Program

What Is Lean Business 2100 Management Program?The Lean Business 2100 Management Program provides:

• Unique management methodology, termed Lean Business Engineering, designed to assist you to succeed in your business.

• Practical and easy-to-use business management guidelines at your fingertips.

• Improved management skills to secure successful performance of your business.

• Simple management tools to effectively plan, manage, and control your business activities and to maximize profitability.

• Comprehensive management tutorials for your management team designed to improve operational knowledge and productivity.

• About 1,800 pages of practical business management information, hundreds of small business examples, and time-saving worksheets.

The Lean Business 2100 Management Program address the challenges presented by two important concepts introduced in the 1990's:

• Knowledge Management (KM)• Personal Knowledge Management.

What Is The Lean Business Engineering Method?

The Lean Business Engineering Method is a cross-functional method of applying traditional Western-style management guidelines and lean management guidelines to operational activities within any organization to maximize the customers’ satisfaction, product and service value, operational performance, and profitability.The Lean Business Engineering Method is at the core of the Lean Business 2100 Management Program.The prime purpose of the Lean Business Engineering Method is to provide a Universal Management Tool. This tool can be used as follows:• Learning Tool for students.• Management Tool for professional managers.• Be-Your-Own-Management-Consultant Tool for aspiring and

existing business owners

•Professional Management Tool for management consultants and pro-active CPAs.

The Lean Business Engineering Method will enable you and your management team to:• Provide you and your management team with practical solutions in

all major areas of business management.• Enable you to improve your knowledge in various areas of business

management on a do-it-your-self basis.

What Is The Lean Business Engineering House?

The Lean Business Engineering House describes the most important elements of the Lean Business Engineering Method.

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 practical cross-functional management guidelines to business people.

• To maximize overall business performance.

This method:

•Is 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 lean management guidelines to business people.

• To maximize the customers’ satisfaction.

This method:

•Is based on “Eastern-style” business management values, methods, and principles.

• Originated in Japan and is used in the U.S. and Europe.

The Lean Business Engineering Method

What Is The Lean Business 2100 Management Program?

The Lean Business 2100 Management Program provides:

• Unique management methodology designed to assist business owners to succeed in business.

• Simple management tools to effectively plan, manage, and control business activities.

• A knowledge-based foundation for the implementation of the lean business engineering method.

• Practical cross-functional management guidelines in all main operational areas of activities.

• Guidelines to maximize overall business performance and ROI.• A universal management tool.

Universal Management Tool

The Lean Business 2100 Management Program is designed to be used as:• 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.

What Does The Lean Business 2100 Management Program Contain?

The Lean Business 2100 Management Program is based on a multi-disciplinary approach to business management and contains:• Five Tutorials covering five major areas of operational business management.• 20 Check Points in each tutorial, which include a broad range of Topics related to the specific tutorial as described below.

Each Of The Five Tutorials Contains 20 Check Points

TUTORIAL 1General

Management

TUTORIAL 2Human

Resources Management

TUTORIAL 3Financial

Management

TUTORIAL 4Operations

Management

TUTORIAL 5Marketing And Sales

Management

20Check Points(1-20)

20Check Points(21-40)

20Check Points(41-60)

20Check Points(61-80)

20Check Points

(81-100)

What Is Lean?

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.

• Lean is critical in developing an effective business organization and improving every aspect of its performance on a continuous basis.

• Lean has many practical applications in all areas of operational activities.

•Lean can be used very effectively by a one-person business owner or by any type of small, medium-sized, and large business organization.

• Various elements of lean were developed in Japan and for this reason lean represents “Eastern-style” school of management.

•The term “Lean” was first introduced by John Krafcik in his 1988 article ”Triumph Of The Lean Production System”.

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 maximize the all-around operational performance and profitability of any business organization.

• To offer the best possible value of products and services based on their quality, reliability, and price, to customers.

• To minimize waste and to use fewer resources.• To enable any business organization to become a “lean

organization”.

• To implement lean values, principles, and guidelines in the most cost-effective manner.

Modern lean management has its origin with Toyota Production System (TPS) developed in Japan and it has evolved gradually over the last sixty years.

What Are The Critical Lean Management Values And Principles?

• Your customers are the most important part of your business.• Offer your customers the best possible value and experience.• Always treat your customers in the best possible way.• Develop long-term mutually beneficial relationship with customers.

• Treat your employees with genuine care, dignity, and respect.• Reward your employees fairly based on their performance.• Identify operational inefficiencies and waste in a timely manner.• Maximize value-added and minimize non-value-added activities.• Improve all operational processes on a continuous basis.• Maximize quality at the source of all operational processes.• Create a continuous customer-driven flow environment.• Ensure maximum safety for all customers and employees.• Motivate all employees to keep 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.

What Are The Main Elements Of Lean Management?

Hoshin Kanri Kaizen Just-In-Time Jidoka (Autonomation)

Total

Productive Maintenance

(TPM)

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.

What Are The Basic Steps In Business Decision-Making?

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.

What Are The Two Basic Types Of Business Environment?

External Environment Internal Environment

Five Types Of External Business Environment

Economic Environment

Social Environment

Technological Environment

CompetitiveEnvironment

Global Business Environment

Critical Elements Of External Business Environment

Customers Suppliers Banks Laws And Regulations

Five Main Elements Of Internal Environment

Human Resources

Financial Resources

Operational Resources

Marketing Resources

Organizational Culture

What Is The Planning Process?

Planning is the first essential managerial responsibility in any organization. The Planning Process represents the foundation of all operational activities within the company.

Two Types Of The Planning Process

Strategic Planning Operational Planning

•Deals with long-term and medium-term planning activities (one to five years).

•Deals with short-term planning activities for a period from one day up to one year.

•Involves business owners and top managers on organization-wide basis

The main purpose:

•

To develop an overall long-term direction for the entire business organization to ensure its successful performance.

•Involves managers who are responsible for meeting specific departmental objectives.

The main purpose:

•To ensure cost-effective implementation of short-term solutions in each department.

What Is Strategy?

Strategy refers to a direction toward a specific goal.

The term “strategy” is derived from the Greek word “strategos” which means "the art of a general”.

What Is Strategic Planning?

Strategic Planning represents the foundation of the entire planning process in every business organization.

Strategic planning also 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.

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.

What Are The 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.

What Are A Company’s Strategic Long-Term Options?

1. The Limited Growth Strategy.A limited 10% - 30% annual growth strategy is frequently used by small and medium-sized companies.

2. The Expansion Strategy.An aggressive 40% - 80% and more expansion strategy is suitable for developing industries with dynamic technology.

3. The Retrenchment Strategy.A retrenchment strategy is used by small and medium-sized companies as the "last option" as follows:3.1 The Retrenchment Strategy - Consolidation.This option entails scaling down of operations and cutting costs.3.2 The Retrenchment Strategy – DivestmentThis option entails disposing of loss-causing operations.3.3 The Retrenchment Strategy - Liquidation.This option entails liquidation of the company's assets.

4. The Combination Strategy.Combination strategy is frequently used by larger organizations and it may entail any combination of the above long-term strategies.

What Are Supporting Short-Term Elements Of A Strategic Plan?

Tactics Policies Procedures Rules

What Are Company Tactics?

Company Tactics are short-term business and operational plans, formulated by management, designed to accomplish short- and long-term strategic objectives.

What Are Company Policies?

Company Policies can be defined as "a clear and complete statements related to the day-to-day running of the organization".

What Are Company Procedures?

Company Procedures represent a plan that provides the necessary method of implementing company policies.

What Are Company Rules?

Company Rules spell out required actions or non-actions by an employee and do not allow any discretion in their application.

Operational Planning In Five Areas Of A Company’s Activities

General Management

Planning

Human Resources

Management

Financial Management

Planning

Operations Management

Planning

Marketing And Sales

Management

Planning Planning

Steps In The Operational Planning Process

1. Establish your company’s specific objectives.2. Define your company’s present situation.3. Identify your company’s operational methods.4. Develop an operational plan to achieve your company’s objectives.

Frequency Of Operational Planning In A Small Business

1. Daily planning.2. Weekly planning.3. Quarterly planning.4. Semi-annual planning.5. Annual planning.

A Company’s Operational Plan Of Action

General Management

Human Resources

Financial Management

Operations Management

Marketing And Sales

Plan Of Action Management Plan Of Action

Plan Of Action Plan Of Action Management Plan Of Action

The Operational Plan Of Action Must Cover Five Areas

1. General Management Plan Of Action.This includes overall planning of all company’s activities.

2. Human Resources Management Plan Of Action.This includes planning of the company’s human resources.

3. Financial Management Plan Of Action.This includes planning of the company’s financial resources.

4. Operations Management Plan Of Action.This includes planning of the company’s operational resources.

5. Marketing And Sales Management Plan Of Action.This includes planning of the company’s marketing and sales resources.

What Is Management By Objectives (MBO)? Management By Objectives (MBO) represents a practical management method and a tool widely used by business owners and managers during the operational planning process. 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 by employees.

••• To improve overall performance results within the organization in

the long run.Steps In The Management By Objectives Process

1. Set specific goals.Develop detailed plan action.Implement planned action.Review the results of the planned action.Repeat steps 1 – 4 above on a regular basis.

2.3.4.5.

What Is A Business Plan?

A well-defined Business Plan represents the final result of all planning activities undertaken by management within any organization.The main purpose of a business plan is:1. To formulate clear operational and financial objectives for the entire

business organization.2. To provide the management team with comprehensive guidelines

for running the business.3. To providing various financial institutions with critical information

about an organization.

Elements Of A 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.

What is The Organizing Process?

Organizing is the second essential managerial responsibility, after planning of various operational activities, within the organization.

What Are The Steps In The Organizing Process?

1. Identify and classify all 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.

Organizing Operational Activities In A Company

Organizing General

Management Activities

Organizing Human

Resources Management

Activities

Organizing Financial

Management Activities

Organizing Operations

Management Activities

Organizing Marketing And Sales

Management Activities

The Organizing Process Must Cover Five Operational Areas

1. Organizing General Management Activities.This includes overall organizing of all company’s activities.

2. Organizing Human Resources Management Activities.This includes organizing of the company’s human resources.

3. Organizing Financial Management Activities.This includes organizing of the company’s financial resources.

4. Organizing Operations Management Activities.This includes organizing of the company’s operational resources.

5. Organizing Marketing And Sales Management Activities.This includes organizing of the company’s marketing and sales resources.

What Is Organizational Departmentalization?

Organizational Departmentalization represents one of the first steps in the organizing process in any company.

Business owners and the entire management team are responsible for ensuring a professionally conducted organizational departmentalization.

Four Methods Of Organizational Departmentalization

Departmentalization By

Departmentalization By

Departmentalization By

Departmentalization By

Function Product Or Service Market Or Customer Territory

Who Is Using Organizational Departmentalization?

• Departmentalization By Function.Used by most small and medium-sized companies.

• Departmentalization By Product Or Service.Used by larger companies that offer range of products or services.

• Departmentalization By Market Or Customer.Used by larger companies that work in specific markets.

• Departmentalization By Territory.Used by larger companies that work in specific territories.

What Is Organizational Structure?

Organizational Structure represents the ultimate result of the organizational departmentalization process in a business organization.

Organizational structure provides a visual description of a business organization’s operational activities and lines of communication.

What Are The Three Types Of Organizational Structures?

FunctionalStructure

DivisionalStructure

Matrix Structure

Application Of Various Types Of Organizational Structures

• Functional Structure.Used by the majority of small and medium-sized companies.

• Divisional StructureUsed by larger companies that offer range of products or services,or work in specific markets or territories.

• Matrix StructureUsed primarily by project management companies.

What Is A Management Structure?

A Management Structure represents:• The ultimate result of developing an organizational structure within

a business organization.• The foundation of every successful organization and plays a critical

role in ensuring effective planning and control of all its operational activities.

Critical Elements Of A Management Structure

Each manager in a well-defined management structure must be assigned a certain level of:

• Authority.Authority represents a specified degree of discretion delegated to individuals to enable them to use their judgment, to have power in

making decisions, and to issue instructions to subordinates.• Responsibility.

Responsibility represents a specified number of tasks assigned to individuals who are answerable for their duties and the performance of their subordinates.

• Accountability.Accountability means being held responsible for results or outcome of a particular assignment.

What Is The Unity Of Command Principle?

The Unity Of Command Principle represents a critical element in the development of a management structure in a business organization.

The Unity Of Command Principle suggests that:

"Each individual in the organization should be accountable to only one superior."

Note: The only exception to the above principle is the matrix structure which allows dual reporting within project management organizations.

What Is The Scalar Principle?

The Scalar Principle represents another critical element in the development of a management structure in business organization.

This Scalar Principle suggests that:

"The clearer the line of authority from the ultimate management position to each subordinate position, the more likely there will be responsible decision making and organizational communication within a company."

What Is The Main Purpose Of Organization Chart?

Organizational Chart represents the ultimate outcome of the management structure development process in a business organization.

The organizational chart:

• Provides a practical management tool for business owners and managers within any business, irrespective of its size.

• Represents a “management driving map” for business owners and managers.

• Provides an effective visual description of the organization’s operational activities.

• Can be used for effective delegation of authority, responsibility and accountability within a business organization.

• Is very helpful in developing clear lines of communication and avoiding confusion between management and other employees.

• Is very useful in providing new and existing employees with a clear

functioning of the business organization.• Provides clear explanation to all employees regarding the

chain of command and the reporting procedures within a business organization

Organizational Design, Development, And Change

The process of organizational design, development, and change begins with the completion of the organizational chart.

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.

Types Of Operations That Affect Organizational Design

ManufacturingOperations

ServiceOperations

MerchandisingOperations

Project Management And Contractors

What Is The Greiner Curve?

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.

What Is The Leading Process?

Leading is the third essential managerial responsibility after planning and organizing various operational activities within the organization.The Leading Process can be defined as "the art or process of influencing people so that they will strive willingly and enthusiastically toward the achievement of organizational goals."

The leading process entails guiding, conducting, directing, and motivating subordinates to accomplish specific corporate objectives.

What Is Leadership?

Leadership means knowing what the right thing is, being able and willing to do the right thing on a continuous basis, and being prepared to take full responsibility for its outcome.Leadership is essential for effective management in any successful organization.

What Is The Difference Between A Manager And A Leader?

• Managers can be trained and they are usually appointed to perform specific tasks within the organization.

• Leaders do not require a special appointment. They just take the

initiative and move forward.

What Are The Two Types Of Leadership Styles?

Task-Oriented Leadership Style

Employee-Oriented Leadership Style

• Is based on an autocratic approach.

•Entails telling subordinates how to complete of a job in the most efficient manner.

• Emphasizes the leader's power.• Minimizes misdirection of

subordinates.• Increases efficiency of the

organizational performance.

• Is based on a democratic approach.

•Entails motivating subordinates to perform a job in the most efficient manner.

• Emphasizes the team’s power.• Permits subordinates to

participate.• Increases employee productivity

and satisfaction.

Four Evolution Stages Related To Leadership Styles

Paul Hersey and Ken Blanchard developed a Situational Leadership Theory which suggests that there is no single “best” style of leadership

and that leadership style may undergo several evolution stages:

1. “Telling” leadership style. 3. “Participating” leadership style.2. “Selling” leadership style. 4. “Delegating” leadership style.

What Is Communication ?

Communication can be defined as the exchange of verbal and non-verbal information between two or more individuals.

What Is The Purpose Of Communication?1. To establish and communicate the organizational objectives.2. To develop functional plans for their accomplishment.3. To select, develop, and appraise employees.4. To lead, motivate, and control the performance of employees.5. To arrange and to utilize available physical resources in the most

efficient way.Six Components Of The Communication Process

1. Sender or source. 4. Receiver.2. Message. 5. Feedback.3. Channel. 6. Noise.

Four Types Of Communication

1. Vertical downward communication.

3. Horizontal communication.

2. Vertical upward communication. 4. Diagonal communication.

What Is 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 represents the ultimate step in converting the company’s plan of management into reality.

What Are The 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.

What Are The Three Types Of Management Control?

1. Feed-forward control.2. Concurrent control.3. Feedback control.

What Is Ethics?

Ethics commonly refers to the rules or principles that define right and wrong conduct.

What Factors Influence Ethical Behavior?

1. Government regulations.2. Industry ethical codes.3. Social pressures.4. Organizational framework.5. Company culture.6. Individual’s characteristics.

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".

What Is A Small Business?

U.S. Small Business Administration (SBA) defines Small Business as follows:"Small business is any organization with fewer than 500 employees."

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.

Why Small Businesses Fail?

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.

What Is One Of The Prime Reasons For Business Failure?

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!

How Can You Succeed In A Small Business?

Your success in business will depend primarily upon your:• Business management knowledge.• Business experience.• Leadership skills.• Financial resources.• Will to succeed.• Ability to deal with other people.• Patience.• Perseverance.• Discipline in getting the job done,• Readiness for sacrifice to achieve objectives,• Ability to focus on the final goal.

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…”.

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

Are You Serious About Your Business Today?

Reprinted with permission.

Additional Information Online

For additional information about

the Lean Business 2100 Management Program online

please visit:

www.LeanBusinessClub.com

© Lean Business Club, Inc. 2016