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PRINCIPLES OF GENERAL MANAGEMENT

Credit Units – 5

Introduction to General Management in Pharmacy

Logistics and Supply Chain Management of Medicines and other Health

Commodities

Small Scale Business Management

Human Resource Management

- Dispute Resolution (Inter and Intra professional collaboration)

- Mentoring in Pharmacy

Financial Management (e.g. Drug Revolving Fund Scheme, Cooperatives in

Pharmacy)

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Scope/Learning Objectives

Management principles are statements of fundamental truth. These principles serve as

guidelines for decisions and actions of managers.

The resource persons are expected to discuss the principles that form the foundations

of successful management.

At the end of the learning session, participants should be able to:

(1) Discuss the fundamentals of Business Logistics and Supply Chain Management

of Medicines and other Health Commodities;

(2) Discuss the principles and application of Management in Pharmacy;

(3) Identify the various financing options/interventions in establishing and

sustaining pharmaceutical businesses;

(4) Understand Dispute Resolution Processes;

(5) Appreciate the importance of Mentoring in Pharmacy;

(6) Discuss Risk Assessment & Management;

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MANAGEMENT AND PRINCIPLES OF GENERAL MANAGEMENT

Management is the art and science of planning, organizing, directing and

controlling human efforts and resources for the general good within the

organizational framework and economic environment of the company or

establishment.

It is the process of setting and achieving objectives by influencing human

behavior within a suitable environment. It is also defined as a process of reaching

organizational goals by working with and through people and other

organizational resources.

Overview of Management

Management is the art of engaging with an organization's human talent and using

the physical resources at a manager's disposal to accomplish desired goals and

objectives efficiently and effectively. Management comprises of planning,

organizing, staffing, leading, directing, and controlling an organization (a group of

one or more people or entities) or effort for the purpose of accomplishing a goal.

One of the most important duties for a manager is effectively using an

organization's resources. This duty involves deploying and manipulating human

resources (or human capital), as well as efficiently allocating the organization's

financial, technological, and natural resources.

Since organizations can be viewed as systems, management can also be defined

as human action, such as product design, that enables the system to produce

useful outcomes. This view suggests that we must manage ourselves as a

prerequisite to attempting to manage others.

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Nature of Managerial Work

In the for-profit environment, management is tasked primarily with meeting the

needs of a range of stakeholders. This typically involves making a profit (for the

shareholders), creating valued products at reasonable cost (for customers), and

providing rewarding employment opportunities (for employees). Nonprofit

management has the added importance of attracting and retaining donors.

In most models of management/governance, shareholders vote for the board of

directors, and the board then hires senior management. Some organizations have

experimented with other methods (such as employee-voting models) of selecting

or reviewing managers, but this occurs only very rarely. In the public sector of

countries that are representative democracies, voters elect politicians to public

office. Such politicians hire managers and administrators.

Several historical shifts in management have occurred throughout the ages.

Towards the end of the 20th century, business management came to consist of

six separate branches, namely:

Human resource management

Operations management or production management

Strategic management

Marketing management

Financial management

Information technology management (responsible for the management

information systems)

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Basic Functions

Management operates through various functions, such as:

Planning - Deciding what needs to happen in the future (today, next week,

next month, next year, over the next five years, etc.) and generating plans

for action.

Organizing - Implementing a pattern of relationships among workers and

making optimum use of the resources required to enable the successful

carrying out of plans.

Staffing - Job analysis, recruitment, and hiring of people with the

necessary skills for appropriate jobs. Providing or facilitating ongoing

training, if necessary, to keep skills current.

Leading/directing - Determining what needs to be done in a situation and

getting people to do it.

Controlling/monitoring - Checking current outcomes against forecast

plans and making adjustments when necessary so that goals are achieved.

Motivating - This is a basic function of management because without

motivation, employees may feel disconnected from their work and the

organization, which can lead to ineffective performance. If managers do

not motivate their employees, they may not feel their work is contributing

to the overall goals of the organization (which are usually set by top-level

management).

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Defining Leadership

Over the years the philosophical terms "management" and "leadership" have

been used both as synonyms and with clearly differentiated meanings. Debate is

fairly common about whether the use of these terms should be restricted or

should generally reflect an awareness of the distinction made by Burns (1978)

between "transactional" leadership (characterized by emphasis on procedures,

contingent reward, management by exception) and "transformational" leadership

(characterized by charisma, personal relationships, creativity). Management is

often associated with the former and leadership with the latter.

Leaders who demonstrate persistence, tenacity, determination, and synergistic

communication skills will bring out the same qualities in their groups. Good

leaders use their own inner mentors to energize their team and organizations and

lead a team to achieve success.

Group Leadership

In contrast to individual leadership, some organizations have adopted group

leadership. In this situation, more than one person provides direction to the

group as a whole. Some organizations have taken this approach in the hope of

increasing creativity, reducing costs, or downsizing. Others may see the

traditional leadership of a boss as costing too much in team performance. In

some situations, the team members best able to handle any given phase of the

project become the temporary leaders. Additionally, staff experiences energy and

success when each team members have access to elevated levels of

empowerment.

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Leadership Styles

A leadership style is a leader's approach towards providing direction,

implementing plans, and motivating people. It is the result of the philosophy,

personality, and experience of the leader. Rhetoric specialists have also

developed models for understanding leadership (Robert Hariman, Political Style;

Philippe-Joseph Salazar, L'Hyperpolitique. Technologies politiques De La

Domination).

Engaging Style of Leadership

Different styles of leadership can achieve the leading function.

Different situations call for different leadership styles. In an emergency, when

there is little time to reach an agreement and where a designated authority has

significantly more experience or expertise than the rest of the team, an autocratic

leadership style may be most effective. However, in a highly motivated and

aligned team, with a homogeneous level of expertise, a more democratic or

laissez-faire style may be more effective. The leadership style adopted should be

the one that most effectively achieves the objectives of the group while balancing

the interests of its individual members.

Positive Reinforcement

Anyone thinking about managing a team must consider positive reinforcement.

B.F. Skinner, the father of behavior modification, developed this concept. Positive

reinforcement occurs when a positive stimulus is presented in response to a

behavior, increasing the likelihood of that behavior in the future.

The following is an example of how positive reinforcement can be used in a

business setting. Assume praise is a positive reinforcement for a particular

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employee. This employee does not show up for work on time every day. The

manager of this employee decides to praise the employee for showing up on time

when the employee actually does so. As a result, the employee comes to work on

time more often because the employee likes to be praised. In this example, praise

(the stimulus) is a positive reinforcement for this employee because the

employee arrives at work on time (the behavior) more frequently after being

praised for it.

The use of positive reinforcement is a successful and growing technique used by

leaders to motivate and attain desired behaviors from subordinates.

Organizations, such as Frito-Lay, 3M, Goodrich, Michigan Bell, and Emery Air

Freight, have all used reinforcement to increase productivity. Empirical research

covering the last 20 years suggests that reinforcement theory has a 17% increase

in performance. Additionally, many reinforcement techniques, such as the use of

praise, are inexpensive and provide higher performance and employee

satisfaction for lower costs.

Strategic Planning

Strategic planning is an organization's process of defining its strategy or direction

and making decisions about allocating its resources to pursue this strategy. To

determine the direction of the organization, it is necessary to understand its

current position and the possible avenues through which it can pursue a

particular course of action. Generally, strategic planning deals with at least one of

three key questions:

What do we do?

For whom do we do it?

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How do we excel?

The key components of strategic planning include an understanding of the

organization’s vision, mission, values, and strategies. (Often a "vision statement"

and a "mission statement" may encapsulate the vision and mission).

Vision: This outlines what the organization wants to be or how it wants the world

in which it operates to be (an "idealized" view of the world). It is a long-term view

and concentrates on the future. It can be emotive and is a source of inspiration.

For example, a charity working with the poor might have a vision statement that

reads "A World without Poverty."

Mission: It defines the fundamental purpose of an organization or an enterprise,

succinctly describing why it exists and what it does to achieve its vision. For

example, the charity above might have a mission statement as "providing jobs for

the homeless and unemployed."

Values: These are beliefs that are shared among the stakeholders of an

organization. Values drive an organization's culture and priorities and provide a

framework in which decisions are made. For example, "knowledge and skills are

the keys to success," or "give a man bread and feed him for a day, but teach him

to farm and feed him for life." These example values place the priorities of self-

sufficiency over shelter.

Strategy: Strategy, narrowly defined, means "the art of the general"—a

combination of the ends (goals) for which the organization is striving and the

means (policies) by which it is seeking to get there. A strategy is sometimes called

a roadmap, which is the path chosen to move towards the end vision. The most

important part of implementing the strategy is ensuring the organization is going

in the right direction, which is towards the end vision.

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Tools and Approaches

There are many approaches to strategic planning, but typically one of the

following is used:

Situation-Target-Proposal:

o Situation – Evaluate the current situation and how it came about.

o Target – Define goals and/or objectives (sometimes called ideal

state).

o Path/Proposal – Map a possible route to the goals/objectives.

Draw-See-Think-Plan:

o Draw – What is the ideal image or the desired end state?

o See – What is today's situation? What is the gap from ideal and

why?

o Think – What specific actions must be taken to close the gap

between today's situation and the ideal state?

o Plan – What resources are required to execute the activities?

Among the most useful tools for strategic planning is a SWOT analysis (Strengths,

Weaknesses, Opportunities, and Threats). The main objective of this tool is to

analyze internal strategic factors (strengths and weaknesses attributed to the

organization) and external factors beyond control of the organization (such as

opportunities and threats).

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SMALL SCALE BUSINESS MANAGEMENT

What is a small business?

This depends on criteria used but the most common criterion is number of employees.

Others include sales revenue, total value of assets, value of owner’s equity etc.

Size standard vary by industry (Construction, manufacturing, mining, transportation,

wholesale, retail trade and service)

Small and medium enterprises (SMEs) or small and medium-sized businesses (SMBs)

are businesses whose personnel numbers fall below certain limits.

The abbreviation "SME" is used in the European Union and by international

organizations such as the World Bank, the United Nations and the World Trade

Organization (WTO). Small enterprises outnumber large companies by a wide margin

and employ many more people. SMEs are responsible for driving innovation and

competition in many economic sectors. The Central Bank of Nigeria defines small and

medium enterprises in Nigeria according to asset base and number of staff employed.

The criteria are an asset base between N5 million and N500 million, and a staff

strength between 20 and 300 employees.

Examples of small-scale businesses include a flea market, shopping mall booth, a

consultancy business and computer repair shop. They typically consist of one owner

and his shop. The business owner sells products and/or services supplied by a franchise

company or created by the owner himself.

The business is generally flexible, i.e., owner can set hours to accommodate customers.

May serve a local community and generate just enough profit to take care of company

owners.

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Characteristics of Small-Scale Business

Small-scale businesses display a distinct set of identifying characteristics that set them

apart from their larger competitors.

1. Low Startup Costs: Initial startup costs are usually pretty low, depending on the

specific business model and what products or services are being sold. A small-

scale business selling retail commodities e.g. a community pharmacy, small

scale production facility or a contract hospital pharmacy only needs funds to

buy initial inventory and pay for a rent. Small-scale businesses that offer

consultation services, such as medical product registration consultation or

nutritional services, also have very low overhead costs.

2. Portability: They are generally portable, making it easy to set up and tear down

e.g. a 30sqm retail space for community practice.

3. Revenue and Profitability: Revenue is generally lower than at larger

enterprises, but profitability may be higher. USA-Maximum revenue allowance

for small business designation is set at $21.5 million per year for service

businesses. The businesses often own their facilities and equipment outright,

which, helps to keep costs down.

4. Employees: Usually very few employees work for the business. Owners are

part of staff allowing them to keep whatever profits they make. Small-scale

businesses employ smaller teams of employees than companies that operate

on larger scales. Micro businesses are run entirely by single individuals or small

teams.

5. Market Area: Small-scale businesses serve a much smaller area than

corporations or larger private businesses. Micro businesses serve single

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communities. By definition, growing beyond single community would increase

the scale of operations and may push it into a new classification.

6. Marketing products and services: Successful businesses deliver something of

value to those who need it. Large groups of people who need something that

can be delivered are identified. These are then narrowed down to those who

want to buy the product with the characteristics that can be produced better

than anyone else or at lower cost. That is ones target market and, as one

develops his business, he either gains market share in that market or add other

target markets that match other versions of the product. In each case, one

matches the product characteristics to the target market needs and promote

those characteristics to that market.

7. Ownership and Taxes: Small-scale businesses are organized as sole

proprietorships, partnerships or limited liability companies. These forms of

organization provide greatest degree of managerial control for company

owners and minimize hassle and expense of business registration. These

businesses may not file their own taxes; instead, company owners report

business income and expenses on their personal tax returns. If limited liability,

it must file tax returns.

8. Locations: A small-scale business, by definition, can be found only in a limited

area. It is not likely to have sales outlets in multiple states or countries, for

example. Many operate from a single office, retail store or service outlet. It is

even possible to run a small business directly out of ones home, without any

company facilities.

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Critical success factors for a small business

Yourself

Your strengths and weaknesses determine how you operate your business.

To be successful, you have to take on a role within your company that builds on

your strengths and avoids your weaknesses.

If you are technically minded or good at design, you have to hire salespeople

and place yourself in product-related roles.

If your strength is sales and marketing, hire good designers and engineers to

help develop your business.

You can retain control of your business, but seek and act upon advice of

specialists you hire in areas in which you are weak.

Business

The organizational structure you choose for your business is critical to its

success.

The business format is simple to organize and operate.

As you develop your business, you may want to incorporate to limit your

liability and gain credibility with customers.

For markets that are mature or for those that are tightly regulated by the

government, a hierarchical structure in which you delegate authority to

managers is the most appropriate.

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Competition

You have to consider the actions of competitors.

Focus your business development in areas where your business is strong and

competition is weak.

If you have a better design or a cost advantage, you promote the design

characteristics or the value of your product to gain market share.

If a competitor threatens a part of your business where you have a weak

position, focus on developing your stronger segments than assigning resources

to the weak business section.

Funding of SMEs

Debt financing

Equity financing through venture capital and business

Non-governmental organizations

Angels financing

Banks (almost all the banks now have facilities for SMEs)

Cooperative societies

Creditors

Family and Friends

Tips for Small-Business Success

Realize that not everyone is cut out to be a small-business owner. Take the

time to explore whether you are compatible with running your own business.

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Some people are happier (and better off financially) on the other end of a

paycheck.

Get your personal finances in order. Before you jump into the entrepreneurial

fray, get your own money matters squared away.

Pick your niche. Take stock of your skills, interests, and employment history to

select the business best suited to you. Choosing a niche that you can be

passionate about will help improve your chances of succeeding. Remember:

many small-business owners succeed in businesses that are hardly unique or

innovative.

Benefit from your business plan. The exercise of creating your business plan

pays dividends. Answer the tough questions now, before the meter is running.

Do not think you need bankers and investors at the outset. The vast majority

of small-business start-ups are bootstrapped (self-financed). Consider your own

savings, investments, and salable assets and then talk to your friends and family

before you look to outside sources.

Know which hats you wear best. In the early months and years of your

business, you will have to acquire many skills. Gain the background you need to

oversee all the facets of your business, but also determine what tasks you

should outsource or hire employees to manage.

Remember that nothing happens until a sale is made. How many good

products go nowhere because they do not reach the shelves? Sales are what

drive your business. You need a crackerjack marketing plan that details how you

intend to package, promote, distribute, price, and sell your product or service.

Pay attention to your customers. After all, you have to see a customer to know

one. No matter how busy you are, especially in the early years of your business,

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be sure to spend at least 25 percent of your time with customers. You cannot

make the right business decisions without understanding the customer’s

viewpoint.

Solve your customers’ problems. The best way to satisfy your customers is not

by selling them products or services but by providing solutions to their

problems. Understand the difference and market your products and services

accordingly.

Keep in mind that quality takes only moments to lose and years to regain.

Quality is not a destination but rather a never-ending journey. After you have

strayed from quality’s path, your journey may be sidetracked forever.

Put profitability first and rewards second. Beware of the small business that

treats itself to hefty salaries, high-priced consultants, and waterfalls in the

lobby. In small business, profitability must come first. To understand

profitability, you must first measure your cash flow and understand your key

financial ratios.

Hire superstars. If you intend to create a growing business, your number one

duty is to assemble a team of superstar employees in your game-breaker

positions. Game-breaker positions are key positions, such as the president/CEO

(that’s you), the financial person, the sales manager, the marketing manager,

the production manager, the office manager, the purchasing agent, the art

director, and so on, that will make or break your company.

Do not go it alone. Tap into resources, such as small-business peers, mentors,

and trade associations, that can help take some of the energy-draining trial and

error out of starting and running your business.

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Remember that vendors are partners too. A good vendor is as important to

your business as a good customer. Treat your vendors like customers and watch

the partnerships grow.

Make use of benefits. The most valuable long-term benefit you can offer

yourself and your employees is a retirement savings plan. In addition, find out

how to provide insurance and other benefits and reduce your tax bill at the

same time.

Pay attention to all small-business-related regulatory issues. Federal, state,

and local government agencies require an array of licenses, registrations, and

permits. Obey them or face stiff penalties, including possible closure of your

business.

Know the tax laws. Invest in understanding tax issues that affect your small

business. You can avoid trouble and, at the same time, legally slice thousands of

dollars off your tax bill if you know the ins and outs of small-business tax law.

Keep your focus on the people. Whatever happens to a small business happens

at the hands of the people who work for it.

Fast, good, or cheap — pick any two. Serious trouble awaits those business

owners who attempt to be all things to the marketplace. Focus on what you do

best.

Develop a passion for learning. As your business changes and grows, you need

to change and grow along with it — particularly as you transition to manager.

The one common denominator you find in all successful business owners is a

passion for learning.

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HUMAN RESOURCE MANAGEMENT

Introduction

• A survey report showed that the biggest challenges a business could have were:

finding competent workers and motivating them to perform.

• Cost of having bad employees include:

o Hiring and training cost can be quite huge

o Loss of customer satisfaction

o Low employee morale

Cost and risks associated with HR issues are too great to ignore

Five Hiring Mistakes Common in Small Businesses

As a business owner, you are challenged with a variety of tasks every day. Small

business owners take on multiple roles, from accounting to legal to human resources.

Regardless of whether you handle human resources yourself or delegate it to someone

else, your company is bound to make mistakes. These human resource management

mistakes can be devastating for your company in numerous ways – from litigation to

employee replacement costs. Therefore, it is imperative that you make sure your

company avoids these common, costly mistakes

1. Not Hiring the Right People for the Job. Some small business owners hire

people they know for open positions, rather than interviewing for outside,

qualified options. Perhaps you do not have the finances, so you do not do

background checks or pull references to verify what a candidate says on his or

her resume, or perhaps you just hire someone because you feel bad for them.

Regardless, hiring the wrong person is costly. Not only are they not qualified;

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eventually you will have to replace them, which is another added human

resource management expense.

2. Not Creating Clear Job Definitions. When you create a job listing, you create a

description for that position. But most small business owners neglect creating

an accurate, clear job description. This is imperative if you want to attract the

right people for the job. Your description should include the skills, training, and

education, an ideal candidate should possess, and you should only accept

interviews with candidates that meet those basic requirements.

3. Not Addressing or Documenting Performance Issues. If you have employees

with performance issues, do not ignore them or hope that they go away on

their own. You must create a performance review with a correction plan for the

employee so that he or she knows how to improve. Also, make sure you

address any employee issues right away rather than wait. By having all of the

issues in writing, you can also back yourself up if you ever need to terminate b

that employee because of his or her performance.

4. Not Understanding Basic Employment Laws. There are many human resource

management laws that most small business owners ignore, but ignoring these

laws could be detrimental to your company. Familiarize yourself with:

Discrimination

Overtime and minimum wage requirement

Family leave

Age and gender discrimination

Disability

Gender-pay differences

Safety in the workplace

Pregnancy discrimination

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Immigration

Never assume that employment laws do not apply to your company. Ignoring

them can cost your small business a lot of money or at least more than you

realize.

5. Misclassifying Your Employees. Do you know the difference between a

contract worker, full-time employee and part-time employee? If not, you need

to familiarize yourself with these classifications. The Nigerian labor laws have

strict guidelines, as does the Internal Revenue Service. Do not try to classify

employees as "contract workers" to save on benefits either. The duties and pay

of employees classify whether or not they are permanent employees. In

general, a person is only an independent contractor if you:

• Do not have control of their job and the work they do

• Do not have any written contracts, benefit plans or vacation time

spelled out

• Do not control the financial aspects of the worker's assignments

Steps in HRM

1. Recruitment process involves attracting competent individuals to your

company. This involves:

Conduct Job Analysis

Prepare job description

Identify job specifications

Identify sources of employees

Conduct interview and tests

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2. Training and Development

Orientation:

The process of introduction of employees to processes of the company

Should not be left to co-workers on a casual basis

This will result in incomplete orientation

Training: A planned effort to teach employees more about their jobs so as to

improve performance.

Development: A planned effort to provide employees with knowledge, skills

and abilities for new and more challenging assignments.

It should be noted that:

Trained workforce give business competitive edge

Training increases moral and employee retention

Training takes time

Ways to Train

On-the-job training – this is learning as job is performed

- Coaching and mentoring – new employee works with an

experienced person.

- Builds a bond between employee, mentor and business.

Lecture – one or more individual communicates instruction or ideas to

others. A large number of people can be trained at a time.

Conferences/group discussion

- Employees are actively involved

- Produces more ideas than lecturing

- It takes more time

- Only limited number of participants

Programmed Learning – through use of computers and printed text

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- Employee learns at his own pace

- Learning materials must be obtained

- Learner must be motivated to learn

Role – playing

- employees take on new roles and perform task

- Task performance is recorded and discussed

Job Rotation

- Employee moves from one job to another within company

- Ensures that employees have a variety of job skills

• On-line training (e-learning)

- Provide access to broad learning opportunities

- Can be self-directed etc.

3. Compensation

Wages and incentives including healthcare and other benefits are necessary to

keep employees alive, healthy and motivated.

Salaries – some employees are paid fixed salaries

Wages – set rate of pay for each hour or days worked

Piecework rates – employee is paid a fixed amount for each unit

produced. Premium may be paid for units above a predetermined level of

production

Commissions – a type of pay-for performance scheme

- Commonly used in sales

- Straight commission – wages based solely on sales volume

- Salary- plus-commission – better preferred by employees

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Incentive pay programs – ties performance to compensation

Bonus – one time reward provided to an employee for exceeding a

performance standard

Profit –sharing plans – employees receive additional compensation

based on profitability of entire business

Benefits – any supplement to wages and salaries

Examples - health and life insurance, paid vacation, pension, education

plans, discount on company products, child care etc.

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References

1. Source: Boundless. “Fulfilling the Planning Function.” Boundless

Management. Boundless, 17 Sep. 2015. Retrieved 22 Feb. 2016 from

https://www.boundless.com/management/textbooks/boundless-

management-textbook/introduction-to-management-1/principles-of-

management-17/fulfilling-the-planning-function-117-5812/

2. Source: Boundless. “Defining Management.” Boundless Management.

Boundless, 12 Aug. 2015. Retrieved 22 Feb. 2016 from



management-17/defining-management-113-3961/

3. Source: Boundless. “Fulfilling the Organizing Function.” Boundless

Management. Boundless, 21 Jul. 2015. Retrieved 22 Feb. 2016 from



management-17/fulfilling-the-organizing-function-114-10713/

4. Source: Boundless. “Fulfilling the Controlling Function.” Boundless




management-17/fulfilling-the-controlling-function-115-3962/

5. Source: Boundless. “Fulfilling the Leading Function.” Boundless




management-17/fulfilling-the-leading-function-116-3963/

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8. Source: Boundless. “Fulfilling the Controlling Function.” Boundless




management-17/fulfilling-the-controlling-function-115-3962/











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https://www.boundless.com/management/textbooks/boundless-management-textbook/introduction-to-management-1/principles-of-management-17/defining-management-113-3961/



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