What Is Business Management Business Essay

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One definition of a business management is the "allocation of resources to maximize profit" (Smith 20). "Making something planned happen within a specific area through the use of available resources." (Nelson and Economy 1996; pg. 9).

As a manager in a forest products company, you are taking a natural resource and turning it into a profit. To make a profit you are managing more than just people you are managing many different resources; financial, physical, and natural. Financial resources include budgets, capital, bonds, loans, etc. The physical resources companies have are the building they use to make the products, manufacturing equipment, transportation, etc. The natural resources or raw materials used in production include: forests, logs, land, and timber management. But, for a company to be successful the most important resource to manage is human resources. Managers must understand how to motivate employees, what employees see as success, and what they want from their job. By knowing the priorities of your employees, they will help you keep your team together and provide you with better results. Managers need to be effective in communication to employees. The forest products industry has very little differences in the raw materials they grow, equipment, products, and markets they sell too. The big difference is among the companies in quality of their employees, customer service and how they manage the human resource. The manager's job is to make decisions about the resources to maximize profitability (Smith 20).

To maximize profits for your firm, as a manager you are accountable for creating/capturing value for the company. Value creation begins with procurement of raw materials, manufacturing and marketing of products. To show if you have captured value from your products you will increase in revenues, new products and new customers (Smith 20). You may ask how you can add value to your wood products? First off the difference between price and value, price is that you pay and value is what you get. You can add value to any product by:

Quality

Delivery time

Guarantee/warranty

Credit terms

Provide an assortment of colors

Provide an assortment of dimensions

Customer support

Technical support

Commitment

Employee satisfaction

You may think anyone of your competitors can add value to their products with these items. But, no the difference is made by your company reputation, commitment, customer service, and employee satisfaction. For example, hardwood lumber manufactures can produce redi-to-use lumber. This will provide value not only for the end customer but also to the retailer. Lumber manufacturers can provide technical and customer support via offering point of purchase displays, free shipping with a minimum order and quality packaging to the retailers. By producing an assortment of sizes and species of lumber available and even S4S products will add value to lumber and increase revenues.

For a business to succeed in an ever changing market, forest products companies need to have a competitive advantage. By having a competitive advantage over other firms it will allow them to increase profits. For forest products companies to increase profits they can either: (1) reduce costs or (2) increase revenues. In-order to reduce costs firms can purchase new technologies, increase yields, purchase raw material more effectively or squeeze more work out of your employees. But these fixes may only allow your firm a short term competitive advantage. Also, your competition is probably doing the same things to reduce costs. To be able to increase your firm's revenue and profits, firms can either: (1) develop a sustainable competitive advantage, (2) provide better customer service, (3) your organization must be people driven. These bottoms down to you need management!

Management Skills

To be a manager you need to understand the skills needed to be successful in what you do. First off, a manager must understand the whole line of business each unit of the business and how it relates to the others, from procuring the raw material for manufacturing to shipping the product out the door. Technical skills are a must when managing at a low level. The more knowledge a manager has of the work being done will make understanding each area of work easier. A checklist every manager should follow is:

Set clear goals

Walk the walk

Be visible

Invite input from others

Respect others

Offer encouragement

Managers sometimes fail in performing their tasks; (1) managers tend to not delegate tasks and become micromanagers. This lack of delegating is mainly from not trusting the employees you manage. Managers should know their workers well, understand their strengths and weaknesses and use those when delegating duties (Buhler2001). By delegating tasks to others it will help improve their work skills (Nelson and Economy 1996). (2) Have clear goals for your employees. By having clear goals for them to achieve it will help you as a manager and your company (Nelson and Economy 1996). (3) Poor communication with employees; some managers try to avoid talking to employees or are too busy to communicate with them. (4) Failure to learn, some managers are resistant to learn how to perform tasks more efficiently and only want things done their way. (5) Resisting change, in an ever changing environment managers need to accept change as always occurring and learn to adapt. (6) No time for employees, as a manager your employees look up to you as leader or mentor and even a coach. You need to take time and provide assistance to them with their needs. (7) Not recognizing employment accomplishments, by recognizing these achievements it will improve workers morale, performance and loyalty to you and your company. Just taking time and recognizing publicly how well employees are performing is a inexpensive way of showing appreciation to them and they will in return provide better results as a worker. (8) Too serious, although business itself is a serious business, managers need to have a sense of humor and have a fun workplace. Have a informal social time during lunch or invite them to your home. This will ensure the employees you don't take work so seriously. (9) Going for the quick fix, some managers only find a quick fix for a problem and need to take time to find a long-term solution.

Managers have four different functions they should follow in order to be successful in their position the first is what every manager must do is plan. Managers on low level management may only need to plan up to a year, but as the higher you go in management the farther in advance you will need to plan (Buhler). Plans are always changing and need to be frequently revised. Organization is a major function for managers. The main principle of organization is how you as a manager will delegate work to others. To help you stay organized purchase some type of day planner and kit it up to date. To organize your business for success start a short and long range plan, with goals on how you will accomplish them (Riddle 2001). Set some time aside in the morning to plan your priorities for the day and some time in the afternoon make sure you have finished what you needed for the day (Nelson and Economy 1996). The third function of management is controlling. Controlling employees doesn't mean to be a micromanager but to measure how well an employee works to suitable performance level. As a manager you need to understand your workers strengths and weaknesses and use them as a controlling need. The last function as a manager is leading. Leading is actually leading by example to your employees. Leading involves motivation and being looked at as a coach or mentor by your employees.

Managing in a global economy

As more and more companies are entering international markets. Competition is becoming stronger for small and larger firms on a global setting. Not only do firms sell products overseas some may have production operations in other countries. This is called globalization. Managers with firms that have operations overseas need to allow themselves to expand their horizons on other cultures and how they work. You may have to adapt your work ethic to suit others. Managers need to have cultural sensitive and strong intercultural communication skills.

Decision making for managers

As a manager decision making is a large part of your position. You will have to make decisions daily, some may not even think about. To help guide managers through making decisions a rational decision-making model is necessary. The model compromises of 6 easy steps (Buhler 2001):

Identify the problem. You need a clear understand of the problem.

Find alternatives.

Evaluate alternatives. You need to assess the positive and negative value of the alternative before accepting.

Select an alternative. If no single alternative fix the problem you may need to start over. But, if you have to many alternatives you will need to modify it before arriving to the best alternative

Implement. Everyone must be on the same page to effectively implement an alternative.

Evaluate. Managers need to evaluate results to determine if objectives were achieved.

To be successful as a manger in decision making, you should follow these few steps (Buhler 2001):

1. Always be prepared by gathering information about the problem and alternatives.

2. Know your organization culture.

3. Use the decision-making model.

4. Include your employees when throughout the entire decision making process.

5. Use reliable information when determining a decision.

6. Use creative problem-solving when needed.

7. Encourage others for feedback.

Summary

You have learned as a manager you not only managing your employees that keep your company going but all the other resources that goes into increasing revenues from procurement, manufacturing, and delivery. Your chief responsibility as a manager is to create and capture value to increase your company's revenues. The way to tell if you are doing your job in creating and capturing value is if customers are willing to pay for the extra value you offer. Customers buy satisfaction of their needs and not just products.

Employee engagement

A recent study on employee engagement at the workplace found 9 ways to keep employees engaged:

Let go of any negative opinions you may have about your employees.

Make sure your employees have everything they need to do their jobs.

Clearly communicate what's expected of employees and do it often, what the company values and vision are, and how the company defines success.

Get to know your employees, especially their goals, their stressors, what excites them and how they each define success.

Make sure they're trained and retrained in problem solving and conflict resolution skills.

Constantly ask how you're doing in your employees' eyes.

Pay attention to company stories and rituals.

Reward and recognize employees in ways that are meaningful to them.

Be consistent for the long haul. Always keep a continue effort to engage your employees.

These 9 management tips have provided less turnover and increased customer loyalty, profitability, and revenues. By getting to know and trust your employees they will help you be more efficient and will contribute positively to the workplace on a daily basis.

Financial Management

Overview

As a manager you need away to measure your company's success and finances is one of those ways. Managers must have an idea of all the finances your company has in-order to perform your job well. Finances can be broken down into a tree.

Branches &Truck

Roots

FruitC:\Users\Scotty\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.IE5\7KWKIGFA\MC900441870[1].wmf

Financial activities (Roots): Financial contribution from the owner and receive equity shares in return.

Creditors loan money in return for interest and principle payments.

Investing activities (Branches and trunk): The capital is used to invest in assets such as, building, equipment, machinery and vehicles.

Operating activities (Fruit): These assets produce goods and service that are sold to customers.

Let's take a look at some important financial definitions:

Assets: items and right owned by a company that can be used to generate economic benefits.

Liabilities: A company's debt and payables. The total amount of liabilities is how much a company has borrowed and must repay.

Stockholders' Equity: consists of contributed capital and retained earnings.

The net income your firm makes from the sales of products or services from customers may be used in three ways:

Reinvested in the production assets

Returned to the creditor as a form of payment for debt

Returned to the owners of the company in the form of dividends

As a manager you should have a clear understanding of the finances the company has. To do this the most important financial statements a manager for small business should use and understand are:

Balance Sheet: provides an estimation of your company's worth on one point in time. They are typically done on the last day of the month. Assets= Liabilities + Equity

To examine the net worth of the company, the fundamental equation is: Assets- Liabilities= Equity

An example of what should be in a balance sheet:

Assets

Liabilities

Current Assets

Current Liabilities

Cash

Accounts payable

Short-term investments

Other payables

Accounts receivable

Current maturities of long-term debt

Inventory

Deferred revenues

Prepaid expenses

Long-term investments

Long-term liabilities

Notes receivable

Notes payable

Land

Bonds payable

Debt securities

Mortgage payable

Equity securities

Property, production equipment

Equity

Intangible assets

Contributed capital

Retained earnings

Income statement: Accounts for all activities in the operating of the business. It provides a measure of profit and performance to show efficiency of the management over a period of time. Net income is the most important number disclosed.

Operating revenues

-Operating expenses

=Operating income

+Other revenues

-Other expenses

=Net income before taxes

-Income taxes

=Net Income after taxes

/Number of shares

=Income per share

Revenues: Total dollar value of goods and services sold during a given time period.

Expenses:

Cost of Goods Sold (COGS): the cost to the business to purchase goods that are later resold or any manufacturing expense.

COGS= starting inventory + purchasing - ending inventory

Operating expenses: costs incurred from business operations.

i.e. marketing, wages, administrative, taxes, insurance, rent, utilities.

Revenues-Expenses= Income

Gross Profit or margin

The difference between sales and COGS

The money available to cover operating expenses

Operating Income

The amount of income left over after subtracting operating expenses

Net Income after taxes:

The amount left to the business after income has been paid.

Profit and Loss Statement (P & L): compares expenses against revenue over a certain time frame to show a profit or loss for the company.

Cash Flow Statement: shows the changes in the business's working capital from the start of the year. This statement lists sources of funds and the use of them.

Sales Statement: shows where the company stands with regards to sales and sales projections.

Financial Ratios:

Return on Assets:

Measures a company's ability to use all its assets to generate earnings.

Asset Turnover

Shows how effective assets are at making sales revenues.

Return on Sales

Shows the percentage of each sales dollar that is made in net income.

Leverage

Shows the debt level of a company

Return on Equity

Presents stockholders the return on their investment

Bookkeeping and other finance sources:

If your company does not have an inside source for your accounting needs an outside source may be needed. An outside source will allow you to focus on other business tasks such as expanding your business to be successful. It depends in your company needs in financial services, but these sources can provide payroll, accounts payable and receivable, financial statements, cash flow management, and even tax preparation.

Finance management allows companies to see the reality in their business and look at things objectively. It presents managers if they and their employees are doing the right thing and making a profit for the company.

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