Business Management Unit 2

Business Person (Current Concept)

A person who is an owner, risk taker, and decision maker.

Owner/Investor

A risk taker and shareholder in a corporation (provides capital but may not manage).

Entrepreneur

Someone who tries to profit from innovations or opportunities (invests, starts a business).

Intrapreneur

Someone who leads innovations within a corporation without being an owner (e.g., creating a new product line like Post-it).

Manager/Executive

A decision maker and expert hired to lead and coordinate other people's work to achieve goals.

Theory: Knight (1921)

Defines the business actor primarily as a "Risk taker" (taking financial risk).

Theory: Schumpeter (1911)

Defines the business actor as an "Innovator" or "Opportunity discoverer" (Market related).

Theory: Galbraith (1967)

Defines the business actor as a "Professional" or "Expert" (Technostructure).

Definition of Management

The coordination and integration of work activities to create value; must be efficient, effective, and ethical.

Mintzberg's 3 Main Role Categories

Interpersonal, Informational, and Decisional.

Role: Monitor (Informational)

Seeking and receiving information, scanning reports, and maintaining interpersonal contacts.

Role: Disseminator (Informational)

Forwarding information to others inside the organization (sending memos, emails).

Role: Spokesperson (Informational)

Representing the unit to outsiders (speeches, reports, external meetings).

Role: Figurehead (Interpersonal)

Performing ceremonial and symbolic duties (e.g., signing documents, receiving visitors).

Role: Leader (Interpersonal)

Directing and motivating subordinates; training, advising, and influencing.

Role: Liaison (Interpersonal)

Maintaining information links both inside and outside the organization (networking).

Role: Entrepreneur (Decisional)

Initiating new projects, spotting opportunities, and identifying areas for development.

Role: Disturbance Handler (Decisional)

Taking corrective action during crises and resolving conflicts among staff.

Role: Resource Allocator (Decisional)

Deciding who gets resources, scheduling, budgeting, and setting priorities.

Role: Negotiator (Decisional)

Representing the unit during negotiations with unions, suppliers, or other parties.

Top Management Team (TMT)

The group of people with managerial responsibilities who participate in analysis and decision-making.

CEO (Chief Executive Officer) Role

The leader who mobilizes and facilitates the team; responsible for the global performance of the company.

TMT Feature: Composition

The mix of characteristics (age, gender, expertise); variety improves perspectives but makes consensus harder.

TMT Feature: Structure

How roles are distributed and how members relate (interdependence vs. autonomy).

TMT Feature: Processes

Communication flows, social/political dynamics, and decision-making paths within the team.

TMT Feature: Incentives

The rewards system that influences whether managers behave collaboratively or competitively.

Corporate Governance (Definition)

The framework of rules, relationships, and systems by which authority is exercised and controlled in corporations.

The "Agency Problem"

The conflict arising from the separation of ownership (principals) and control/management (agents).

Purpose of Governance Systems

To monitor management, prevent excessive power concentration, and safeguard the firm's assets.

Board of Directors: Chairman

Leads the whole organization’s board; ensures the board functions effectively.

Board of Directors: Directors

Control/monitor the direction, provide resources/networks, and advise on strategy.

Functional Directors (e.g., CFO, CMO)

Responsible for specific functional areas (like Finance or Marketing) across the organization.

Middle Managers / Project Directors

Responsible for managing specific projects or implementation issues.

Governance Structure: Shareholders' Meeting

The body responsible for appointing or dismissing the Board of Directors and Auditors.

Subsystems: Others

Besides the main ones, these include Information, Logistics, Quality, and Knowledge management.

Challenge: Voluntary and Non-profit

Fulfilling the mission, raising funds for educational work, and encouraging visitor returns.
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Challenge: Public Sector

Managing high-profile political and commercial interests.
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Challenge: Large Private Businesses

Establishing suitable control systems to ensure quality across vast operations.
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Partnerships (Legal Form)

Includes general and limited partnerships; often characterized by unlimited liability and less frequent in business .

Corporations (Specific Types)

Includes joint stock companies and new companies with limited liability.

Theory Detail: Knight's Risk

Specifically focuses on Financial Risk.

Theory Detail: Schumpeter's Risk

Specifically focuses on Market-related Risk (innovation cycles).

Theory Detail: Galbraith's Risk

Specifically focuses on Professional Risk (experts in the technostructure).

Factors fostering TMT creation

Size and Complexity of the organization .

CEO Role: Mobilize

Actively moving and energizing the management team to pursue goals.

CEO Role: Facilitate

Making it easier for the team to collaborate and perform their tasks.

TMT Composition Trade-off

Variety provides better perspectives but makes consensus and integration harder to achieve.

TMT Structure Influences

Interdependence vs. autonomy and the distribution of power among members.

TMT Process Dynamics

Communication flows and social/political dynamics that affect decision quality.

Corporate Governance: Power Prevention

Mechanisms designed to prevent any single person from gaining too much power.

Governance: Transparency

Increasing accountability to meet the expectations of investors and stakeholders.

Internal Audit Department

The unit responsible for conducting internal audits and reporting directly to the Board .

Accounting Auditor

The external party that signs off to confirm that financial information is correct .

Board of Auditors

A supervisory body that assists in monitoring and reviewing audit reports .

Representative Directors

Specific board members who have the legal power to represent and sign for the company.

Cooperative Members

Can be Individual Members, Group Members, or Corporate Members.

Cooperative: Board of Trustees

A specific governing board found within the structure of mutualistic/cooperative organizations.

Secretariat

The administrative body in a governance structure that supports the Board and Assembly.

Officer (Management Level)

A mid-range director responsible for the implementation of strategic actions in specific units