Page 490 - Encyclopedia of Business and Finance

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Management

business, a government agency, or a church group. In a
business, many different activities take place. For example,
in a retail store there are people who buy merchandise to
sell, people to sell the merchandise, people who prepare
the merchandise for display, people who are responsible
for advertising and promotion, people who do the
accounting work, people who hire and train employees,
and several other types of workers. There might be one
manager for the entire store, but there are other managers
at different levels who are more directly responsible for the
people who perform all the other jobs. At each level of
management, the four key functions of planning, organiz-
ing, directing, and controlling are included. The emphasis
changes with each different level of manager.

Planning. Planning in any organization occurs in differ-
ent ways and at all levels. A top-level manager, such as the
manager of a manufacturing plant, plans for different
events than does a manager who supervises a group of
workers who are responsible for assembling modular
homes on an assembly line. The plant manager must be
concerned with the overall operations of the plant, while
the assembly-line manager or supervisor is only responsi-
ble for the line that he or she oversees.
Planning could include setting organizational goals. Douglas McGregor (1906–1964). © BETTMANN/CORBIS
This is usually done by higher-level managers in an organ-
ization. As a part of the planning process, the manager
develops strategies for achieving the goals of the organiza- strategic plans and are necessary to implement the strate-
tion. In order to implement the strategies, resources will gic plans.
be needed and must be acquired. The planners must also
Contingency planning allows for alternative courses
then determine the standards, or levels of quality, that of action when the primary plans that have been devel-
need to be met in completing the tasks.
oped do not achieve the goals of the organization. In the
In general, planning can be strategic planning, tacti- economic environment of the early twenty-first century,
cal planning, or contingency planning. Strategic planning plans may need to be changed very rapidly. Continuing
is long-range planning that is normally completed by top- with the example of building modular homes in the plant,
level managers in an organization. Examples of strategic the plant might be using a nearby supplier for all the lum-
decisions managers make include who the customer or ber used in the framing of the homes but the supplier loses
clientele should be, what products or services should be its entire inventory of framing lumber in a major ware-
sold, and where the products and services should be sold. house fire. Contingency plans would make it possible for
Short-range or tactical planning is done for the bene- the modular home builder to continue construction by
fit of lower-level managers, since it is the process of devel- going to another supplier for the same lumber that it can
oping very detailed strategies about what needs to be no longer get from its former supplier.
done, who should do it, and how it should be done. To
return to the previous example of assembling modular Organizing. Organizing refers to the way the organization
homes, as the home is nearing construction on the floor allocates resources, assigns tasks, and goes about accom-
of the plant, plans must be made for the best way to move plishing its goals. In the process of organizing, managers
it through the plant so that each worker can complete arrange a framework that links all workers, tasks, and
assigned tasks in the most efficient manner. These plans resources together so the organizational goals can be
can best be developed and implemented by the line man- achieved. The framework is called organizational struc-
agers who oversee the production process rather than ture. Organizational structure is shown by an organiza-
managers who sit in an office and plan for the overall tional chart. The organizational chart that depicts the
operation of the company. The tactical plans fit into the structure of the organization shows positions in the organ-

ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION 467