What is Business management ?

What is Business management ?

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Business management is the process of the planning, co-ordination and control of a business. To survive in the long run, a business must be profitable and liquid. To do so, it must create sufficient value for its customers so that its revenues exceed its total costs. The overall task of business management is to address successfully the problems that confront a business in its role as a value-creating organization.

In addition to their problem-solving abilities and skills, business managers must have knowledge and expertise in the seven functional areas of business: production, marketing, finance, accounting, human resources, management information systems, and product research and development. Moreover, top management must be able to co-ordinate these activities within the business so as to maximize the value of the business to its shareholders and its other stakeholders, such as employees, suppliers, customers and the surrounding community.

Areas of Business Management

Production managers purchase and take inventory of raw materials and semifinished inputs, manage the use of these inputs in the production process, and control final goods inventory and the shipping, transportation and distribution of final products.

Marketing managers conduct of market research to determine which products, at which prices and quantities and with which characteristics, will create value for consumers. They also manage the advertising, promotion and sales of the firm's products.

Finance managers raise capital for the firm from external sources, such as the stock market (see STOCK AND BOND MARKETS), banks (see BANKING), individuals and the PUBLIC DEBT market, and manage the internal allocation of funds within the firm. They also evaluate capital expenditures for plant and equipment and for research and development.

Management accountants collect and evaluate cost data on the wages and salaries of a firm's employees, equipment and materials inputs, and its various sources of capital. They combine these data with revenue data to determine the firm's profits, its assets and liabilities, fund-flow needs and tax liabilities (See ACCOUNTING).

Human resource managers help make hiring decisions, conduct training, co-ordinate the evaluation and reward systems within the firm, and chart and manage the careers of the firm's employees.

Research and development managers develop new process technologies to increase production efficiency and new product technologies to expand the range, quality and performance of the firm's products (See INDUSTRIAL RESEARCH AND DEVELOPMENT; SCIENTIFIC RESEARCH AND DEVELOPMENT).

Information systems managers manage information flows within the firm and between the firm and its suppliers and customers. Increasingly, they also provide access to the wealth of data available via the INTERNET.

The firm's overall business strategy and how it is implemented are crucial to its success. Top managers assess the strengths and weaknesses of the firm in relation to other firms in its industry (or industries) both at home and abroad; set the firm's objectives and goals; formulate and implement the firm's strategy; assess the success of the firm in creating value for its various stakeholders relative to its competitors; and, if necessary, over time revise its basic competitive strategies.

One of the most important aspects of business management is to ensure that all employees possess the information, skills, attitudes and motivation to use their full potential to achieve the firm's strategic goals. Top management influences the corporate management style, the corporate culture of interpersonal relationships and values within the firm.

Top management, sometimes with the assistance of the firm's government and community relations departments, is also responsible for the management of the firm's relations with the various levels of government and the general public.

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