BUSINESS MANAGEMENT (AE1014, FC1014, EC1014)

UNIT 1. THE NATURE OF

BUSINESS MANAGEMENT

Luis Martnez Chfer (chafer@emp.uji.es)

Dpto. Administracin Empresas y Marketing
UNIVERSITAT JAUME I

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

OBJECTIVES
Reflecting on the administration process.
Know the different key functions of the management process.
Recognizing the company as a system formed by subsystems.
Understanding the importance of the interaction between the human
system and the technical system.

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.1. Management
1.2. The classic or functional approach to the management process
1.3. Systems theory: systemic analysis of the firm
1.4. The company as a socio-technical system

REFERENCES
Camisn, C.; Dalmau, J.I. (2009) Introduccin a los negocios y su gestin. Pearson Prentice
Hall
Iborra M. et al. (2007): Fundamentos de Direccin de Empresas. Thomson: Madrid
Robbins, Stephen P.; Coulter Mary (2014). Management (Twelfth Edition). Pearson.

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.1. What is Management

Who Are Managers?

Manager
Someone who works with and through other people
by coordinating and integrating their work activities in
order to accomplish organizational goals.

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.1. What is Management

MANAGERS

Responsible for carrying out the

administration process
Decide the goals of the organization,
how to reach them,
who is responsible for each task,
what resources are needed,
how it will control that the objectives are achieved
properly.
Business management should improve the effectiveness and efficiency :
EFFECTIVENESS: the goals are achieved
EFFICIENCY: how the resources are used to achieve the
objectives

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.1. What is Management

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.1. What is Management

Activity 1

In todays environment which is more important to organizationsEfficiency or effectiveness?

Explain Your choice

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.1. What is Management

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.2. The classic or functional approach to the management

process

Functional Approach
Planning
v Defining

goals, establishing strategies to achieve goals,

developing plans to integrate and coordinate activities.

Organizing
v Arranging

work to accomplish organizational goals.

Leading
v Working

with and through people to accomplish goals.

Controlling
v Monitoring,

comparing, and correcting the work.

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.2. The classic or functional approach to the management

process
THE MANAGEMENT PROCESS

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.3. Systems theory: systemic analysis of the firm

SYSTEM DEFINED

A system is a set of interdependent elements that form an

integrated whole and interact with each other regularly
A set of interrelated and interdependent parts arranged in
a manner that produces a unified whole
CHARACTERISTICS
They have a structure that is defined by its parts and processes
They are generalizations of the reality
They process a number of inputs that return to the environment
with certain modification
The diverse parts of a system have functional and structural
relationships between them

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.3. Systems theory: systemic analysis of the firm

BASIC TYPES OF SYSTEMS

Closed systems
v Are

not influenced by and do not interact with their

environment (all system input and output is internal).

Open systems
v Dynamically

interact to their environments by taking in

inputs and transforming them into outputs that are
distributed into their environments.
v They can grow, change, reproduce and adapt to the
environment
v They can compete and / or cooperate with other systems
SYSTEM COMPONENTS
Elements

Objectives

Interactions among elements

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.3. Systems theory: systemic analysis of the firm

Implications of the Systems Approach

Coordination of the organizations parts is
essential for proper functioning of the entire
organization.
Decisions and actions taken in one area of the
organization will have an effect in other areas of
the organization.
Organizations are not self-contained and,
therefore, must adapt to changes in their
external environment.

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.3. Systems theory: systemic analysis of the firm

THE FIRM AS A SYSTEM

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.3. Systems theory: systemic analysis of the firm

The system as cycles of recurring events

Limits or boundaries

Equifinality

Characteristics
of open systems
applicable to the firm

Diferenciation

Negative entropy

Information and
feedback

Balance and homeostasis

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.3. Systems theory: systemic analysis of the firm

According to systems theory, a system is composed of subsystems, each one
with the same properties as the system that contains them.

ENTERPRISE SUBSYSTEMS
Subsystem of management and administration: strategic management,
organizational structure definition, administration and management, human
resources management, information systems management, etc.
Subsystem of operations: manufacture, processes, design, innovation,
strategic operations management.
Subsystem of accounting and finance: fund-raising and financial
investment.
Subsystem of marketing: market research, consumer behavior, marketing
strategy, etc.

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.4. The firm as a socio-technical system

SOCIO-TECHNICAL SYSTEM
Combination of social (people, attitudes, values, society) and
technical aspects (technology, processes, procedures,
machinery)
Interaction between both
Need for joint optimization

The interactions between people and technology are

analyzed in order to optimize its relations
Examples: job enrichment, job enlargement, process improvement, etc.

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.4. The firm as a socio-technical system

UNIT 1. THE NATURE OF BUSINESS MANAGEMENT

1.4. The firm as a socio-technical system

SOCIO-TECHNICAL SYSTEM

Joint optimization is the goal of Socio-Technical design.

For example, a manufacturing workcell that requires high
teamwork will not produce in an environment of suspicion and
command/control.
A self-directed work team will be ineffective when the layout of
their area prevents communication or does not require
cooperation.
The social and technical systems must integrate and assist
one another