ADMN 201 — Ch6: Managing the Business Enterprise
Learning Objectives
- Describe the four activities that constitute the management process.
- Identify types of managers by level and area.
- Describe the five basic management skills.
- Explain the importance of goal setting and strategic management in organizational success.
- Discuss contingency planning and crisis management in today’s business world.
- Explain the idea of corporate culture and why it is important.
Overview
Management = the process of planning, organizing, leading, and controlling a business’s financial, physical, human, and information resources to achieve its goals.
The four functions (POLC) are not a one-time sequence — they form a continuous feedback cycle. Strategy links planning to long-term direction; culture holds everything together underneath the surface.
mindmap root((Ch6: Managing<br/>the Business)) LO1 POLC Cycle Planning — decide what to do Organizing — arrange resources Leading — motivate people Controlling — monitor and correct LO2 Manager Types By Level Top — strategic Middle — tactical First-Line — operational By Area Marketing Finance Operations HR IT LO3 Five Skills Technical — First-Line peak Human Relations — all levels Conceptual — Top peak Decision-Making — all levels Time Management — all levels LO4 Strategic Management Mission + Vision SMART Goals SWOT Analysis 3 Strategy Levels Plan Hierarchy KPIs LO5 Contingency + Crisis Contingency — proactive before event Crisis Management — reactive during event LO6 Corporate Culture Iceberg model Visible 10% Invisible 90% Why it matters How to change it
LO1 — The Four Functions of Management (POLC)
The management process has four functions that cycle continuously. Organizing + Leading together are called planning implementation — they are how plans actually get executed.
flowchart LR A[Planning\nDecide what to do] --> B[Organizing\nArrange resources] B --> C[Leading\nMotivate people] C --> D[Controlling\nMonitor and correct] D -- Feedback loop --> A
Planning
Definition: Determining what the business needs to do and the best way to achieve it.
Purpose: Sets direction; gives the organization a roadmap so everyone knows what success looks like.
Key activities:
- Establish objectives (using SMART goals — see LO4)
- Identify resources needed (people, money, equipment)
- Develop strategies (long-term) and tactical/operational plans (short-term)
Example: A retailer planning to expand online sales must forecast demand, set sales targets, and allocate marketing and tech budgets.
Organizing
Definition: Mobilizing the necessary resources — people, money, equipment, information — to carry out the plan.
Purpose: Creates structure so work can actually be completed. This is where plans become structures and roles.
Key activities:
- Assigning tasks to individuals and departments
- Designing organizational structures (hierarchy, teams)
- Allocating resources where they are most needed
Example: The same retailer hires IT staff, trains warehouse workers for online orders, and adjusts delivery logistics.
Leading (Directing)
Definition: Guiding and motivating employees to meet the firm’s objectives.
Purpose: Ensures people execute the plan with energy and commitment — organizing assigns tasks; leading makes people want to do them.
Key activities:
- Motivating employees through recognition, communication, and incentives
- Communicating expectations clearly
- Applying appropriate leadership styles (autocratic, democratic, laissez-faire, transformational)
Example: Managers encourage collaboration between marketing and IT, recognize top performers, and keep morale high during busy periods.
Controlling
Definition: Monitoring the firm’s performance and, if necessary, acting to bring it in line with goals.
Purpose: Keeps performance on track; ensures actual results match planned results.
Key activities:
- Set performance standards
- Measure actual performance
- Compare actual vs. standard
- Take corrective action if there is a deviation
Example: If online sales fall 10% short of target, management adjusts the marketing campaign, improves website UX, or expands product range.
Exam trap: Controlling is not just monitoring — it also includes the corrective action step. Both parts are required.
LO2 — Types of Managers
Managers are categorized by level (how high in the hierarchy) and by area (which function they oversee). A manager is usually defined by both — e.g., a Middle Manager in Finance, or a Top Manager in Operations (COO).
By Level
graph TD A[Top Managers\nCEO, CFO, President] --> B[Middle Managers\nRegional Manager, Plant Manager, Division Head] B --> C[First-Line Managers\nTeam Leader, Supervisor, Shift Manager] C --> D[Non-managerial Employees]
| Level | Role | Responsibilities | Plan Type | Examples |
|---|---|---|---|---|
| Top | Set overall direction and vision | Long-range strategic planning; represent firm to external stakeholders; decisions affecting the whole organization | Strategic (long-term) | CEO, CFO, President |
| Middle | Translate top management’s vision into action | Supervise/coordinate departments; ensure resources are used effectively; communicate between top and first-line | Tactical (medium-term) | Regional Manager, Plant Manager, Division Head |
| First-Line | Direct daily supervision of employees | Oversee day-to-day activities; ensure work is completed on schedule; provide training, coaching, and evaluation | Operational (short-term) | Team Leader, Supervisor, Shift Manager |
By Area
| Area | What They Manage |
|---|---|
| Marketing Managers | Plan, promote, and oversee product/service sales |
| Finance Managers | Accounting, budgets, and investment decisions |
| Operations Managers | Production, quality, and supply chain |
| Human Resources Managers | Hiring, training, compensation, employee relations |
| Information Managers | Technology systems, data, and digital infrastructure |
LO3 — Five Basic Management Skills
Different levels of management rely more heavily on different skills, but no skill is exclusive to one level.
| Skill | Definition | Most Critical For | Example |
|---|---|---|---|
| Technical | Ability to perform specialized tasks within a firm | First-Line managers (closest to the actual work) | IT manager who can code; factory supervisor who understands the machines |
| Human Relations | Ability to understand, communicate, and work well with people | All levels — especially Middle managers who coordinate across departments | Resolving a conflict between marketing and operations staff |
| Conceptual | Ability to think abstractly, diagnose complex situations, see the big picture | Top managers (shape long-term vision) | CEO recognizing that consumer trends are shifting to online and repositioning the strategy |
| Decision-Making | Ability to identify problems and select the best course of action | All levels — scope of decisions varies | Supervisors: daily scheduling; Top managers: mergers and acquisitions |
| Time Management | Ability to use time productively and prioritize tasks | All levels — time is universally limited | Balancing meetings, reports, and employee coaching without burning out |
graph LR A[Management Level] --> B[First-Line] A --> C[Middle] A --> D[Top] B --> B1[Technical skills peak here] B --> B2[Human Relations — high] C --> C1[Human Relations — highest need] C --> C2[Bridge between top and floor] D --> D1[Conceptual skills peak here] D --> D2[Technical skills lowest]
LO4 — Goal Setting and Strategic Management
Why Goals Matter
Goals (objectives a business plans to attain) serve three purposes:
- Direction: everyone knows what success looks like
- Motivation: clear targets encourage action
- Measurement: progress can be tracked against a standard
SMART Goals
Goals should be SMART:
| Letter | Meaning | Example Test |
|---|---|---|
| S — Specific | Clearly states what is to be achieved | ”increase online sales” not “do better” |
| M — Measurable | Can be tracked with numbers or milestones | ”by 15%“ |
| A — Achievable | Realistic given available resources | Not 500% in one month |
| R — Results-oriented | Tied to meaningful outcomes, not just activity | Sales increase, not “run more ads” |
| T — Time-framed | Has a clear deadline | ”over the next 6 months” |
Full example: Increase online sales by 15% over the next 6 months by launching a new marketing campaign.
Strategic Management
Strategic Management = the process of helping an organization maintain effective alignment with its environment and achieve long-term success.
Steps:
flowchart TD A[1. Set Mission and Vision] --> B[2. Establish Strategic Goals] B --> C[3. Strategy Formulation\nCreate broad plans] C --> D[4. Strategy Implementation\nTranslate into action plans] D --> E[5. Monitor and Adjust\nFeedback from performance] E -- Feedback --> A
| Step | What It Means |
|---|---|
| Mission | Why the organization exists — its purpose in the environment |
| Vision | What it wants to become — aspirational future state |
| Strategic Goals | Long-term objectives derived directly from the mission |
| Strategy Formulation | Creating the broad program — e.g., cost leadership, differentiation |
| Strategy Implementation | Breaking strategy into strategic, tactical, and operational plans |
| Monitor and Adjust | Using performance feedback to adapt to changes in the environment |
Plan Hierarchy
Strategy flows from broad to specific:
Mission & Vision
↓
Strategic Goals → Strategic Plans (long-term, whole organization)
↓
Tactical Plans (medium-term, departmental — Middle Managers)
↓
Operational Plans (short-term, daily/weekly — First-Line Managers)
Three Levels of Strategy
| Level | Question It Answers | Example |
|---|---|---|
| Corporate-Level | What businesses/markets should we compete in? | Diversify into streaming? Sell a division? |
| Business-Level (Competitive) | How do we win in our chosen market? | Compete on price? Quality? Innovation? |
| Functional-Level | How does each department support the business strategy? | Marketing campaign, HR training program |
Tools for Strategy
SWOT Analysis — maps internal and external factors:
| Positive | Negative | |
|---|---|---|
| Internal (within the firm) | Strengths | Weaknesses |
| External (from the environment) | Opportunities | Threats |
Key Performance Indicators (KPIs) — specific metrics used to track whether strategic goals are being met (e.g., market share %, revenue growth rate, customer satisfaction score).
LO5 — Contingency Planning and Crisis Management
Both contingency planning and crisis management prepare a firm for disruption — but at different times.
| Contingency Planning | Crisis Management | |
|---|---|---|
| Timing | Before an event occurs | While an emergency is happening |
| Posture | Proactive | Reactive |
| Goal | Anticipate “what if” scenarios | Protect people, assets, and reputation |
Contingency Planning (Proactive)
Definition: Identifying aspects of a business or its environment that might require changes in strategy, and preparing backup strategies in advance.
Process:
- Identify potential risks (e.g., supply chain disruption, technology failure, key employee leaving)
- Develop alternative plans or backup suppliers/systems
- Train staff and pre-allocate resources so the firm can switch quickly
Example: A manufacturer maintains a pre-vetted alternative raw materials supplier in case their primary supplier shuts down unexpectedly.
Crisis Management (Reactive)
Definition: The organization’s specific methods for dealing with emergencies when they actually occur.
Key elements:
- Immediate response plans: evacuation procedures, emergency communication protocols
- Crisis team: designated managers trained and authorized to lead the response
- Public relations strategy: clear, honest communication to stakeholders to protect the firm’s reputation
Example: A food company that discovers a contaminated product batch immediately recalls it, notifies regulators, and issues a public statement — acting fast to protect consumers and maintain trust.
How They Work Together
Contingency planning prepares the playbook before anything goes wrong. Crisis management executes it when something does. A company that skips contingency planning is forced to improvise during a crisis — with predictably worse outcomes.
LO6 — Corporate Culture
Definition
Corporate Culture = the shared experiences, stories, beliefs, and norms that characterize a firm. It is often described as the “personality” of the organization.
Culture influences:
- How decisions are made
- How employees communicate with each other and with management
- How motivated employees feel
- How customers and partners perceive the firm
The Iceberg Model
Culture works like an iceberg — only ~10% is visible, but 90% is hidden below the surface and is far more powerful.
graph TD A[Corporate Culture Iceberg] --> B[Visible - 10%] A --> C[Invisible - 90%] B --> B1[Logos and slogans] B --> B2[Office layout and dress code] B --> B3[Company events and rituals] C --> C1[Shared values and beliefs] C --> C2[Attitudes toward teamwork] C --> C3[Leadership styles] C --> C4[Communication norms] C --> C5[Unwritten rules of behaviour]
| Layer | Examples | Ease of Change |
|---|---|---|
| Visible (above surface) | Logo, slogan, office layout, dress code, company events | Easy to change |
| Invisible (below surface) | Values, beliefs, communication norms, teamwork attitudes, unwritten rules | Very hard to change |
Why Culture Matters
| Impact Area | How Culture Makes a Difference |
|---|---|
| Performance | A strong, positive culture increases motivation and productivity |
| Consistency | Culture guides how employees respond to new or uncertain situations without needing a rulebook |
| Attraction and Retention | Culture influences whether talented people want to join and stay |
| Adaptability | A flexible, learning-oriented culture helps the firm adjust to market shifts |
Changing Corporate Culture
- Easiest: Change visible symbols (logos, branding, dress code)
- Hardest: Shift deep-seated values and norms
What successful culture change requires:
- Clear, visible commitment from leadership
- Aligning rewards and incentives with new desired behaviours
- Consistent communication and role modeling by managers
Attempting to change only the visible layer while the invisible layer stays the same produces cosmetic change, not real change.
Culture Examples
| Culture Type | Emphasis | Example Firm |
|---|---|---|
| Innovative | Creativity, risk-taking, experimentation | Tesla |
| Customer-Service | Client satisfaction above all | Ritz-Carlton |
| Ethical | Transparency, fairness, social responsibility | Patagonia |
Mnemonics and Exam Reference
POLC in One Line
Plan → Organize → Lead → Control → Feedback → Repeat
Organizing + Leading = Planning Implementation (how plans become reality)
SMART Goals
Specific · Measurable · Achievable · Results-oriented · Time-framed
Key Exam Traps
| Trap | Correct Answer |
|---|---|
| ”Controlling = just monitoring” | Wrong — it includes corrective action too |
| ”Top managers use operational plans” | Wrong — Top = Strategic, Middle = Tactical, First-Line = Operational |
| ”Technical skills are most important at the top” | Wrong — Conceptual peaks at top; Technical peaks at First-Line |
| ”Mission and Vision are the same” | No — Mission = why we exist now; Vision = what we want to become |
| ”SWOT Strengths and Weaknesses are external” | Wrong — S/W are internal; O/T are external |
| ”Contingency planning happens during a crisis” | Wrong — contingency is before; crisis management is during |
| ”Culture is easy to change” | Only the visible 10% is easy; the invisible 90% is very hard |
Connections to Other Chapters
- Ch7 OrganizationalDesigns — Organizing (O in POLC) is the entire subject of Ch7
- Ch9 LeadershipApproaches — Leading styles (L in POLC) are explored in full in Ch9
- Ch8 HumanResourceManagement — HR planning integrates with the Organizing function
- Ch15 RiskManagement — the five-step risk process extends contingency planning
- Ch2 BusinessEnvironments — SWOT’s Opportunities and Threats come from the four external environments
Related Pages
ManagementProcess, ManagerTypes, ManagementSkills, StrategicManagement, ContingencyPlanning, CorporateCulture