How Important Is Business Management?

How Important Is Business Management?

There are many benefits of business management in your company. Through this, the manager will create and execute plans on the correct way to use and optimize the resources that are available for the operation of an organization.

It also grants effectiveness to the efforts of the people who make up such an organization and allows for their sustainable growth. Business management generates relevant information on how to deal correctly with the company’s resources, especially human resources, which are an indispensable element in any organization and must be carefully managed due to their impact on results and minimize risks—migrating to other organizations.

Business management is also essential because it reduces the organization’s operating costs. When carrying out strategic planning, the manager also prepares necessary information about possible changes that will improve the operation of these organizations.

Types Of Business Management

Some business management methods have become better known. Therefore, studying and getting to know them is essential to know which one best fits the organization’s situation.

  • Value Chain: The Value Chain was developed in 1985 by Michael Porter. It is a combination of systems that a company or organization uses to make a profit. It comprises several subsystems that create products or services, including the end-to-end process.

With Value Chain Management, you can understand customer expectations and devise strategies to overcome them. The author separates the methodology into five pillars: inbound logistics (that is, the one that covers supplies purchased from suppliers, such as raw materials, tools or office supplies), operational, outbound logistics (referring to the final product), marketing and sales, and finally, the services pillar.

In general terms, this type of analysis was designed for companies that manufacture consumer goods. Still, any organization can use Porter’s Value Chain analysis, even without having all the components mentioned.

  • Innovation Cycle: As the name implies, this type of business management refers to the company’s innovation, that is, creating a new service. The innovation cycle is divided into four phases: experimental, disruptive, combinatorial and incremental.

In the experimental phase, ideas are discussed, something more accessible, like brainstorming. Then comes the disruptive phase, where some pictures mature, and others are discarded. Then, in the combinatorial step, the most viable ideas are selected, often combined to arrive at something more beneficial for the organization. And finally, the innovation cycle ends with the incremental phase, in which the idea is consolidated.

  • PDCA: The Deming Cycle, Shewhart cycle, control circle/loop, or PDSA (plan-do-study-act) is a continuous quality evolution model consisting of a logical sequence of four repetitive steps to constant learning and development.

The acronym, in English, refers to Plan (Planning), Do (Doing), Check (Checking) and Act (Acting). The steps consist of planning the change, analyzing and estimating the results, executing the plan step by step under controlled circumstances, checking and studying the effects, and taking steps to standardize or improve the process.

  • Democratic management: This management model requires the leader to have excellent communication skills and know how to work in a group. The entire team is in charge of decision-making, which has positive points in exchanging knowledge and reflects a sense of importance for all employees.

On the other hand, this model can become an obstacle in situations requiring immediate decision-making or even become unproductive for more straightforward resolutions, typically consuming less time.

  • Meritocratic management: In meritocratic governance, the most outstanding employee is favored. The hierarchy is based on results, which combats self-indulgence and encourages employee performance improvement.

The only problem is when the situation escalates, and the work environment becomes excessively competitive and becomes toxic. Then, focusing on results that are best for the organization needs to focus more on pursuing the best individual development.

  • Centralized management: As the name suggests, this model focuses decision-making on the figure of the manager. This model has become less common precisely because of the authoritarian position in which the leader is placed. Its most frequent use is in leading inexperienced teams, with which the manager must take the reins of the situation because he has more knowledge.

The main criticism about this model type is that managers are only sometimes trained enough to occupy such a centralizing position. The choice of a management technique depends greatly on each organization’s situation and the manager’s and collaborators’ profiles. The only method that can undoubtedly avoid risks is knowledge.

How To Apply Business Management?

First, the manager must be aligned with the company’s culture, exemplify exceptional results, be committed to necessary changes and practice the organization’s values.

In addition, he needs to be aware and aware of his role as a manager and a professional and personal example, as leaders are considered examples of performance and dissemination of organizational culture.

And for a manager to be a benchmark, or rather, an example to be admired by people, he also needs to play the role of leader. He needs to break his resistance, get to know his environment, change his mentality, develop new values, strengthen more good beliefs, and transform in the moment of change that companies face.

It will be necessary for the manager in the role of leader to deal with situations of instability, to have mental and emotional balance and not to get lost in the “chaos”, not to be scared in the face of challenges, and to have the ability to solve problems together and manage conflicts of previously shared decisions.

You will need to have a critical sense and self-knowledge as a constant practice, in addition to being open-minded and free to understand, analyze, and accept the scenario that presents itself around you.

It will also be up to him to lead people to participate actively and enthusiastically to understand the advantage of the participatory decision-making process and to negotiate with people and teams, thus legitimizing the role of leader that was entrusted to him and conquered according to his posture in performance of the role assigned to him.

Also Read: When To Use Different Types Of Business Strategies