Key Takeaways

  • Business management refers to the organization of business activities, including operations, production, finance, and marketing, to accomplish a goal.

  • The basic functions of business management are planning and organizing, direction and coordination, staffing, and controlling. They are all important for optimal operating efficiency and sound decision-making.

  • Each function contributes to the success of the business as a whole by setting goals, allocating resources, providing direction, filling roles, and achieving objectives.

  • A business management system (BMS) is an organized method for running a business and reaching its goals.

  • Different management styles—democratic, autocratic, paternalistic, and laissez-faire—affect decision-making, employee engagement, and business performance differently.

  • All management styles have advantages and disadvantages. They influence the dynamics between employees at work and support the objectives of different types of corporations.

By definition, business management is the coordination and organization of business activities. This typically includes producing materials, money, and machines and involves innovation and marketing.  

Management is responsible for planning, organizing, directing, and controlling the business's resources to meet policy objectives. 

This article will cover fundamental information about business management. Along with its definition and core functions, we will also explore strategic considerations and business management tactics. 

What Is Business Management?

Managers and directors have the responsibility and power to oversee an enterprise and make decisions. Management can range from a single person in an organization to thousands of managers in companies in different nations.  

In bigger organizations, policies are defined by the board of directors and then carried out by the CEO. 

Some people think the best way to evaluate a company's future and current worth depends on the experience and quality of the managers. Management aims to unite people to achieve the same objectives and goals by using the available resources effectively and efficiently. 

Good business management coordinates using resources to achieve a company’s goals through organizational planning, strategic decision-making, and operational efficiency.  

Coordination is crucial because it helps ensure no one business function impedes the ability of another function to achieve a business goal. 

Management functions include the following:  

  • Organizing

  • Directing or leading

  • Planning

  • Staffing

  • Controlling an organization 

They also encompass employing and deploying financial, natural, human, and technological resources. Management must facilitate a united effort towards achieving the company's goals.

Key Functions of Business Management

Business management is based upon a set of core functions that enable a company to achieve its objectives, cope with its challenges, and achieve sustained growth. To make this happen, the business must effectively plan, organize, direct, hire, and control.  

Here’s a closer look at how each of these functions supports the smooth operation of the enterprise. 

1. Planning

Planning is the first function on the list. It’s about setting goals, anticipating future needs, and determining how the company can best achieve them.  

Good planning gives managers a roadmap and guides them in allocating resources accordingly. It helps businesses map their future, exploit opportunities, mitigate risks, and maximize opportunities.

2. Organizing

Organizing involves structuring resources and technology to make the plan happen. It involves identifying roles, assigning responsibilities, and arranging workflows to ensure cohesion.  

In a well-organized company, resources are marshaled to deliver peak performance, minimize waste, and create a well-coordinated flow of work that supports the strategy.

3. Directing (or Leading)

Leading people is the most important function of a business manager. This role involves guiding and motivating staff so they will work for the company and pursue its goals.  

Good leadership creates a positive workplace in which the team members feel motivated, engaged, and committed to the company’s goals.  

A manager who can lift people’s spirits and inspire them will create a workforce willing to work hard and face challenges to achieve the company’s goals and succeed.

4. Staffing/Hiring

You can’t execute a plan without people. Staffing involves recruiting, developing, and keeping the talent the business needs to run.  

Staffing well means hiring people as employees or retaining independent contractors with the right skills, providing ongoing training, and placing them in jobs where they can succeed.  

A solid staffing strategy helps guarantee the business has a staff who can carry out its mission with minimal turnover.

5. Controlling

Control is what keeps things on track. It tracks performance against the standards set in the planning stage and, as necessary, makes adjustments.  

Control allows managers to identify problems as they occur, keep quality high, and adapt to changing circumstances.  

It helps ensure a company uses its resources wisely, promoting consistent performance and long-term growth. 

These core management functions must be not only understood but also implemented.  

Then, the balance between leadership and operation will be greater even while steering the company in the right direction, supporting decision-making, and ensuring resources are best used.

Business Management System (BMS) Explained

A business management system provides a foundation for tactical and strategic decision-making, supporting current processes, tasks, activities, and procedures to meet organizational objectives and fulfill customer expectations and needs. 

The main goal of a business management system is to provide management with the the tools to monitor, plan, and control their activities and measure a business' performance.  

A BMS also aims to implement continuous improvement processes in the company. This system finds the principles of the organization's existence and is linked closely to business success criteria.  

It is a multi-level hierarchy of different business solutions that shows how a profit-oriented organization will perform different functions (including marketing, sales, staffing, and purchasing) to complete a task successfully.

Business Management Tactics

Business management tactics are activities that follow the business standards identified in the company's policies. They implement business tasks and plans to meet the prioritized goals. 

This functional group also has processes and guidelines for developing business management plans. The guidelines include practical instructions and directions showing how decision-makers can control all the tactical solutions.  

They include operations and procedures showing how performers accomplish daily tasks and activities. This group also directs the staff toward completing business solutions and recognizes implementation plans aligned with management tactics.

Management Styles in Business

Four common business management styles are democratic, autocratic, paternalistic, and laissez-faire. 

Traditional management is a hierarchy of employees, with low, mid, and senior-level management. The manager creates expectations for the goals employees need to make.

Each style's influence on decision-making, employee engagement, and business outcomes varies. 

For instance, democratic and paternalistic styles increase engagement, whereas autocratic and laissez-faire styles impact outcomes based on employee willingness and industry demands.

Next, let’s discuss the basic details of each style, its pros and cons, and examples of this management style in the real world.

Democratic 

A democratic management style is when employees can openly give feedback or input on business decisions. 

Democratic management promotes employee engagement and innovation by welcoming diverse perspectives, although it may slow decision-making.  

Tech companies like Google utilize a democratic style, encouraging creative problem-solving and team solutions.

Autocratic

Autocratic management is when a business owner makes all decisions and leads the company through the business environment. 

An autocratic approach promotes fast, decisive actions that prove valuable in high-stakes industries. Because it excludes employee input, this can affect morale and innovation in the long term. 

The autocratic style is associated with sectors requiring tight control, such as the military and manufacturing.

Paternalistic

Paternalistic management creates a supportive workplace and strives for high job satisfaction. 

A paternalistic manager treats or relates to employees in a way similar to that of a family member. That can be a good thing, but there are also clearly professional boundaries that must be respected.

Paternalistic management is common in family-owned businesses, where employee welfare is prioritized.

Laissez-Faire

Laissez-faire is associated with the most employee autonomy. Laissez-faire leaders often let decisions be made with little to no business owner oversight

While high autonomy benefits creative environments, it can lead to a lack of direction if employees are unprepared for such independence.

Laissez-faire management is often embraced in startups, encouraging independence among team members.

Frequently Asked Questions

Is It Hard To Become A Business Manager?

It can be difficult to become a business manager. It requires extensive education and experience in multiple areas, including leadership, strategic planning, and financial analysis.  

However, getting a degree in business management helps, as does any relevant work experience. Building good communication, problem-solving, and decision-making skills can ease the transition into this position.

Is A 2-Year Business Management Degree Worth It?

A two-year business management degree can be a good investment. For many, it is a practical way to start working right out of college with a basic understanding of business and the skills to prepare for entry-level management and sales positions. It is also a way to earn money and gain practical experience while continuing a person’s pursuit of a four-year degree.   

Those who only need to learn the basics about business to do entry-level work or to move straight into work after school can save time and money while still getting a solid return on the investment in time and money.

Can You Make Good Money In Business Management?

Working in business management positions can be very lucrative, especially as one moves into more senior management roles. Of course, compensation will depend on industry, location, and specific job functions.  

Still, experienced business managers can find themselves eligible for competitive salaries, incentive-based bonuses, and promotional opportunities as they advance.

Legal Help with Business Management

If you need help with business management issues, post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5% of lawyers on its site.  

Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.