What Is Business Management?

August 20, 2021 | bestvalue

What is Business Management

In a world where everything is changing, the job of business management is to make sure important things stay the same.

Nearly all business managers will tell you that their most important job is dealing with unexpected changes.The 2020s have brought many unexpected changes.

Workers who did their jobs at the office now do them at home. As a result, human resource (HR) managers are dealing with behavioral issues related to Zoom calls, and they are having to recruit more employees for information technology (IT).

IT job managers are having to team up with training and development managers to figure out ways to teach new computer skills in addition to keeping systems up and running. User experience (U/X) managers are working overtime to make Internet access more productive and pleasant. Cybersecurity managers are having to work harder than ever to keep corporate networks safe. Supply chain managers who had mastered just-in-time inventory have found out that keeping stocked now requires lead time. Advertising managers are having to deal with the reality that many of the programs where they placed ads have been taken out of production. Employee benefits managers are having to figure out the best ways to manage costs related to COVID.

And all kinds of managers have found that moving work from in-office to on-line gives them issues to resolve 24/7.

Business managers keep businesses on-mission so they stay efficient and profitable. Business managers ensure compliance with laws, regulations, and the company’s ethical principles. Business managers make sure the organization does the things that grow its brand.

Business managers give people a reason to come to work. They make sure that important tasks get done. And they direct the acquisition of information and materials that will keep the organization going in the future. Skilled managers made the amazing economic growth of the twentieth century possible. And a little later in this article we will tell you all about the amazing economic growth you can experience in your own business management career.

The Management Century

The modern world runs on technological innovations that were unknown even in the 1990s. The human genome has been sequenced and scientists have basic knowledge of how to use it to enhance human performance and to treat diseases. Nanotechnology has been used to make bulletproof suits out of graphite, the same material used to make pencil leads, and invisibility cloaks. Artificial intelligence has been used to replace interviewers for tasks such as, for instance, placing undergraduate business students into the courses in which they are most likely to succeed.

All of these modern innovations are the result of progress in technology, but they are also the result of progress in management. The state of management a little over a century ago is hard to imagine today.

The famous management scientist Frederick W. Taylor observed that stacking boxes in railroad cars gave the railroads the ability to carry more freight than throwing boxes into railroad cars and scrunching them up against each to close the door — as was common practice in the 1800s. He also learned how to match tools to the strength of laborers so they could lift more loads and shovel more coal, which did not make him particularly popular with the laborers. Taylor started the era of scientific management, famously teaching that “the best management is a true science, resting upon clearly defined laws, rules, and principles,”

Scientific management was great for loading box cars, shoveling coal, and working efficiently on an assembly line. But years of labor strife that sometimes broke out in riots and murders led to an era of humanistic management that led to  the idea that the “boss” was really a “manager” and the “worker” was really an “employee.”

Peter Drucker introduced the idea that businesses don’t have dictatorships run from the top down, and that “back room” tasks could be outsourced to other companies and other countries to allow companies to focus on what they do best and what brings them the highest return on investment. But because companies are always looking for higher returns on investment, the last 20 years of the twentieth century brought an emphasis on helping companies sharpen their competitive focus.

No academic did more for the concept of competitive strategy than a Harvard professor named Michael Porter. His books Competitive Strategy and Competitive Advantage opened the door for business consultants, many of them armed with newly minted MBA degrees, were the key to seizing opportunities to expand a company’s mission and increase a company’s profits. Business management became more of  an “ability to take an extraordinarily complex, integrated, multidimensional problem and get arms around it conceptually in a way that helps, that informs and empowers( companies( to actually do things.”

But what are the specific kinds of tasks that business managers do all day? Let’s consider eight tasks of business management. These are the sorts of things you will have to do when you become a business manager.

Eight Things Business Managers Do

Society has always had people in charge. The difference between a boss and a business manager in the modern world is that business managers are professionals. They have a body of knowledge to guide their actions and decisions and management codes against which they can be judged. And the academic science of management gives us at least eight general tasks that all kinds of business managers are expected to to do.

Business managers create value for customers. Investor Warren Buffet says “Price is what you pay. Value is what you get.” A simple way of explaining how business managers create values for customers is just that managers make sure customers get a good deal.

A good example of how business managers help companies succeed by providing value for customers is the story of OnTimeAuditor.com. Software developer Michael Harris was frustrated that even when he paid extra for overnight delivery, his customers did not get their packages on time, so he wrote a program that tells businesses when their packages have been delivered late so they can get a refund on shipping fees. OnTimeAuditor.com costs the business that uses it $9.99 a month. If the company gets a refund of $10 for each of 10 late package deliveries every month, the service has created a value of $880 for each of its customers.

Business managers turn insight into enterprise. In the 1850s, investor J. C. Fargo wisely carried letters of credit rather than cash, which could be lost to stagecoach robberies. But when he got very far off the beaten path, he found that his letters of credit were, as he put it, “worth no more than wet paper.” He invented a system of business credit that in our time is known as the American Express card.

Want a more recent example? Millions of people find opportunities to housesit, to do pet sitting, to send out drop shipments, to run food trucks, to print T-shirts, run lawn care services, and do online writing and translation. None of these enterprises is going to create a business dynasty, or at least we don’t think they will. But each of these businesses requires the management skills to recognize a business need and to do what is needed to fill it.

Business managers define strategies to create and sustain competitive advantages. Chances are that you strategize to maintain your personal competitive advantages all the time. You take a Lyft or an Uber rather than buying a used Toyota. You put your spare cash into ShareSlice instead of a Vanguard fund. You use your Door Pass so you won’t have to pay delivery fees on DoorDash rather than paying higher delivery fees with another service.

A shrewd business manager at Uber or Lyft or Charles Schwab or DoorDash realized how to create a competitive advantage over competing, better-known alternatives to get you to use their service. In your career as a business manager, you will define strategies for your own company to give your products a competitive advantage over the products sold by your competitors.

Business managers draw the lines in their organizations. Business managers draw three kinds of lines in their organizations. They decide who is in and who is out, what is in and what is out.

Business managers draw lines (in a figurative sense) on the company’s organizational chart. They decide which groups of people work together and where resources are allocated. Then they establish lines of authority in the company. They establish reporting relationships, responsibilities, and authority in the company.

The classic example of drawing lines in business organizations is the story of Henry Ford, founder of Ford Motor Company, and Alfred Sloan, early president of GM. Ford chose to make just one car, the Model T. Drawing this line enabled Ford to build about half of the nation’s cars with just one-fifth of the nation’s workers. Ford famously said that he didn’t care what color the company’s cars were painted “as long as it is black.”

Alfred Sloan realized that GM could not compete with Ford on the basis of price, but could offer more features and consumer choices than Ford. Unlike Fords, Chevrolets came in different models and in different colors and with different features. Eventually the way Sloan drew the lines in the auto industry was even accepted at Ford.

Business managers are paid to know which numbers matter and why. We live in an era of Big Data. Businesses generate exabytes and zetabytes and yottabytes of data. The task of business management is to make informed decisions on the basis of data analysis.

How do business managers use data to inform decisions? They create business stories. When numbers can be matched to stories that make sense, the numbers add up, to. But without the ability to translate data into story, number crunching is useless. Business managers need to understand data analysis and statistics, but they also need logic and strong communication skills.

Business managers connect company mission to the bottom line. Every for-profit corporation is legally obligated to take all reasonable steps to earn profits for its shareholders without sacrificing the organization’s mission. The nonprofit world gives us a great example of why this principle is important.

In the late 1990s, NASA was forced by budget cuts to shift its focus from long-term projects that cost billions of dollars to short-term projects that cost hundreds of millions of dollars. NASA’s chief executive Daniel Goldfin described success for the agency as doing more with less.

So NASA cut corners on pre-mission testing for its Mars Polar Lander. In December of 1999, the $165 million Mars Polar Lander crashed when it arrived at Mars, probably because NASA had failed to debug a program essential to its navigational control. And then its $125 million Mars Orbiter crashed onto the surface of Mars because rushed engineers had failed to convert English measurements to metric.

NASA had failed to define performance in terms of mission, which in this case was actually reaching Mars, not saving money from the development budget. Successful business managers keep sight of what the company or the organization was founded to do. Successful business managers match metrics to mission.

Business managers make informed bets on the future. Managers are responsible for getting good results every quarter. They are also responsible for getting good results over the long term. Future profitability always requires current investments, and managers are responsible for taking well-informed, strategic risks with company assets to keep their companies growing and profitable.

Managers don’t always get this right.

An example of a bet on the future gone bad is the Kodak Company’s transition to digital photography. Kodak was the world’s largest maker of photographic film, but now that cameras don’t use film, what were they to do?

Film is made with chemicals, and drugs are made with chemicals, so in 2020 Kodak got a $765 million loan from the US government to make generic drugs to fight the coronavirus. Unforrunately, within three days of when the loan was announced, the government halted payment when it was discovered that Kodak did not have the staff to make the drugs.

Business managers constantly redirect organizational focus. Every business student learns about Pareto’s law, which states that 80 percent of profits are made from 20 percent of a business’s activities. it’s the business manager’s job to make sure the company keeps focused on the smaller number of things that generate the most profit rather than the larger number of things that don’t.

There are variations of this law in different industries. Silicon Valley refers to Moore’s Law, which states that computing speed constantly increases. Japanese companies talk about kaizen, or step-by-step improvement. In American manufacturing, the buzzword is continuous improvement. The bottom line for this principle is that business managers have to keep redirecting attention to what is important.

An example of how a company used this principle to increase profits is the Popeye’s chicken sandwich. Popeye’s knew that its customers didn’t like to pick through chicken bones in their cars. They knew that people loved their sandwiches. So they went all in on promoting their chicken sandwich, which was a tremendous promotional success.

Business managers maintain values. Management doesn’t really have a hard side, finance, accounting, and top-down direction, and a soft side, HR, advertising, and customer relations. Business managers infuse the company’s values in everything the company does.

Some companies have values that are entirely pecuniary. Turning Pharmaceuticals, for instance, became infamous when it decided to raise the price of an antiparasitic medication from $13 to $750 per pill. (The CEO is now in jail for other reasons.) And it’s not unusual for companies to price new, essential technology at “all the market will bear plus 10%.” That’s the issue with producing meat from tissue culture without having to kill animals. One of the companies that supplies one of the chemicals used in growing the meat cells has raised the price of that reagent by 15,000%. But under ideal conditions, business managers figure out ways for their companies to grow profits while observing ethical norms.

And they are well paid to do it.

How Much Are Business Managers Paid?

One definition of business management is that it is a well-paid profession. Some of the highest paying careers in the United States are in business management. All of the business management specialties in this list require a bachelor’s degree in business management for an entry-level job. The salaries listed here are averages for the profession as a whole, not entry-level pay. Figures are from the US Bureau of Labor Statistics.

  • Administrative services managers keep organizations running smoothly. The average manager in this specialty earns $96,940 per year.
  • Architectural and engineering managers plan building and engineering projects and keep them on their timelines until they are completed. The average manager in this speciality earns $144,830 per year.
  • Compensation and benefits managers oversee plans to pay and motivate employees. The average manager in this specialty earns $122,270 per year.
  • Computer and information systems managers direct the acquisition and use of information technology for an organization. The average manager in this specialty earns $146,360 per year.
  • Financial managers contribute data to the creation of financial reports and oversee the acquisition and use of capital by the firm. The average manager in this specialty is $129,890 per year.
  • Human resources managers plan, direct, and oversee employee relationships in the organization. The average manager in this specialty earns $116,720 per year.
  • Industrial production managers oversee daily activities of manufacturing. The average salary in this specialty earns $105,480 per year.
  • Natural sciences managers oversee the work of scientists, including biologists, chemists, geologists, and physicists. The average manager in this specialty earns $129,100 per year.
  • Public relations managers define the company’s brand and manage reputation of the company. The average manager in this specialty earns $116,180 per year.
  • Sales managers lead sales teams. The average manager in this specialty earns $126,640 per year.
  • Top executives develop policy and strategies that empower an organization to meet goals and stay of mission. The average manager in this specialty earns $104,690 per year.
  • Training and development managers plan, direct, and coordinate skills-improvement programs for workers throughout their organizations. The average manager in this specialty earns $113,900 per year.
  • Business management is a growing profession. The Bureau of Labor Statistics estimates the number of jobs for business managers will grow every year through 2029.
  • Business management is a well-paid profession. Most business managers earn over $100,000 per year.

And the entry ticket to a job as a business manager is a bachelor’s degree in business administration.

How do you get started as a business manager?

It’s just always necessary to earn a bachelor’s degree in business administration to get your first job as a business manager. Most universities award B.B.A. degrees, Bachelor of Business Administration degrees, but a few programs end with B.S. (Bachelor of Science) or B.A. (Bachelor of Arts) degrees. You will open more doors with a B.B.A. than with a B.A., although great networking can compensate for an unusual degree program.

It’s absolutely essential that you get your degree at an AACSB-accredited college or university. (AACSB stands for Association to Advance Collegiate Schools of Business.O) Every school we recommend on this site will be AACSB accredited.

Unless your objective is to run a family business, and usually even if your objective is to run a family business, you should pursue a degree program with a clear specialization rather than just “general business” or even “management.” Be an expert in HR, U/X, MIS, supply chain management, or some other specialty field right off the bat. Applying specialized knowledge not otherwise available to your new employer will increase your starting business management salary and give you a niche in which you can show your abilities to earn your promotion to more responsibilities and higher pay. But don’t got into a specialty that makes you irreplaceable unless it’s a job you love — or you could find yourself spending too many years in the same position.

Try to get into one of top programs we recommend for business management. Don’t waste time on fly-by-night or online schools that admit anyone. Employers may be OK with online coursework taught by a college or university that also has courses in brick-and-mortar classrooms, but a 100% online college experience is not optimal for developing team building skills or for interacting with mentors and your college’s partner corporations who give you opportunities for hands-on experience. Our pages will direct you to the colleges and universities that give you the greatest amount of experience in the real business world while you are earning your degree.

On the other hand, keep in mind that the best business program is the program that is best for you. That is why we have taken care to include links to colleges and universities that offer business education to students with special interests and special needs. No matter what your intended management destination, corporate, non-profit academic, or military, we list a school that meets your needs.

We have one thing we would like to ask of you. Please share your experiences in the comments sections. We always welcome up to date information about all of the schools of business that we ist on this site. Good luck with your journey, and don’t be hesitant to ask us for more information if you have questions.

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