What is business management? 14 principles in business management

What is business management? What are the 14 important management principles in business to acknowledge? Let's come to the article of Viindoo to find the needed answer!

What is the concept of business management?

Business management simply means the mechanisms and regulations issued to help operate and control business operations. The main task is to balance the interests of related parties in the business such as managers, shareholders, customers, etc.

Definition of business management

What is the definition of business management? Which are the goals for the task to achieve?

The business management process is a continuous and organized activity to control employees. These mechanisms and regulations will help businesses optimize the potential and opportunities to conduct business activities, production, information disclosure, internal control, etc.

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Functions of corporate management

Strategic planning

The responsibility of business management is defining and devising strategies to achieve business goals. The planned strategies can lead businesses in the right direction as well as proper prediction and planning for the possibilities.

Strategic planning

Strategic planning

To perform the strategic planning function, leaders need to:

  • Understand the economic context of the external environment
  • Understand the internal situation of the business
  • Set goals
  • Identify the resources required and all related parties
  • Determine the tasks tagged with time and resources available. In addition, leaders also need to specify the necessary conditions to accomplish the goals set.

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Organization and implementation

The function to organize and implement corporate management is reflected in the following three areas:

  • Organize and build the business apparatus and company organization chart with appropriate order, level, and position. Which, the benefits and responsibilities of each should be clarified clearly and in detail.
  • Assign resources, personnel, and tasks to departments. Leaders have to allocate these following the order of company - department - working group - individual.
  • Develop and issue policies and mechanisms to ensure effective business activities.
Organize-and-implement

Organize and implement

Management and leadership

After building a foundation for operation, the next function of business management is to manage and lead personnel to operate following regulations. In this process, leaders need to well form behavior, policies, mechanisms, and working styles to stimulate employees.

Management and leadership

Management and leadership

Control and adjustment

Managers have to closely monitor and regularly check business processes to objectively assess and timely update the company’s internal situation. During this process, conducting corporate management will support the understanding of the business's strengths and weaknesses. Therefore, managers can make adjustments to improve effectiveness.

Control and adjust

Control and adjust

Principles of business management

Specialization and allocation of labor

A specialization is a form of labor allocation. Accordingly, leaders let individuals or groups focus on a certain area and assign them specialized tasks.

Specialization and allocation of labor

Specialization and allocation of labor

Principles to expertise and allocate labor in business governance will help increase businesses’ efficiency and productivity.

Centralization

The principle of centralization is to concentrate power among managers in the company. Centralization help business decisions become unified, decisive, and consensual.

Principle of centralization

Principle of centralization

Unity of orders

The principal conducts working orders from both sides to avoid confusion. Specifically:

  • The leaders give orders to the subordinates within his/her authority
  • Employees follow orders from their superiors
Unity of orders

Unity of orders

Consensus on the direction

Groups, departments, or individuals within a business can conduct different tasks but need to follow common goals and directions. Any small projects and tasks need to be unified in a big plan while coordination is there to remain rhythmical.

Consensus-on-the-direction

Consensus on the direction

Authority with corresponding responsibility

Authority and responsibility are like the two sides of the same coin. The important principle in business governance is that authority comes with the corresponding responsibility.

Authority goes with corresponding responsibility

Authority goes with corresponding responsibility

Individuals with high authority are the ones to conduct resource optimization for the best task completion. At the same time, those who hold great authority take significant responsibility for the decisions made, especially when something goes wrong.

Prioritising the common goals

The ideal goal of every leader is the dedication and hard-working of employees. Every employee should work based on the principle of putting the company's interests above their personal interests.

Putting-the-common-goals-first

Putting the common goals first

However, in the process of working, conflicts of interest may inevitably arise. Therefore, leaders need to practice business management for conciliating arising conflicts and directing them to win-win results.

"Leadership Chain"

In an enterprise, the relationship between employees and leaders should be maintained at a balanced level, neither too close nor far away. This relationship needs to be expressed clearly and transparently while avoiding abusive and coercive behavior.

The-elationship-between-employees-and-leaders

The relationship between employees and leaders is better at a balanced level

Every order given should be clear and in a reasonable manner to ensure all parties can understand and flexibly follow.

Order

Business management should lead to great order setting within the company. For instance, the establishment of order can be the allocating of positions and jobs to employees in a specific and clear way.

Building order within the business

Building order within the business

However, managers need to set orders appropriately and transparently to ensure all employees know their value in the business.

Discipline

Discipline within business governance includes standards of reaction and adherence to rules and values. Discipline is among the key factors for a business to run smoothly.

Disciplinary principles

Disciplinary principles

Justice

A justice culture will make employees feel free and satisfied in the working environment. Business management with fairness and justice will result in sustainable operations and strong employee loyalty.

Principle of justice

Principle of justice

Remuneration

Managers need to guarantee commensurate remuneration for employees. The remuneration level also needs to fit with the financial capacity of the business.

Remuneration is commensurate with the employee's effort

Remuneration is commensurate with the employee's effort

Mission stabilization

Stability is a foundation for business development. An effective management system of a business should create a sense of assurance for stability. Therefore, employees and leaders need to mind nothing but complete work.

Mission stabilization

Mission stabilization

Initiative

Business leaders need to create a comfortable environment and encourage their employees to freely express their personal initiatives and ideas. The need for self-expression is true of paramount importance.

Principle of initiative

Principle of initiative

Regardless of the level within a business, dedication often comes from those who can demonstrate personal competence and receive recognition.

Solidarity

It is fact that the greatest strength comes from the spirit of collective solidarity. Therefore, managers need to ensure policies and management principles contribute to creating a cohesive relationship among employees. In that case, internal solidarity will be there to create great strength for the business.

Solidarity

Solidarity

Viindoo hopes that the above article gives some understanding of What is business management? and the 14 important business management principles. For specific advice on business management solutions, please feel free to contact us through the information below:

What is business management? 14 principles in business management
Viindoo Technology Joint Stock Company, Trần Thị Lâm Anh December 3, 2022

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