Topic Eight : Enterprise Management
❖ Enterprises Management
✔ The organization and coordination of the activities of a business in order to achieve
defined objectives requires that various decisions and functions are fulfilled either
selectively or through combination to facilitate the realisation of organizational
objectives.
✔ The directors and managers have the powers and responsibility to make decisions and
oversee an enterprise during business operations.
✔ The size of management can range from one person in a small organization to
hundreds or thousands of managers in multinational companies.
✔ In large organizations, the board of directors defines the policy which is then carried
out by the chief executive officer, or CEO. Some people agree that in order to evaluate
a company's current and future worth, the most important factors are the quality and
experience of the managers.
✔ The role of an entrepreneur is very much developed and highlighted in enterprise
management and this very important function dictates the pace of business
development in entrepreneurship process.
✔ Mangers /leaders /owners are faced with tasks ranging from Goal setting, Decision
making, Resource mobilization ,Human resources management, Time management
,Risks management ,Policy formulations ( creditors,debtors,cash and customer
relations management )
Management functions
Management in businesses and organizations is the function that coordinates the efforts of
people to accomplish goals and objectives by using available resources efficiently and
effectively. Some management skills includes typical of entrepreneurs are
✔ Leadership skills
✔ Communication
✔ Interpersonal and Human relations skills
✔ Marketing skills
✔ Decision making skills
✔ Entrepreneurial
❖ Role of an Entrepreneur In Enterprise Management
1. Planning process & goal Setting
✔ If you plan to be successful in business, you need a business plan to follow. A large
part of the business plan is identifying your goals and detailing how you plan to reach
them.
✔ When you set out on the business planning process, put the plan on paper. Simply
writing or printing out the goals and being able to see them on a daily basis can keep
you more focused on your plan than only knowing what your goals are in your mind.
✔ When setting goals, rely on the SMART goal-setting process. SMART stands for
Specific, Measurable, Achievable, Realistic and Timely.
Steps in setting Goals
Step 1
✔ Set specific goals. Without specificity, you do not know what you are reaching for or
when you have achieved your goal
✔ Increase gross sales by 15 percent by December 31 of this year; This tells you exactly
what you are going after in the planning process. A specific goal makes it easier to
plan the objectives you need to reach in order to achieve it.
Step 2
✔ Develop goals that can be measured. If a goal cannot be measured, it is impossible to
monitor how well you are doing in reaching your goal.
✔ In the above example, a 15-percent increase in sales is measurable. A business owner
can easily look at sales reports and income data to determine if sales have increased
by 15 percent at year-end.
✔ When setting measurable goals, it may be helpful to set mini-goals with it.
Step 3
✔ Implement business goals that are achievable/attainable by the business and its
employees. If you have a brand-new business, becoming number one worldwide in
your industry in the next year is likely not an attainable goal.
✔ It is important that the goals you set can actually be reached based on the current
resources of your business. If unattainable goals are set, it is only setting up your
business and your employees for failure.
✔ Do not set unreachable goals as a way to motivate. Give employees goals they can
reach, so when each mini-goal is achieved, that in itself will be a motivator.
Step 4
✔ Establish relevancy when planning and setting goals. Some business owners will go
overboard in setting goals for the business.
✔ The goals will focus on areas of the business that are not important or will not have a
great impact on the overall direction of the business.
✔ Decide what is the most important thing your business must achieve during this
period. This item should be something that if you were only able to accomplish this
one goal, you would be proud of your business.
Step 5
✔ Attach deadlines to your goals. Without time lines, goals are useless. In our first
example about increasing sales, our specific goal gives a deadline of December 31 of
this year to increase sales.
✔ This provides a deadline for the goal. It gives a time when the goal should be
measured to determine whether the objectives have been achieved.
✔ All goals that are set should have a time line attached so that you can measure and
track your successes, and conversely, see where you might need to improve.
Decision making processes
✔ Decision making is a daily activity for any human being. There is no exception that
Effective and successful decisions make profit to the company and unsuccessful ones
make losses.
✔ Therefore, corporate decision making process is the most critical process in any
organization.In the decision making process, we choose one course of action from a
few possible alternatives. In the process of decision making, we may use many tools,
techniques and perceptions.
Steps of Decision Making Process
Following are the important steps of the decision making process. Each step may be
supported by different tools and techniques.
Identification of the purpose of the decision
✔ In this step, the problem is thoroughly analysed. There are a couple of questions one
should ask when it comes to identifying the purpose of the decision.
✔ What exactly is the problem? Why the problem should be solved? Who are the
affected parties of the problem? Does the problem have a deadline or a specific
time-line?
Information gathering
✔ A problem of an organization will have many stakeholders. In addition, there can be
dozens of factors involved and affected by the problem.
✔ In the process of solving the problem, you will have to gather as much as information
related to the factors and stakeholders involved in the problem. For the process of
information gathering, tools such as 'Check Sheets' can be effectively used.
Principles for judging the alternatives
✔ In this step, the baseline criteria for judging the alternatives should be set up.
organizational goals as well as the corporate culture should be taken into
consideration.
✔ As an example, profit is one of the main concerns in every decision making process.
✔ Companies usually do not make decisions that reduce profits, unless it is an
exceptional case. Likewise, baseline principles should be identified related to the
problem in hand.
Brainstorm and analyse the different choices
✔ For this step, brainstorming to list down all the ideas is the best option. Before the
idea generation step, it is vital to understand the causes of the problem and
prioritization of causes.
✔ Cause-and-Effect diagrams and Pareto Chart tool. Cause-and-Effect diagram helps
you to identify all possible causes of the problem and Pareto chart helps you to
prioritize and identify the causes with highest effect.
Evaluation of alternatives
✔ Use your judgement principles and decision-making criteria to evaluate each
alternative.
✔ In this step, experience and effectiveness of the judgement principles come into play.
You need to compare each alternative for their positives and negatives.
Select the best alternative
✔ Once you go through from Step 1 to Step 5, this step is easy. In addition, the selection
of the best alternative is an informed decision since you have already followed a
methodology to derive and select the best alternative.
Execute the decision
✔ Convert your decision into a plan or a sequence of activities. Execute your plan by
yourself or with the help of subordinates.
Evaluate the results
✔ Evaluate the outcome of your decision. See whether there is anything you should
learn and then correct in future decision making. This is one of the best practices that
will improve your decision-making skills.
Conclusion
✔ When it comes to making decisions, one should always weigh the positive and
negative business consequences and should favour the positive outcomes. ✔ This
avoids the possible losses to the organization and keeps the company running with a
sustained growth. Sometimes, avoiding decision making seems easier; especially,
when you get into a lot of confrontation after making the tough decision.
2. Resource Mobilization and Utilization
Resource is any physical or virtual entity of limited availability; a stock or supply of money,
materials, staff and other assets that can be drawn on by a person or organisation in order to
function effectively.
There are six broad types of resources
✔ Financial: this includes money, shares and other assets
✔ Physical: refers to tangible property such as equipment and office space ✔ Human
resources: includes the knowledge, training, experience, as well as the time of the
business owner and employees
✔ Technological: are embodied in a process, system or physical transformation, eg.
unique software products and tailored information system architecture
✔ Reputation: encompasses the perceptions that people in the business' environment
have of the business
✔ Organizational: include the business' structure, routines and systems
Human resources Management functions
Human resource management (HRM, or simply HR) is a function in organizations designed
to maximize employee performance in service of an employer's strategic objectives. HR is
primarily concerned with the management of people within organizations, focusing on
policies and on systems.
Six Main Functions of a Human Resource Department
Recruitment
Filing vacant positions
Work place Safety- occupational safety and health act
Employers have an obligation to provide a safe working environment for employees. Support
workplace safety training and maintain federally mandated logs for workplace injury and
fatality reporting.
Employee Relations
In a unionized work environment, the employee and labor relations functions of HR may be
combined and handled by one specialist or be entirely separate functions managed by two HR
specialists with specific expertise in each area.
Compensation and Benefits
On the compensation side, the HR functions include setting compensation structures and
evaluating competitive pay practices. A comp and benefits specialist also may negotiate
group health coverage rates with insurers and coordinate activities with the retirement
savings fund administrator
Compliance
Compliance with labor and employment laws is a critical HR function. Noncompliance can
result in workplace complaints based on unfair employment practices, unsafe working
conditions and general dissatisfaction with working conditions that can affect productivity
and ultimately,
Training and Development
Extensive orientation training to help them transition into a new organizational culture. Many
HR departments also provide leadership training and professional development. Leadership
training and professional development opportunities are for employees looking for
promotional opportunities
Performance management & Controls
The entrepreneurs always do performance evaluation, financial and non financial, these
will dictate ensuring control measures within the business.
Motivations & Coordination
Managers are charged with responsibility of motivating employees and coordinating all
functions to ensure that they are performed to realise the organizational objectives
3. Time management
Time management is of essence to the entrepreneurs and this resource matters to
organizational efficiency and operations in terms of deadlines management, decision making
period as this may hinder the potential profits affirm may make.
Time management is reflected in
✔ Solving customer queries
✔ Meeting production deadlines
✔ Compliance management
✔ Decision making criteria
✔ Competitiveness in business
✔ Access to critical information’s.
4. Risk Management (ERM)
✔ Enterprise risk management (ERM) is the process of identifying and addressing
methodically the potential events that represent risks to the achievement of strategic
objectives, or to opportunities to gain competitive advantage
✔ . Risk management is an essential element of the strategic management of any
organisation and should be embedded in the ongoing activities of the business. ✔ Risk
responses include: acceptance or tolerance of a risk; avoidance or termination of a risk;
risk transfer or sharing via insurance, a joint venture or other arrangement; and reduction
or mitigation of risk via internal control procedures or other risk prevention activities.
✔ Other important ERM concepts include the risk philosophy or risk strategy, risk
culture and risk appetite. These are expressions of the attitude to risk in the
organisation,
✔ Management responsibilities include the risk architecture or infrastructure,
documentation of procedures or risk management protocols, training, monitoring and
reporting on risks and risk management activities.
Source: How to Communicate Risks Using Heat Maps,
What benefits does ERM provide?
✔ Greater awareness about the risks facing the organization and the ability to respond
effectively
✔ Enhanced confidence about the achievement of strategic objectives ✔
Improved compliance with legal, regulatory and reporting requirements ✔
Increased efficiency and effectiveness of operations
Questions to consider when Implementing ERM
✔ What are the main components or drivers of our business strategy? ✔ What
internal factors or events could impede or derail each of these components? ✔ What
external events could impede or derail each of the components? ✔ Do we have the
right systems and processes in place to address these internal and external risks?
Credit Management policies
✔ Entrepreneurs plays critical role in credit management in the organizations. Credit
policies must be development since this the management of the revenue and cash flow
that determines the growth of an enterprise.
✔ Prudent policies dictate that debtors and creditors must be matched as part of working
capital management such that outstanding and maturing obligations are sufficiently
covered.
Decisions made includes
Procedures on credit policy administration
The procedures should be somewhat flexible, but not so vague that they are subject to
interpretation by every member of the department. Situations where flexibility is possible and
the hierarchy for approval of changes should be well defined.
Evaluating New Customers’ Creditworthiness
Reevaluating the Creditworthiness of Existing Customers-Terms and Conditions of Sale
Invoicing-Collections
Other items you may want to include in this section of your credit policy:
✔ Disputes and Deductions: How to respond. Who has authority to approve? ✔
Credit Holds: When to place an account on credit hold. Who authorizes credit holds. ✔
Payment Plans: Who can propose and approve payment restructuring plans. ✔
Write-offs: When to write off an account to bad debt.
✔ 3rd-party Collections: When and who authorizes forwarding an account to a
3rd-party collection agency.
✔ Law Suits: How to determine whether to sue.
Customer Relation management
✔ Customers are the most critical aspects of any business success since customers
determine the products, revenue and profits that are expected to be earned. ✔ Business
management have developed customer relations management techniques that maximizes
the relationships.
Key aspects includes
✔ Customer retention
✔ Customer acquisition
✔ Customer satisfaction
✔ Customer focus
✔ Quality management.
