ELATE: E-Learning and Teacher Education

TEACHER’S GUIDE

Subject: Entrepreneurship Education

Unit: 3

Class: S.3

Topic: Managing a Small Business Enterprise

Sub-topics:

Meaning of management
The role of management
Functions of management
Importance of management.
Responsibilities of management.
Tasks of management.

Introduction

In Unit 2, we looked at businesses in Uganda and learnt that there are different types of businesses. This unit focuses on managing a small business enterprise. In order to understand how a small business enterprise can be managed effectively, we shall look at the meaning, role, importance, and the functions of management. The unit will conclude with a discussion of the tasks and responsibilities of management.

Main Content and Concepts to Emphasize

Meaning of management
Roles of an entrepreneur in the management of a small business enterprise
Importance of management in a small business enterprise
Functions of management in a small business enterprise
The responsibilities of management
Management tasks

By the end of this topic, students should be able to:

Define management.
Explain the roles of an entrepreneur in the management of a small enterprise.
Discuss the importance of management in a small business enterprise.
Describe the functions of management in a small business enterprise.
Examine the responsibilities of management in a small business enterprise.
Outline the tasks of management in a small business enterprise.

Teaching/Learning Materials, Activities and Guidance

Markers
Flip charts

1. Meaning of management

Management is the art of getting things done through people and the proper utilisation of resources like capital, raw materials and time, which enables the enterprise to achieve its goals and objectives. Management is a problem solving process of effectively achieving organizational objectives through the efficient use of scarce resources in a changing environment. In a small business enterprise, the entrepreneur acts as the top manager while the few employees and family members serve as lower managers.

Who are the managers?

A manager’s job is highly crucial to the success of any organization. The more complex the organisation is, the more crucial is the manager’s role. It is the manager’s job to achieve the organizational objectives through the proper utilization of its human and material resources. However, since the material resources of equipment, capital, facilities, information, etc., can only be used by humans, the human resources are the most valuable assets of any organization. Accordingly, a manager must be highly skilled in the art of optimally utilizing the human resources. Some of the essential skills are:

(1) Technical skills

These involve the knowledge, methods and techniques and the ability to use these techniques in performing a job effectively.

(2) Human skills

Human skill is the ability to work with other people amicably. It involves patience, trust and genuine involvement in interpersonal relationships.

(3) Analytical skills

Effective and right decision making is the most important function of management. A successful manager must possess the analytical skill, involving the ability to logically, objectively, and scientifically analyse the problems and opportunities and use scientific approaches to arrive at feasible and optimal solutions.

(4) Conceptual skills

The conceptual skill is the ability to view the organisation as a whole, and as a system comprised of various parts and sub-systems, integrated into a single unit.

Characteristics of a good manager

Not all managers are successful. Those managers who are successful have certain characteristics which create a climate for success for themselves and their subordinates. Some of the more important personality traits of a successful manager are:

(a) Knowledge

To have the knowledge about competitive markets, about technological advancements and about social changes is very important for taking action.

(b) Decisiveness

Decision making involves more than simply choosing the best alternative. A good manager should possess conceptual logical ability, intuitive and courageous judgement and ability to analyse the problem by breaking it into parts and identifying the nature and effect of each part.

(c) Ability to handle conflict

A good manager is calm, able to listen, is positively responsive to criticism and is able to handle conflicts and differences in a constructive manner. In order to handle conflicts well, a manager must be confident, self-assertive, fair and dominant.

(d) Emotional stability

Emotional stability is the major ingredient for effective leadership and an effective manager is always an effective leader. Emotional instability often leads to wrong and impulsive decisions with dire consequences.

Student Activity 1

1. Define management.

2. What are the various skills that an effective manager must possess? Are all these skills equally important?

3. Are the characteristics of a good manager in-born traits or can these be acquired by environmental influences?

2. Roles of an entrepreneur in the management of a small business enterprise

An entrepreneur plays a number of roles in a small enterprise. Among these are:

(a) Decision making

Decision making is the process of choosing the best alternative from among different alternatives to maximize the achievement of business goals and objectives. The decision-making role can be seen in resolving conflicts, resource allocation and in negotiations. The entrepreneur makes decisions concerning:

Identifying markets and business opportunities
Making available the necessary resources, such as capital, labour, raw materials, etc., for the identified business opportunities
Translating the business idea into a real business that produces goods and services
Searching for new ideas and innovations to meet changing customer needs, tastes and preferences
Conducting regular meetings with business employees, staff involved in research and development, etc
Solving conflicts among employees, other business competitors
Allocation of resources such as money, time, equipment, etc
Negotiating business contracts with suppliers, customers, etc

(b) Information processing

Under information processing, an entrepreneur acts as a monitor as well as an information disseminator.

In his/her role as a monitor, the entrepreneur regularly scans the internal and external environment which affects the business. He/she collects information on changes in customer’s needs, tastes and preferences. This information can be collected from newspapers, magazines, and other media.
In his/her role as a disseminator of information, an entrepreneur finds possible solutions to the changes in the internal and external environment and disseminates the changes in company policies to employees. This information is disseminated through memoranda, telephone calls, electronic mail, etc.

(c) Interpersonal relationships

An entrepreneur can maintain good interpersonal relationships by playing a leadership role, network officer and figure head.

As a leader, an entrepreneur must lead by example. He/she should guide other employees, treat them with respect and be dedicated to the business. This will motivate the employees to perform their duties.
As a network officer, an entrepreneur should have contacts outside of the business. This helps in assessing changes in the business environment, social changes and changes in government policy.
As a figure head, an entrepreneur receives company visitors; signs legal documents, gives public speeches, and attends workshops and conferences, etc on behalf of the enterprise. Within the enterprise, an entrepreneur plays the figure head role by attending employees’ functions such as weddings, funerals, etc. This helps to build rapport and shows a good image to the outside world.

Student Activity 2

1. What are the different roles that an entrepreneur is expected to play?

2. Describe in detail the manager as a decision maker.

3. How do manager’s different work roles affect his/her ability to perform as an effective manager?

3. Importance of management in a small business enterprise

Management is important to different stakeholders such as owners of the business or the shareholders, employees, customers, government and the community.

(a) Shareholders

The shareholders are the owners of the business who invest capital in the business. The main purpose of investing capital in the business is to generate profits. Management therefore plays an important role of investing the shareholder’s resources (capital) into projects that can yield satisfactory rate of return and produce quality products and services that can meet customer’s needs.

(b) Employees

The importance of management to employees can be seen in:

Assigning employees the right jobs as per their knowledge, experience, attitudes and interest
Communicating to employees the business policies, procedures and objectives and the strategies to be used to achieve the objectives
Ensuring that the working conditions of employees are conducive
Provision of social activities and additional benefits to boost the employees’ morale and dedication
Involvement of employees to participate in business affairs like how to improve on business performance, etc
Provision of fringe benefits in addition to salary, medical insurance, sick leave, etc

(c) Consumers

Management tries to ensure that a customer is their business lord and is always right. Management thus produces quality products and services at fair prices with guaranteed satisfaction to meet the interests/needs of their customers.

(d) Government

Management ensures that its business operates within the legal system abiding by all the laws and regulations of the state. This is important to the government in that;

There is payment of taxes and on time
Environmental laws are respected
Provision of employment by hiring/employing people on merit

(e) Community interests

Management is important to the community in the following ways:

Providing jobs for the people within the community
Raising funds for public activities like hospitals, roads

Provision of products and services needed by the community

(f) Inter-business relations

Management helps to maintain the inter-business relations through fair trade practices like fair prices, good quality products, and fast mode of delivery and quality services. This is because businesses are interdependent on each other in terms of products produced by them.

Student Activity 3

1. Discuss the importance of management to the following stakeholders:

(a) Shareholders

(b) Employees

(d) Government

(e) Community

4. Functions of management in a small business enterprise

Management carries out a number of functions in a small business enterprise. These functions include planning, organising, staffing, leading, controlling, communication, motivation, and budgeting.

(a) Planning

Planning involves the establishment of business goals and objectives, and determining the ways in which they will be achieved. In planning, an entrepreneur is envisaged to:

Set business goals and objectives
Determine different courses of action to achieve the business goals and objectives
Select the best option
Formulate business strategies to translate the chosen option into action

Planning aims at reducing future uncertainty. Planning answers questions like: what should be done? When will it be done? Where will it be done from? Who will do it? How will it be done?

(b) Organising

This refers to identifying the activities to be done, categorising them into sections/departments and assigning the activities to particular people to carry them out. In order to organise efficiently, an entrepreneur should:

Identify the tasks to be performed and group them into departments, for example, sales and distribution under the marketing department
Assign tasks/activities to individuals and define their responsibility and authority, for example, a sales manager can be assigned marketing tasks
Delegate the authority to the chosen employees, for example, heads of departments, managers, etc
Co-ordinate the activities to ensure that they are done as scheduled

(c) Staffing

This involves the process of recruiting, training, developing, compensating and evaluating employees. It also involves maintaining employees with incentives like good salaries, housing and medical facilities or allowances, etc. This is likely to result in commitment to work on part of the employees.

(d) Leading

This involves motivating and guiding the employees about business procedures and methods. There should be open communication such that employees receive information and also give feedback. An entrepreneur should lead by example and employees should be motivated either verbally or through other rewards like money, promotion, recognition, etc.

(e) Controlling

Controlling in a small business enterprise is concerned with monitoring purchases and sales, money received and paid out, stock and other business property. It consists of those activities which are undertaken to ensure that the activities done are not different from the pre-planned ones. An entrepreneur should look at the original set goals, and find out whether or not they have been achieved as planned.

(f) Communication

This is the process of receiving and sending messages. It is the process of passing information from one individual to another. An entrepreneur should transmit and share messages, ideas, facts and information with his/her suppliers, employees, customers, etc.

(g) Motivation

This is the process of encouraging employees to do their best towards the desired goals of the business. Employers should aim at getting their employees to willingly pursue company objectives. Motivation can be through fair payments/salaries, allowances, promotion, fringe benefits like free housing, medical care, etc.

(h) Budgeting

A budget is a quantitative statement, for a defined period of time, which may include planned revenues, expenses, assets, liabilities and cash flows. It is a financial plan outlining how funds will be spent in a given period of time and how these funds will be obtained. The process of preparing a budget is known as budgeting.

Types of budgets

1. Master budgets

This is a comprehensive summary budget, incorporating all the functional and operational budgets, generally including sales, production, material and labour costs, any overhead costs, profit, etc.

2. Materials and utilities budget

This budget also known as operations budget includes budgeting for raw materials required for production, spare parts for maintenance, labour time, machine time, energy consumption, etc. Labour time and machine time is the output per unit of time.

3. Control of liquidity

This involves cash flow and is very important in controlling and meeting current financial obligations. This budget forecasts cash receipts and outlays in a set time basis and is necessary to control the income and expenses, so that there is no shortage of cash to pay bills, and also no excessive unused cash which may be unproductive.

4. Revenue and expenses budgets

The revenue budgets should show anticipated sales by product or by geographical area or department, etc. The expense budgets should cover all necessary and relevant areas such as rent, utilities, supplies, security, etc.

5. Capital expenditure budgets

These budgets plan for long term investments and include expenditures for new plant and equipment, major installations, replacement of existing equipment, building, etc.

6. Sales budget

The sales budget is the direct outcome of sales forecast and is based on the consideration of the following factors: demand and supply, competition, past sale trends, future prediction of sales, seasonal changes that affect sales, etc. The sales forecasting is based on such factors as population trends, consumer’s purchasing power, disposable income, price trends of the products, inflation rate and the general business economy, etc.

7. Production budget

The production budget contains manufacturing program for future operations and is based upon the sales forecasts and sales budgets. It aims at obtaining maximum utilization of manufacturing methods and facilities.

8. Balance sheet

It is a composite budget and reflects anticipated assets, liabilities and owner’s equity or net worth at the end of a given period in the future. It provides a forecast of the anticipated financial status of the company at a future date.

9. Flexible budget

Flexible or variable budget reflects and combats the changes in expenditure as a result of changes in volume of production and revenues. These expenditures are primarily variable costs since the fixed costs are not generally affected by changes in revenues.

Benefits of budgeting

Budgets are produced in all organizations, whether they are small, large, private or public sector. They are important and are produced for the following reasons:

To compel planning – by having a formal budgeting procedure, managers are forced to consider business objectives and ways in which those objectives can be achieved
To co-ordinate the activities of the various parts of the business and to ensure that the parts are working together
To communicate plans to the various responsibility managers within the enterprise
To motivate managers to work towards the business objectives
To control activities – the budget provides a yardstick against which the performance of the business can be compared
To evaluate the performance of the managers
The budgeting process helps management learn from past experience. Management can critically look at the success or failure of the past budgets and isolate errors and analyse their causes and establish steps to avoid repetition of the same errors
Budgets help in the just measurement of performance. Due to quantification of budgets, the measurement is more objective, thus eliminating biases that might be introduced due to subjective evaluations
The budgeting process induces the management to shift attention to the future operations. It forces managers to anticipate and forecast the trends and changes in the external environment

Limitations of budgeting

Some of the problems associated with budgeting are:

Budgets are often too rigid and restrictive and supervisors are given little free hand in managing their resources. The budgets may either be changed too often or not at all, making it difficult for employees to meet performance levels
Budgets are used to evaluate the performance and results, but the causes of failures and successes are not thoroughly investigated
Budgets may be used punitively. The employees may regard budgets simply as rating tools or as a device for catching their mistakes. This will lower their morale and dilute their sense of dedication
Budget goals may be conceived as too high. A high production level or sales level may be resented as un realistic and may create tension and pressures which could very well result in worker inefficiency and create conflict between workers and the management

Student Activity 4

1. (a) List seven functions of management in a small business enterprise.

(b) For any four functions chosen, describe the activities managers must perform to achieve a desired goal.

(d) Describe one way in which any one of the problems chosen in part (c) might be eased or solved.

2. Define budgeting and a budget.

3. List six types of budgets.

4. Why is budgeting important to an entrepreneur?

5. What are some of the problems associated with budgeting?

5. The responsibilities of management

Management is responsible and answerable to many groups. Sometimes the interests of these groups conflict with each other. Hence, management must conduct its affairs in a manner so as to be fair and equitable to all parties who have a vested interest and claim on management. These parties include the government, shareholders, the community, employees, customers and board of directors. These responsibilities are discussed in more detail as follows:

(a) Responsibilities to government

Management responsibilities towards government are to maintain the law of the land, not to flout trading practices, to pay taxes such as (corporation tax and value added tax). Managers must operate within guidelines established by the National Bureau of Standards.

(b) Responsibilities to shareholders

These responsibilities include calling annual general meeting, inviting shareholders to attend, declaring the dividend and making profits for the company.

(c) Responsibilities to society and the environment

Management should use environmentally friendly practices and every board of directors should be fully aware of the disastrous consequences of environmentally damaging actions.

(d) Responsibilities to employees

These responsibilities include the provision of adequate facilities and amenities for workers, such as a clean working environment, proper toilet, canteen and health facilities, and the provision of essential work-wear. Managers should also ensure that workers receive pensions and gratuities on time. Managers’ responsibilities also include the protection of female employees against sexual harassment and discrimination.

(e) Responsibilities to customers

Individuals, wholesalers, retailers, other companies, importers and exporters and even the government may be customers of a business. To all of these managers have many different responsibilities. Managers must, for instance, ensure that goods coming off the production line are of good quality and fit for the purpose for which they are intended.

(f) Responsibilities to the board of directors

Some mangers may be members of the board of directors and may deal with one another directly. However, managers have certain specific responsibilities towards board members and these may include:

maintaining a close working relationship with board members
working towards a common goal or objective
working within a framework of harmony and co-operation for the common good of the entire business
promoting the aspirations of board members in trying to achieve company objectives
making frequent reports to the board of directors
preparing research materials, statistics, data and other important information needed by board members for use in preparing results for presentation at an annual general meeting

Student Activity 5

1. (a) Outline, briefly, five responsibilities of management.

(b) For any three responsibilities chosen give two activities for each to show how managers operate.

(d) Explain the role of workers in the solution of the problem outlined in part (c).

2. What are the management’s responsibilities towards employees? Should the return on investment be the primary concern of the shareholders?

3. Are the management’s responsibilities towards employees applicable in all situations or in the democratic style of management system only?

6. Management tasks

A task refers to activities organised in units for particular purposes. In a small enterprise, the management tasks include production, marketing, personnel and financial management.

(a) Production management

Production management is the process of taking a set of inputs and turning them into outputs. The inputs are the factors of production while the outputs are the goods and services. Production management is the process of effectively planning and regulating the operations of that part of an enterprise which is responsible for the transformation of materials into finished products. Production management deals with planning and controlling production activities, which include:

acquisition of inputs such as land, capital, raw materials, human resources and information
Transformation of the inputs into output. Output refers to products that have been processed from raw materials into finished or semi-finished goods.

(b) Marketing management

Marketing management concentrates on marketing products (outputs) produced by the production management of the business with an aim of satisfying the customers with a view of making profit. The aspects of marketing include:

providing the products which customers need
setting prices that customers are willing to pay but are still profitable to the enterprise
getting products within the reach of the customers
informing and persuading customers to buy the goods/services
selling the products to the customers

(c) Personnel management

This is also referred to as human resource management. It is that part of management which deals with the effective control and use of employees to do all the activities involved in the business. Human resource is the most significant factor which contributes to the success of a business because it is people who have to acquire factors of production (inputs), manage them, transform or process raw materials into finished products, market them and collect and manage the finances. Personnel management deals with:

manpower planning, which is concerned with assessing the manpower requirements of an enterprise in terms of both quality and quantity
recruitment, which refers to the process of attracting and identifying suitable workers for a given job
selection, which is the process an entrepreneur follows to pick out the most suitable candidate for a particular job
placement, induction, training and termination, which involves assigning a worker tasks to be done in the enterprise, introducing the new employee to the enterprise and laying off a worker from the job
human resource development, which is concerned with improving the skills of employees through further training, study tours, etc
determination of employee remunerations and terms of employment and standards of working conditions
communication, which deals with putting in place formal and informal communication channels and procedures for the business

Human resource management is important to the proper functioning of an enterprise in the following ways:

human resource management enables an entrepreneur to get the right type of workers with the necessary training and skills
Human resource management helps in staff development and training. Employees acquire needed skills through various training programmes
personnel management improves working conditions and provides a good working environment which motivates employees to work hard
eliminates wastage or improper utilization of resources since it allows employees to put together their efforts and properly use the materials and resources to achieve business objectives
personnel management plays a vital role in attainment of business objectives as it provides motivation and helps to instil commitment in the employees
personnel management helps to promote good relations between employees and management or between fellow employees
Personnel management promotes good image of the business to the public. The good will created can enable the business to meet the demands of the community
personnel management aids in evaluating the performance of employees in all departments of the business

(d) Financial management

Financial management refers to the routine functions, which are performed within the enterprise to ensure efficient use of funds. Examples of routine functions of financial management include:

supervising daily cash receipts and expenditures
banking of surplus cash balance
settling debts of suppliers of goods/services and funds on time
record-keeping

Student Activity 6

1. Examine the various management tasks in a small business enterprise.

2. Define personnel management.

3. What is the importance of personnel management?

4. Ask students to visit any business of their choice and find out how the roles, functions and tasks of management are being performed.

5. Ask students to write a report of their findings and include a list of the aspects which they think are missing and should be done to enable the business to perform better.

References:

Abiraj, B.M.C. 1998. Higher Level Business and Economics for Caribbean Students. Hodder Headline Group. pp.258-260.

Broadbent, M. and Cullen, J. (eds). 2003. Managing Financial Resources. Third Edition. Butterworth-Heinemann. pp.116-117.

Chandan, J.S. 2005. Management Theory and Practice. Vikas Publishing House PVT Ltd. pp3-23.

Kabatire, S. and Mutyaba, S.V. 2007. Entrepreneurship Skills. Net soft Publishers. Kampala, Uganda. P.114-126.

National Curriculum Development Centre (NCDC). 2002. Entrepreneurship for Secondary Schools. Book 3. National Curriculum Development Centre, Kampala, Uganda. P.1-9.

Tayebwa, K. 2007. Entrepreneurship Education Skills. First Edition. Bagah Printers and Stationers. Kabale, Uganda. Pp.26-27.

LESSON PLAN

Date: ………… Class: …………. Period: …………. No. of Students: ……………

Topic: Managing a Small Business Enterprise

Sub-topic: Functions of management in a small business enterprise

Lesson objectives:

By the end of the lesson, students should be able to:

Describe the functions of management in a small business enterprise.
Explain problems managers might have in performing their functions.

Teaching methods: (i) Guided discovery; (ii) Demonstrations; and (iii) Question and Answer

Teaching Aids/Materials: Chalkboard; Flip Chart; Markers

References:

Abiraj, B.M.C. 1998. Higher Level Business and Economics for Caribbean Students. Hodder Headline Group. Pp.250-251.

Chandan, J.S. 2005. Management Theory and Practice. Vikas Publishing House PVT Ltd. pp3-23.

Kabatire, S. and Mutyaba, S.V. 2007. Entrepreneurship Skills. Netsoft Publishers. Kampala, Uganda. P.120-122.

National Curriculum Development Centre (NCDC). 2002. Entrepreneurship for Secondary Schools. Book 3. National Curriculum Development Centre, Kampala, Uganda. P.4-6.

Step	Time	Content	Teacher’s activity	Student’s activity
1	10 mins	Review of the importance of management	Reviews previous lesson on importance of management	Students respond to questions on the importance of management
II	10 mins	Introduction to the functions of management	Introduces and writes topic on the blackboard	Students listen and write topic in their notebooks
III	40 mins	Functions of management in a small business enterprise Problems managers are likely to face while performing their functions	Asks students to form into groups of three or four and discuss the functions of management Displays a chart showing the functions of management Asks students to identify the problems managers are likely to face while performing their functions	Students form into groups of three or four and discuss the functions of management Students view the chart showing the functions of management Students identify the problems managers are likely to face while performing their functions
IV	10 mins	Exercise	Gives exercise and moves around	Students copy and answer the exercise in their note books
V	10 mins	Conclusion and summary	Summarises lesson and informs students of what to be covered in the next lesson	Students listen
Self Evaluation .......................................................................................................................................... …………………………………………………………………………………………..

Evaluation Exercise

1. (a) Describe any two functions of management that help managers to perform their duties.

(b) Explain two problems managers might have in performing any one function mentioned in part (a).

SCHEME OF WORK

Subject: Entrepreneurship Education Year:………..

No of students ………….. Topic: Managing in a Small Business Enterprise

No of periods……………. Class: S.3

Week	No. of periods	Topic	Sub-Topic	Aims/objectives	Teaching methods	Teaching aids	References	Comments
1	4	Managing in a Small Business Enterprise	Meaning of management Skills of a manager Characteristics of a good manager	By the end of the lesson, learners should be able to: -Define the term management -Identify the skills of an effective manager -Identify the characteristics of a good manager	Guided discovery Questions and answers Discussion Self test exercises	Chalkboard Textbooks	N.C.D.C. 2002. Entrepreneurship Education Skills for Secondary Schools. Book 3. Kabatire, S. and Mutyaba, S.V. 2007. Entrepreneurship Skills.
2	2	Managing in a Small Business Enterprise	Roles of an entrepreneur in the management of a small business enterprise	By the end of the lesson, learners should be able to: - Explain the roles of an entrepreneur in the management of a small business enterprise	Guided discovery Questions and answers Discussions Self test exercises	Chalkboard Textbooks	NCDC. 2002. Entrepreneurship Education Skills for Secondary School. Book 3.
3	4	Managing in a Small Business Enterprise	Importance of management Functions of management	By the end of the lesson, learners should be able to: - Discuss the importance of management to various groups of people - Describe the functions of management in a small business enterprise	Discussion Question and answers Guided discovery Self test exercises	Chalkboard Textbooks	NCDC. 2002. Entrepreneurship Education Skills for Secondary Schools. Book 3.
4	4	Managing in a Small Business Enterprise	Responsibilities of management Management tasks	By the end of the lesson, learners should be able to: - Examine the responsibilities of management in a small business enterprise - Outline the tasks of management in a small business enterprise	“	“	NCDC. 2002. Entrepreneurship Education Skills for Secondary Schools. Book 3.

MGVSS Entrepreneurship (Teachers)

Tuesday, June 30, 2015

Managing a Small Business