It is important for management to have a clear picture of where they are going and how they will get there.
Perfect competition means:
- There are many small companies relative to the size of the industry (no monopolies or companies big enough to control prices)
- Products produced by the different companies are identical. There are perfect substitutes and demand for the products are perfectly elastic.
- Entry and exit barriers are low. Competitors can freely enter and exit the market.
During the planning process, there are two types of external inputs that need to be considered, namely opportunities/threats and strategic plans.
There are nine distinct steps in the planning process. Each of these steps have activities associated with it. The activities are intertwined during the planning and management process.
Principles to keep in mind to plan more efficiently
- The principle of current choices
- The principle of planning stability
- The principle of resistance to change
- The principle of uniform planning outcomes
- The principle of commitment
- The principle of limiting factor
Managers need to proactively plan the future of their companies. They must identify threats and opportunities in advance and decide how to respond. Even better if a company can actively manipulate the future to the company’s advantage.
A company’s primary objective is to maximize profit. This post shows how economic profit is calculated and how it relates to the basic decisions companies make in a perfectly competitive market.
A manager does not operate in isolation. Everything happens in a certain context. The internal and external environments in which the manager operate can be quite complex and need to be monitored.
We all have different roles to play. Sometimes these roles can be conflicting. For example, we may need to spend a lot of time at work to provide financial stability to our household. But at the same time, we are expected to spend time with our families. We may also be expected to serve as a leaders and mentors in society and serve on committees. All these conflicting demands cause tension and may have a detrimental effect on ourselves.
Every manager do two types of work. The first is his managerial work, which consists of planning, organizing, directing and control. The second is operational or technical work which comes with his line of work.