Fundamentals of Business Management: Explore 6 Functional Areas
To successfully lead a team or become a well-rounded entrepreneur, you need strong business management skills and have a good grasp of the core business functions.
Read on to learn more about the six fundamentals of management and how to incorporate them into your business or job role.
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1. People Management
Applying the standard human resources management processes is not enough to build a high-performing business environment. Data from Gartner found that successful managers who display high levels of empathy affect their employee’s performance three times more than those who display lower levels of empathy.
"At the end of the day, how well you manage yourself determines how effective a manager you are."
“At the end of the day, how well you manage yourself determines how effective a manager you are,” said Vasanthis Srinvasan, professor and instructor of IIMBX’s people management course.
As more organizations shift to hybrid work and implement more technology to monitor employees, motivating and driving performance from their team members will become even more critical for success.
Operations management oversees the entire production process of a good or service. Managing a supply chain and making sure production meets demand under tight deadlines can be incredibly complex and is critical to business success.
Folks in operations management spend much of their time problem-solving and thinking about how to improve the production processes. This requires an understanding of a range of concepts such as capacity planning, productivity analysis, quality assurance, and lean management.
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Proper management of finances is important to make critical business decisions. Knowing basic business accounting will enable you to answer questions such as how much you can spend on marketing, or whether you have the ability to secure a loan from a bank. By understanding profit margins, cash flow, and managing debts and expenses, you are equipping yourself with the knowledge to ensure that your business stays profitable.
The ability to take a high-level, strategic view of a business is a must to meet business goals. A good business strategy should give you a clear vision of your target audience, your business’s unique value proposition, available resources you can utilize, and how to stay competitive.
But the strategic management of a business requires higher levels of critical thinking.
"While I believe that having a good strategy is very important, I strongly believe that the process of thinking more deeply about your strategy is even more important."
“While I believe that having a good strategy is very important, I strongly believe that the process of thinking more deeply about your strategy is even more important,” said Nicolaj Siggelkow, instructor for Business Strategy from Wharton: Competitive Advantage. “It’s through this process that you can gain much clarity about where to focus your energy and resources, which ultimately will lead to a higher performance of your organization.”
5. Data Analytics
Today’s businesses have more data than ever before. Implementing insights from large amounts of data into your business model can be invaluable to optimize performance, decision making, and increasing your business’s ROI.
According to Sisense’s State of BI & Analytics Report, 49% of companies rely more on data analytics since the COVID-19 pandemic.
“Being able to extract information from data is actually a very powerful position to be in with data being collected in all aspects of society, ranging from marketing to health and even to sports and entertainment," said Philippe Rigollet, associate professor in the MIT mathematics department and Statistics and Data Science Center.
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Learn the Fundamentals of Business on edX
Whether you’re a small business owner or want to bolster your entrepreneurship and leadership skills, knowing the six fundamental areas of business management can help you. Explore business management courses on edX today.
Last updated: March 2016