Directing the Efforts of Others

Our definition of management assumes that there is an organization - any group of people who are seeking an objective. To achieve the organization's goal, management directs the efforts of others involved.         
          In large firms, the managers do not produce raw materials; they do not operate factory equipment or transportation vehicles; they do not produce finished products. Their job is to direct the activities of others in the organization (staff members and hourly employees) in such a manner that the company's objectives are reached.

The 5 M's of Management

          In reading business literature, you may find that the four factors of production are often called the 5 M's management: management, manpower, materials, money, and machinery. This is because one factor -capital- is divided into its two forms, money and machinery.
          Now let's see what management does in coordinating the other factors of production.

The Factors of Production

          Four resources, or factors of production, must be coordinated in any nation or economic system in order to produce goods and services. They are land, labor, capital, and management.

LAND

You learned in the raw materials needed to manufacture products come from the land - from farms and ranches, forests, mines, and waters. There are our natural resources.

LABOR

To convert raw materials into products, we need labor, the skilled and unskilled workers who operate our farms, mines, factories, distribution systems, and retailing activities. Labor is a human resource.

CAPITAL

To produce goods and services, we need capital, which may take the form of money or assets such as machinery, factories, transportation system, and buildings. Such things are our capital resources.

MANAGEMENT

Management, or entrepreneurship, is the factor of production that brings the other three together to produce the goods and services we need and desire. Like labor, management is a human resource

A definition of Management

Defining management is not easy as defining an object like a pencil, a chair, or a wheelbarrow. That's because management is not an object but a process that involves different types of activities in the operation of an organization. There is no exact definition for management, and yet its importance for every business or government organization is recognized by all. Management is the coordination of the factors of production to meet the objectives of the organization.

Summary of Management and Organization of the Business Firms

In seeking an overview of our total business world, we have identified its basic functions as (1) acquiring raw materials, (2) manufacturing these into products, and (3) distributing products to consumers. These are the basic activities involved in providing goods and services needed or desired by people - the basic activities of business.
          We also have seen that many industries, institutions, and professions are needed to perform these basic functions in a way that can support a population of more than 225 million people. We identified and briefly described ten key segments of the business world and showed that they are interdependent. They are all working for the same objective: to provide people with goods and services of all types. With this purpose in mind, employees of the ten key segments of business perform their three basic functions, serving you and all members of society.