Business Management

Lessons

Senior 4 · Entrepreneurship

Business Management

5 lessons

Lesson 1 of 5

Business management and its importance

25 min

Case: the best carpenter in Huye

Kagabo started a carpentry workshop in Huye with two apprentices. Five years later he has fourteen workers, two showrooms and a reputation for strong, well-finished desks. Then a secondary school orders 80 desks for the new term. The order arrives late: two workers spent a morning cutting the same boards, nobody checked the sanding until the bursar complained, and a fifth of the timber ended up as offcuts. Kagabo worked harder than anyone, from six in the morning, at the bench. (Kagabo and his workshop are illustrative.)

Think about it: Kagabo is still the best carpenter in his workshop. Why was that not enough to deliver 80 desks on time? What should the owner of a fourteen-person business spend his day doing?

What management is

In 1916 the French mining engineer Henri Fayol, who had run a large coal and iron company, wrote that "to manage is to forecast and plan, to organise, to command, to co-ordinate and to control". The American writer Mary Parker Follett put it more briefly: management is "the art of getting things done through people". Both definitions point to the same shift that Kagabo has to make: from doing the work himself to arranging the work so that other people do it well.

Definition

Business management: the process of planning, organising, directing (leading) and controlling an organisation's people and other resources so that it reaches its goals efficiently and effectively.

Example: deciding how many desks to make each day, who cuts and who sands, and checking each batch before delivery.

Definition

Manager: a person responsible for the work of others and for the resources used to do it, who makes decisions and is accountable for results. In a small firm the owner is usually the manager (an owner-manager).

Definition

Efficiency: getting the most output from the inputs used; doing things right. It is measured by ratios such as productivity:

\text{Labour productivity} = \frac{\text{Output}}{\text{Labour hours used}}

Effectiveness: reaching the goal that was set; doing the right things. Peter Drucker summed up the difference as doing things right (efficiency) versus doing the right things (effectiveness).

Example: a workshop that wastes no timber but makes chairs nobody ordered is efficient but not effective.

Levels of management and the skills they need

Level	Who (examples)	Main decisions	Time horizon
Top (strategic)	Managing director, board of directors, owner of a small firm	Goals, new products, new branches, big investments	Years
Middle (tactical)	Production manager, sales manager, branch manager	Turning goals into departmental plans and budgets	Months
First-line (operational)	Supervisor, foreman, team leader	Daily tasks, shifts, quality checks on the floor	Days and weeks

In 1955 Robert Katz argued in the Harvard Business Review that managers need three kinds of skill: technical (knowing how the work is done), human (working with and through people) and conceptual (seeing the business as a whole and how its parts and its environment fit together). The mix changes with level:

In 1973 Henry Mintzberg published The Nature of Managerial Work, based on watching what managers actually did all day. He grouped what they do into ten roles:

Group	Roles	In Kagabo's workshop
Interpersonal	Figurehead, leader, liaison	Opening a showroom; motivating workers; keeping contact with timber suppliers
Informational	Monitor, disseminator, spokesperson	Following timber prices; passing a new safety rule to staff; speaking for the firm at a trade fair
Decisional	Entrepreneur, disturbance handler, resource allocator, negotiator	Starting a new product line; settling a quarrel; deciding how to spend the budget; agreeing a price with the school

Tip

Remember Mintzberg's three groups as "people, information, decisions". In an exam, name the role and the group, then link it to the case: "Settling the quarrel is the disturbance-handler role, one of the decisional roles."

Why management matters

It turns goals into results. Without plans and checks, effort is wasted, as in Kagabo's late order.
It uses scarce resources efficiently: money, timber, machines and people's time cost less when work is organised.
It coordinates the work of different people so that their efforts add up instead of clashing.
It motivates and develops staff, which raises output and keeps good workers.
It helps the firm adapt to change: new competitors, new prices, new technology.
It makes growth possible. An owner who does every job himself sets the limit of his business at his own working hours.
It meets obligations to customers, workers, lenders, tax authorities and the community.

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Worked example 1: efficient, effective, or both?

Kagabo's 14 workers each work 45 hours a week. Before he reorganised the workshop they made 70 desks a week using 14 m³ of timber. After he wrote a cutting list, gave each worker one clear task and named a supervisor to check quality, they made 84 desks a week using 14.7 m³. The school's target is 80 desks a week. Timber costs Frw 250,000 per m³. (Illustrative figures.)

Labour hours: $14 \times 45 = 630$ hours a week.

Labour productivity:

\text{Before} = \frac{70}{630} \approx 0.111 \ \text{desks per hour}, \qquad \text{After} = \frac{84}{630} \approx 0.133 \ \text{desks per hour}

\text{Increase} = \frac{84 - 70}{70} \times 100\% = 20\%

Timber per desk:

\text{Before} = \frac{14}{70} = 0.2\ \text{m}^3, \qquad \text{After} = \frac{14.7}{84} = 0.175\ \text{m}^3

\text{Saving per desk} = (0.2 - 0.175) \times 250\,000 = 6\,250\ \text{Frw}

Effectiveness: before, $70 < 80$ , so the target was missed; after, $84 \ge 80$ , so it is met.

Conclusion: with the same people and the same hours, better management made the workshop both more efficient (20% more output per hour, Frw 6,250 less timber per desk, Frw 525,000 a week on 84 desks) and effective.

Worked example 2: naming the roles

Classify each of Kagabo's activities by Mintzberg's role and group.

He cuts the ribbon at the new showroom in Huye town. Figurehead (interpersonal): a ceremonial duty as head of the firm.
He reads the news on timber prices and asks two suppliers about next month's stock. Monitor (informational): gathering information.
He calms a quarrel between two workers over who broke a saw. Disturbance handler (decisional): dealing with an unexpected problem.
He agrees a price of Frw 45,000 per desk with the school bursar. Negotiator (decisional).
He decides to spend this year's surplus on a planing machine rather than two more workers. Resource allocator (decisional).
He starts selling flat-pack shelves through a mobile app. Entrepreneur (decisional): starting change.

Warning

Common mistakes. Management is not the same as ownership: a hired manager can run a firm she does not own. It is not shouting orders either: Mintzberg showed that most of a manager's day is spent talking, listening and deciding. And do not mix up the two E's: efficient compares outputs with inputs; effective compares results with goals.

Expert Program Management, "Mintzberg's Managerial Roles Explained" (about 9 minutes). As you watch, write each of the ten roles under its group (interpersonal, informational, decisional), and give one example of each from a business you know.

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Practice

Define business management, efficiency and effectiveness. Give an example of a business that is efficient but not effective.
Name the three levels of management and give one job title and one typical decision for each, in a hotel.
A tailoring workshop has 6 tailors working 40 hours a week. Last month they made 120 shirts a week using 1.6 m of cloth per shirt; this month 150 shirts a week using 1.5 m per shirt. The target is 140 shirts a week. Calculate labour productivity before and after, the percentage change in productivity and in cloth per shirt, and say whether the workshop is now effective.
Using Katz's skills, explain which skill matters most for (a) a first-line supervisor in a tea factory; (b) the managing director of the same company. Why does human skill matter to both?
Classify each activity by Mintzberg's role: (a) a bank manager explains the bank's new loan product on Radio Rwanda; (b) a hotel manager sends staff the new shift rota; (c) a cooperative chairperson meets the district to agree on land for a warehouse.
Explain four reasons why good management is important to a small business in Rwanda.
"A good carpenter will automatically make a good manager of a carpentry business." Evaluate this statement.

Show answersHide answers

Management: planning, organising, directing and controlling people and resources to reach goals efficiently and effectively. Efficiency: most output for the inputs used (doing things right). Effectiveness: reaching the goal set (doing the right things). Example: a bakery that bakes cheaply with no waste but makes bread flavours that customers do not buy.
Top: general manager (decides to open a second hotel). Middle: food and beverage manager (plans the restaurant's monthly budget and menus). First-line: head of housekeeping on a shift (assigns rooms to cleaners today). Other answers are possible.
Hours $= 6 \times 40 = 240$ . Before: $\frac{120}{240} = 0.5$ shirts per hour; after: $\frac{150}{240} = 0.625$ shirts per hour; change $= \frac{150 - 120}{120} \times 100\% = 25\%$ increase. Cloth: $\frac{1.5 - 1.6}{1.6} \times 100\% = -6.25\%$ , a 6.25% saving per shirt. Effective: yes, $150 \ge 140$ .
(a) Technical skill: the supervisor must know how withering, rolling and drying are done to guide workers and spot faults. (b) Conceptual skill: the director must see the whole firm, its markets and competitors, to set strategy. Both depend on people (the supervisor on the workers, the director on the managers), so human skill matters at every level.
(a) Spokesperson (informational). (b) Disseminator (informational). (c) Negotiator (decisional); keeping links with the district is also the liaison role (interpersonal).
Any four, with a reason: it turns goals into results; it uses scarce money and materials efficiently; it coordinates people's work; it motivates and develops staff; it helps the firm adapt to change; it makes growth possible beyond the owner's own hours; it meets obligations to customers, lenders and the tax authority.
For: technical skill earns customers' trust and helps the owner train and check workers. Against: as the business grows, conceptual and human skills (planning, delegating, motivating, controlling) matter more, as Kagabo's late order shows; a craftsman who will not delegate becomes the bottleneck. Conclusion: technical skill is necessary at the start but not sufficient; the owner must learn management skills or hire a manager.

Quick check

A workshop meets its order of 80 desks on time, but wastes a quarter of its timber. How is it best described?

Key points

Business management is planning, organising, directing and controlling people and resources to reach goals efficiently and effectively.
Efficiency is output per unit of input (doing things right); effectiveness is reaching the goal (doing the right things).
Top, middle and first-line managers make decisions over years, months and days; Katz's conceptual, human and technical skills are mixed differently at each level.
Mintzberg's ten managerial roles fall into interpersonal, informational and decisional groups.
Good management turns effort into results, saves resources, coordinates people, helps a firm adapt and makes growth possible.

Sources and credits

Image: Ububaji, Camilopiz, 2023, via Wikimedia Commons, CC BY-SA 4.0.
Video: Mintzberg's Managerial Roles Explained, Expert Program Management (EPM), embedded from YouTube.
Background: Henri Fayol and Henry Mintzberg, Wikipedia. The ideas of Fayol (1916), Follett, Katz (1955), Mintzberg (1973) and Drucker are summarised in Ganzaa's own words.

Written by Ganzaa: the Huye case, the skills chart (shares illustrative), the tables, the worked examples and the practice items. People, businesses and figures are illustrative (2026). This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.

1Case: the best carpenter in Huye

2What management is

3Levels of management and the skills they need

4Why management matters

Case: the best carpenter in Huye

What management is

Levels of management and the skills they need

Why management matters