Every creation has a purpose or the reason for being. Similarly, a business organization's reason for being, or raison d'être, justifies its existence. A business is created for a purpose. It is there for a reason.
What is the raison d'être of business organizations? Despite its varied nature, the answer to this question is quite simple. Their basic purpose is to produce goods and services that fulfill the needs and wants of people with the aim of making profits. This is simple enough to understand but it ought to be remembered that to achieve this end is not that easy. There are many operational stages that businesses have to go through before their goods and services can be ready for consumption.
Goods and services go through a very complex transformation process from its raw form (known as resources) to the good or the service in a more useful form that is demanded by consumers. For example, people want a complete wooden dining table and not in its original form of a tree. So here is where businesses play the role of fulfilling that want. They transform the available resources into the dining table. It must be remembered that to produce a wooden dining table requires more than just a tree. It is a combination of other required resources too such as technology, time, effort, information, and so on. The right combination of these resources will produce the wooden table as demanded by consumers and the wrong combination will not.
The right combination of resources to produce specific goods or services requires answering questions such as, what resources are needed. Where to get the resources? How much or how many are needed? When are the resources needed? Who will be using these resources? Answering these questions (and many more) requires decisions to be made. The decisions must be the right ones because wrong decisions will have dire consequences.
Who makes these decisions? The owner of businesses does. In a small business (like a small family restaurant), the owner (usually the father) makes all the decisions. But in large business organizations (especially business corporations that have a very complex ownership structure like General Motors, Nestle, and Apple) decision-making is delegated to a group of professionals. This group of professionals acts on behalf of the owners. They are called managers. These managers make the required decisions and are always guided by the goals of the business set by the real owners.
Making decisions on the available resources when producing the good and services of the business is an important role of managers. Their decisions will transform resources into usable and demandable goods and services and these decisions are based on what they want to achieve (known as goals, objectives, targets, ends). Decisions made that will help achieve goals are the right decisions, whereas any decision that has nothing to do with the achievement of these goals is a wrong one. Managers who consistently achieve predetermined goals are said to be effective managers.
But being an effective manager is not enough. Achieving goals is one thing, but how the goals are achieved is equally important. Since the aim of businesses is to make profits, managers must produce with minimum or no wastage so once again right decisions have to be made. For example, they must decide on the exact amount of resource to use, the best person to use, it and the most economical process to follow. Making decisions to ensure minimum or no wastage will make the manager efficient. So efficiency is another important dimension of managerial decision making.
From the discussion so far it can be concluded that the main responsibility of a manager is to make the right decisions on the resources of the business. Their decisions must be based on effectiveness (achieve goals) and efficiency (minimum or no wastage). A successful manager is one who is both effective and efficient.
Making decision is not the only role of a manager. Other than making the right decisions on the best way to achieve the goals of the business, the manager must also make sure that the effort (or work) to transform resources into usable goods and services is also carried out. This effort is carried out mainly by workers and it is the role of the manager to make them do the required work and this requires positive interactions with them. As such Interpersonal role is another important role of the manager. It is most important that the managers get the workers to do the required work or else objectives can never be achieved.
To carry out their duties, managers must use and manage information well. Information is also needed and used by their workers. Only when information is correct, complete, and timely would it be useful. Information Management is therefore another important role of the manager.