What is a Management Business Model?

A management business model outlines the strategy or concepts a company desires its management staff to follow. Like all business models, several steps are necessary to complete this value-adding process. Common steps in a management business model include identifying growth opportunities, creating value within a department or business activity, developing a competitive strategy, and generating revenue. A company will create this business model to provide its managers with a standard process for completing their tasks and activities successfully.

Many companies find it impractical to completely micromanage the way their individual managers handle activities. Using a management business model allows the company to dictate the expectations of each manager and what the end result should be for various situations. Companies will often need to train managers on how to follow this type of business model to ensure a uniform completion of tasks and activities. Management training schedules allow for initial training and a continual process for re-educating managers on following the business model.

A management business model helps a company increase or add value to current business operations. Firms with specific business operations — such as fast food, production, or retail — will often use the management business model to define its competitive advantage. This allows the company to grow through its standard operations and ensure all products meet predetermined quality controls, all customer problems receive the same service level, and problem resolution is quick and thorough when correcting issues in the company.

When a company creates a business model for use by employees, it allows the owners or board of directors to impose their management beliefs or systems upon other individuals. This is not necessarily a bad thing in business, as in many cases, the model will often bring like-minded individuals to the company. The company can extend the business model as a reason for individuals to come and work for the firm. For example, a firm that has a management business model focusing on a structured, tall organizational system will likely attract individuals who prefer this system.

A downside to using models in a business environment is the opportunity to pigeonhole operations. A company may believe that managers can only accomplish tasks and activities according to the model. This results in an inflexible environment where managers cannot make changes to operations if the decisions fail to meet the business model guidelines. Firms may also experience negative growth opportunities as the company may not allow for decisions that increase the responsibility of managers without approval of owners or directors.