Management Unit Decision Unit Planning Unit
Nature Maintain operational conditions. Decisions about the allocation of resources. Anticipate market changes and opportunities. Allocate its factors of production.
Scope Production, sales, marketing, payroll, distribution. Financial, labor, raw materials, research and development, etc. Economic, technological, social and political change.
Time frame Short term (production cycles). Short to long term (product cycles). Medium to long term (business cycles).
The Corporation as a Decision, Management and Planning Unit
A corporation is a separate legal entity, usually used to conduct business. They are the main agents generating trade and using the international transport system. Some corporations are generators of movements (producers), while others are attractors of movements (retailers) and, finally, some are involved in transportation and distribution. The great majority of corporations combine some of the previous elements. The territory over which a corporation exercises its influence took a new dimension facing globalization. Still, all corporations act as management, decision and planning units:
  • Management unit. A corporation maintains its operational conditions, which involves activities such as production, sales, marketing, payroll and distribution. It must disburse wages to its labor force, pay its suppliers and collect from its customers as well as insuring that its customers receive the asked product in the right quantity and delivered at the right time. These tasks are mainly related to production cycles, that is insuring that all the tasks related to its output are efficiently performed and matching the fluctuations in the demand. For instance, it could involve all the tasks and information flows required to fill an order. For freight distribution, management issues would relate to the operations of the supply chain in terms of routing and scheduling.
  • Decision unit. A corporation also makes decisions about how its resources, such as capital (finance), labor and raw materials, be allocated in light of its expected output. This is linked with product (life) cycles, ranging from the introduction, maturity and obsolescence of a good.
  • Planning unit. A corporation is subject to constant changes and must thus consider what are growth opportunities and how its factors of production to be allocated. It can consider a set of expansion strategies such as vertical or horizontal integration. This mainly falls within business cycles with periods of growth and contraction.