当代商学概论 Fundamentals of Business Lecture 6: Management: An Overview

What to cover today ： 1.Management functions 2.Management levels and skills 3.Organizational structure 4.Organizational decision-making 5.Strategic planning and SWOT analysis 6.Organizational culture Exercises

1. Management functions Planning: setting goals (i.e. ends) and fixing strategies (i.e. means) Planning: setting goals (i.e. ends) and fixing strategies (i.e. means) Organizing: defining and group tasking, allocating staff and resources, and structuring chain of command 指令链 Organizing: defining and group tasking, allocating staff and resources, and structuring chain of command 指令链 Leading: guiding and motivating; proper leadership style Leading: guiding and motivating; proper leadership style Controlling: info-gathering, performance assessing, and deviation correcting Controlling: info-gathering, performance assessing, and deviation correcting

2. Management levels and skills Top managers: board of directors: executives from inside (also managers) and outside (not managers) of a company, elected by shareholders to act as their representatives, oversee the company ’ s overall business dealings, can appoint, oversee, reward and fire the CEO board of directors: executives from inside (also managers) and outside (not managers) of a company, elected by shareholders to act as their representatives, oversee the company ’ s overall business dealings, can appoint, oversee, reward and fire the CEO president/CEO/GM: ultimately responsible for the company ’ s success or failure, oversees the operations of the company, ensures its capital is used to create the most profit, creates a hierarchy of managers president/CEO/GM: ultimately responsible for the company ’ s success or failure, oversees the operations of the company, ensures its capital is used to create the most profit, creates a hierarchy of managers vice presidents/senior managers: report to the president/CEO/GM, head up the company ’ s major functions, establish business goals and decide the models to achieve those goals, monitor the actions of middle managers vice presidents/senior managers: report to the president/CEO/GM, head up the company ’ s major functions, establish business goals and decide the models to achieve those goals, monitor the actions of middle managers

Sources of outside board members

Middle managers: function or division managers: e.g. plant manager, sales manager, accounting manager; in charge of the company ’ s various functions or divisions, responsible for implementation of goals and policies, make daily decisions, monitor bottom managers function or division managers: e.g. plant manager, sales manager, accounting manager; in charge of the company ’ s various functions or divisions, responsible for implementation of goals and policies, make daily decisions, monitor bottom managers Bottom-line/first-line managers: supervisors: e.g. head nurse in the emergency room of a hospital, chief mechanic in the service department of a car dealership; responsible for the daily supervision of nonmanagerial employees, fulfill operational and supervisory duties supervisors: e.g. head nurse in the emergency room of a hospital, chief mechanic in the service department of a car dealership; responsible for the daily supervision of nonmanagerial employees, fulfill operational and supervisory duties

Sources of managers from within the company: promotion from within the company: promotion from educational institutions: through job fairs or campus recruitment; manager/management trainee (MT) 管理培训生 from educational institutions: through job fairs or campus recruitment; manager/management trainee (MT) 管理培训生 from other organizations: directly or through headhunters from other organizations: directly or through headhunters

Three types of managerial skills: Conceptual/analytical skills 概括技能 Conceptual/analytical skills 概括技能 Human/interpersonal skills 人际技能 : the most important Human/interpersonal skills 人际技能 : the most important Technical skills 操作技能 Technical skills 操作技能

3. Organizational structure Organizational structure 组织结构 identifies responsibilities for each job position and the relationships among these positions. 3.1 Factors affecting the choice of organizational structures The specific organizational structure used by a firm may depend on: span of control span of control organizational height organizational height use of line vs. staff positions use of line vs. staff positions

Span of control 控制跨度 : the number of employees managed by each manager, ideally five Narrow span of control: an organizational structure is designed so that each manager supervises just a few employees -- suitable for firms that have highly diverse tasks (Can you think of any examples?) Narrow span of control: an organizational structure is designed so that each manager supervises just a few employees -- suitable for firms that have highly diverse tasks (Can you think of any examples?) Wide span of control: each manager supervises numerous employees -- suitable for firms that numerous employees perform similar tasks (Can you think of any examples?) Wide span of control: each manager supervises numerous employees -- suitable for firms that numerous employees perform similar tasks (Can you think of any examples?)

Examples of narrow and wide span of control President Sales- person 1 Sales- person 2 Sales- person 3 Sales- Person 4 Sales- Person 5 President Vice-President of Operations Sales Manager Sales-person

Organizational height 组织结构高度 : the number of layers from the bottom of the structure to the top Tall organizational structure: much distance between the bottom and the top, e.g. GM ’ s 10 levels – narrower span of control Tall organizational structure: much distance between the bottom and the top, e.g. GM ’ s 10 levels – narrower span of control Short/flat organizational structure: not much distance from the bottom to the top, e.g. Toyota ’ s 5 levels – wider span of control Short/flat organizational structure: not much distance from the bottom to the top, e.g. Toyota ’ s 5 levels – wider span of control In the 1990s and early 2000s, many firms, e.g. Continental Airlines, IBM, GM, Sears, have attempted to cut expenses by eliminating job positions. This so-called downsizing 裁员 has resulted in flatter organizational structure with fewer layers of management. In the 1990s and early 2000s, many firms, e.g. Continental Airlines, IBM, GM, Sears, have attempted to cut expenses by eliminating job positions. This so-called downsizing 裁员 has resulted in flatter organizational structure with fewer layers of management.

Effect of downsizing on span of control

Line vs. staff positions 直线 vs. 参谋职位 : two types of job positions Line positions: job positions established to make decisions that achieve specific business goals; an organizational structure that contains only line positions and no staff positions is referred to as a line organization 直线组织 Line positions: job positions established to make decisions that achieve specific business goals; an organizational structure that contains only line positions and no staff positions is referred to as a line organization 直线组织 Staff positions: job positions established to support the efforts of line positions; can be outsourced; an organizational structure that contains both line and staff positions is referred to as a line-and-staff organization 直线和职 能混合组织 Staff positions: job positions established to support the efforts of line positions; can be outsourced; an organizational structure that contains both line and staff positions is referred to as a line-and-staff organization 直线和职 能混合组织

3.2 Job specialization and departmentalization Job specialization 工作专业化 -- breaking down a firm ’ s overall tasks, responsibilities and resources into small and specific parts or positions Departmentalization 部门化 -- grouping (mainly line) job positions into various departments in a logical way by function by function by product by product by location by location by customer by customer by manufacturing process by manufacturing process All these line departments can work together with staff departments to form line-and-staff organizations. Functional organization Divisional organization Functional organization Divisional organization

3.3 Matrix organization -- an organizational structure that enables various parts of the firm to interact to focus on specific projects, an example of cross-functional teams 跨功能团队 Members of a project team may continue to perform their normal tasks, and still report to the same boss for those tasks, leading to the generation of “ two-boss employees ”. Members of a project team may continue to perform their normal tasks, and still report to the same boss for those tasks, leading to the generation of “ two-boss employees ”. 3.4 Committee organization -- an organizational structure that uses groups of people from different functions or divisions to make decisions together 3.5 Informal organizational structure -- an informal communication network among a firm ’ s employees, also called grapevine 小道消息

Case study: Sony’ New “Networked” Organization Questions: 1. What was the method used by Sony before 2001 to departmentalize the firm? 2. What were the pros and cons of such a method?

4. Organizational decision-making Given the complex patterns of organizational structure, firms should work out effective ways to allocate authority (i.e. the right to make decisions) in the organization and coordinate their various functions and divisions. Given the complex patterns of organizational structure, firms should work out effective ways to allocate authority (i.e. the right to make decisions) in the organization and coordinate their various functions and divisions.

4.1 Chain of command The hierarchy of authority is a company ’ s chain of command 指令链 – the relative authority that each manager has – from the CEO down through the middle managers and first-line managers. The hierarchy of authority is a company ’ s chain of command 指令链 – the relative authority that each manager has – from the CEO down through the middle managers and first-line managers. The flatter the structure, the faster to make decisions and the easier to coordinate departments. The flatter the structure, the faster to make decisions and the easier to coordinate departments. The unity of command principle: the principle that a subordinate should have one and only superior to avoid conflicting commands The unity of command principle: the principle that a subordinate should have one and only superior to avoid conflicting commands The minimum chain-of-command principle: the principle that a company ’ s structure should be designed with as few managerial levels as possible The minimum chain-of-command principle: the principle that a company ’ s structure should be designed with as few managerial levels as possible

4.2 Centralization vs. decentralization Centralization 权力集中 : the way of distributing authority that most authority is held by the high-level managers; middle and first-line managers are responsible for day-to- day tasks and for reporting to the top managers without making many decisions; most common in small and owner- operated businesses Centralization 权力集中 : the way of distributing authority that most authority is held by the high-level managers; middle and first-line managers are responsible for day-to- day tasks and for reporting to the top managers without making many decisions; most common in small and owner- operated businesses Decentralization 权力下放 : the way of distributing authority that authority is spread among various levels of management; autonomy 自主权 : an extreme form of decentralization, divisions are permitted to make their own decisions and act independently Decentralization 权力下放 : the way of distributing authority that authority is spread among various levels of management; autonomy 自主权 : an extreme form of decentralization, divisions are permitted to make their own decisions and act independentlyAdvantages: Shorten the decision-making process Shorten the decision-making process Improve the morale of employees Improve the morale of employees Train employees for future high-level management positions Train employees for future high-level management positionsDisadvantages: For employees to make major decisions while inexperienced For employees to make major decisions while inexperienced Excessive workload Excessive workload

4.3 Integrating mechanisms -- organizing tools that managers use to increase communication and coordination among a company ’ s functions and divisions The greater the need for coordination, the more complex the integrating mechanisms tend to be. The greater the need for coordination, the more complex the integrating mechanisms tend to be. Examples of cross-functional teams: matrix organization, project teams, committees Examples of cross-functional teams: matrix organization, project teams, committees

Four kinds of integrating mechanisms Direct contact e.g. marketing manager and R&D manager meet to brain- storm new product ideas Liaison roles e.g. assistant manager and project team leader identify best product suggestions to put into development Task forces e.g. representatives from marketing, R&D and manufactu- ring meet to discuss launch of a new product Cross-functional team e.g. a cross-functional team composed of all functions is formed to manage product to its launch in the market simple complex

5. Strategic planning and SWOT analysis Strategic management process: mission and strategic goals – SWOT analysis – developing, implementing and evaluating new strategies Strategic management process: mission and strategic goals – SWOT analysis – developing, implementing and evaluating new strategies SWOT analysis: a strategic planning technique that matches the environment (external opportunities and threats) and the firm ’ s status quo (internal strengths and weaknesses); applicable to both new and existing ventures; helps direct a firm ’ s future business strategies SWOT analysis: a strategic planning technique that matches the environment (external opportunities and threats) and the firm ’ s status quo (internal strengths and weaknesses); applicable to both new and existing ventures; helps direct a firm ’ s future business strategies

Sample 1: 中国邮政快递业务

Sample 2: ASIL, Inc.

6. Organizational culture -- the set of shared company values and norms that shape the way employees and groups interact with one another, also called corporate culture 企业文化 e.g. working hard, respecting traditions and authority, being courteous to others, being conservative, being cautious, being creative, courageous and taking risks, being honest, frugal and maintaining high personal standards, being a team player, keeping one ’ s desk tidy, cleaning up at the end of the day, taking one ’ s turn to bring doughnuts to the office, saying hi to everyone in the morning, wearing blue jeans and T-shirts on a Friday

Sources of a company ’ s culture: 1. Values of the founder: Founders tend to recruit mangers who share their values and who, in turn, recruit employees who share theirs, and gradually the founder ’ s values and norms permeate the entire firm. e.g. Bill Gates ’ informal mode of dress and “ think-outside-of-the- box ” approach 2. Organizational socialization: socialization programs to help new recruits “ learn the ropes ” 3. Ceremonies and rites: formal events that recognize employees or groups who have acted in ways that benefit the company, e.g. rite of passage (recruitment, retirement, resignation), of integration (office parties, company cookouts, announcement meetings), and of enhancement (promotions, awards dinners, press conference) 4. Stories and language: stories about heroic staff members, Wal-Mart ’ s classic story about its much-valued employee Sheila, who risked her own safety to jump in front of a car to prevent a customer from being struck

Exercises 1. Translation (1) 指令链 (2) 自主权 (3) 士气 (4) 裁员 (5) 直线组织 (6) 跨功能团队 (7) 一线经理 (8) 权力下放 (9) 小道消息 (10) 企业文化 2. Visit the website of a well-known company, and draw a chart of its organizational structure; if possible, explain the motives of adopting such a structure

3. Group project: conduct a SWOT analysis of the new business proposed in the marketing plan your group has just accomplished

4. Supplementary reading (1) Methods of Departmentalizing Tasks (2) Sony’ New “Networked” Organization (3) How Michael Dell Created a Frugal Company Culture?