FHF Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

part CHAPTER 8 Managing Service and Manufacturing Operations CHAPTER 7 Organization, Teamwork, and Communication 3 CHAPTER 6 The Nature of Management FHF 6-2

[] FHF Management Is A process designed to achieve an organization’s objectives by using its resources effectively & efficiently in a changing environment

FHF What Managers Do Make decisions (utilize resources) achieve objectives Planning Organizing Staffing Directing Controlling 6-4

FHF The Importance of Management Crucial for a successful business  CEO Gary Kelly has helped make Southwest Airlines the most profitable airline in the United States  His strong management skills have helped the company be a success  Philosophy: Treat employees and customers well Smart expansion Careful planning and strategizing 6-5

FHF The Importance of Management  Resource acquisition and coordination  Resources : People Raw materials Equipment Money Information 6-6

FHF Management Functions 6-7

FHF Management Functions Planning Process of determining the organization’s missions, goals, and objectives and deciding how to accomplish them.  Mission  Organization’s statement of purpose and basic philosophy  Goals  The results that a firm wishes to achieve– almost always have multiple goals  Objectives  Results desired by organization 6-8

FHF The Mission Statement What business are we in? 1. Who are we? 2. Who are our customers? 3. What is our operating philosophy? 4. What are our core competencies and competitive advantages? 5. What are our responsibilities with respect to being good stewards of environmental, financial and human resources? 6-9

FHF GoalsGoals  A firm almost always has multiple goals  Should be specific  Components of a goal: An attribute sought A target to be achieved A time frame 6-10

FHF Common Organizational Objectives The desired end results Profit Competitive advantage Efficiency Growth Service Ethics Community responsibility 6-11

FHF Planning as a Function of Management  Strategic  Tactical  Operational 6-12

FHF Strategic Plans Duty of executive-level managers Establish the long-range objectives & overall strategy to fulfill firm’s mission  2-10 years forward-looking  Diversification, issuing stock, mergers & acquisitions, going international  Must account for organization’s capabilities and resources, business environment and objectives 6-13

FHF Short-range  Strategy implementation Time frame of 1 year or less Environmental changes Periodically reviewed & updated Tactical Plans 6-14

FHF Operational Plans Very short-term  Actionable, specific Individuals, work groups, departments 1 month, 1 week, 1 day Help to achieve tactical plans 6-15

FHF Crisis Management Contingency Planning Focus on potential disasters  Product tampering  Oil spills  Fire, earthquake, terrorist attack  Unethical/illegal employee activity  Communication is very important during a crisis 6-16

FHF Adapting to a New Business Environment Environmental uncertainties have changed how companies plan for and manage crises  General Electric General Electric  Struggled during the downturn; lost AAA credit rating  Changed its focus to clean energy, new healthcare tech Capture government stimulus funding Focus on socially responsible industries 6-17

FHF Management Functions Organizing Structuring of resources & activities to accomplish objectives efficiently & effectively  Importance: Creates synergy Establishes lines of authority Improves communication Improves competitiveness 6-18 …continued on next page

FHF Management Functions Staffing Hiring people to carry out the work of the organization  Importance: Recruiting Determine skills Motivate & train Compensation levels 6-19 …continued on next page

FHF Management Functions Downsizing The elimination of significant numbers of employees  Rightsizing  Trimming the fat 6-20 …continued on next page

FHF Management Functions Directing Motivating and leading employees to achieve organizational objectives  Motivation Incentives (raise, promotion) Employee involvement (cost reduction, customer service, new products) Recognition and appreciation 6-21 …continued on next page

FHF Management Functions Controlling Process of evaluating and correcting activities to keep organization on course  Five activities of controlling: 1. Measuring performance 2. Comparing performance against standards 3. Identifying deviations from standards 4. Investigating causes of deviations 5. Taking corrective action 6-22

FHF Levels of Management  Top management  Middle management  First-line/supervisory management 6-23

FHF Top Managers  President  Chief Executive Officer (CEO)  Chief Financial Officer (CFO)  Chief Operations Officer (COO) 6-24

FHF Middle Management  Responsible for tactical planning  Implement general guidelines established by top management  Responsibility is more narrowly focused than top managers 6-25

FHF First Line Management  Supervise workers  Oversee daily operations  Directing and controlling are primary functions 6-26

FHF Areas of Management  Finance  Production  Operations  Human Resources  Marketing  Administration 6-27

[] FHF Financial Management 6-28 Focus on obtaining money necessary for the successful operations and using these funds to further organizational goals

[] FHF Production & Operations Management 6-29 Develop & administer activities to transform resources into goods, services and ideas for the marketplace.

[] FHF Human Resources Management 6-30 Handle staffing function and deal with employees in a formalized manner

FHF Managing Talent Responses of managers when asked if they are worried about their high-potential talent being recruited by competitors 6-31 Source: “USA Today Snapshot,” USA Today, April 14, 2009, A1

[] FHF Marketing Management Responsible for planning, pricing and promoting products and making them available to customers 6-32

[] FHF Information Technology (IT) Management Responsible for implementing, maintaining and controlling technology applications in business (such as computer networks) 6-33

FHF Administrative Managers  Manage an entire business or major segment of the business  Coordinate activities of specialized managers 6-34

FHF Skills Needed by Managers  Leadership  Technical expertise  Conceptual skills  Analytical skills  Human relations skills 6-35

FHF 7 Tips for Successful Leadership 6-36

FHF Types of Leaders Autocratic Leaders  Decision makers, “tell” employees what to do Democratic Leaders  Involve employees in decisions Free-Rein leaders  Employees work with minimal interference 6-37

FHF Technical Expertise  The specialized knowledge and training required to perform jobs related to a manager’s area.  Computer expertise is a skill for nearly all managers 6-38

FHF Conceptual Skills  Are the ability to think in abstract terms and to see how parts come together to form the whole.  The ability to think creatively Needed by all managers Especially important for top managers 6-39

FHF Analytical Skills  The ability to identify relevant issues and recognize their importance, understand the relationships between them and perceive the underlying causes of a situation  Most important to top-level managers  Required in complex situations where the solution is unclear 6-40

FHF Human Relations Skills  The ability to deal with people inside and outside the organization  Managers with good HR skills are generally more successful 6-41

FHF Where Do Managers Come From? Good managers are not born; they are made  Internal promotion  Know the company  But may limit innovation  Hiring from other organizations  Better for innovation  Do not know the company as well  Hiring straight from colleges Lack of experience 6-42

FHF Decision Making 6-43

FHF The Reality of Management Not a cut-and-dried process  Managers spend a lot of time: Establishing and updating an agenda A calendar that covers short-term goals and long-term objectives Networking Building relationships and sharing information with colleagues who can help managers achieve the items on their agendas Confronting the complex challenges of today’s business world 6-44