FHF Ferrell Hirt Ferrell M: Business 2 nd Edition

7 FHF The Nature of Management Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

FHF Planning, organizing, staffing, directing & controlling Achieving objectives requires skilled managment Management 7-3

] [ Management Is... A process designed to achieve an organization’s objectives by using its resources effectively & efficiently in a changing environment FHF 7-4

FHF Make decisions – utilization of resources – achieve objectives Planning Organizing Staffing Directing Controlling What Mangers Do 7-5

FHF Crucial when starting a successful business Confluence Energy Largest pellet plant w. of Mississippi Enough energy for 35,000 homes Manager and owner, Mathis, works with policymakers Improve access to land Improve environmental policy dealing with bark beetles Uses trees killed by pine beetles to make pellets for stoves Domestic, renewable energy source High efficiency The Importance of Management 7-6

FHF Resource acquisition and Coordination Resources: People Raw materials Equipment Money Information The Importance of Management 7-7

FHF Management Functions 7-8

Management Functions FHF Planning Process of determining the organization’s objectives and deciding how to accomplish them. Objectives Results desired by organization Mission Organization’s purpose and philosophy 7-9

FHF Profit Competitive advantage Efficiency Growth Service Ethics Community responsibility Common Organizational Objectives 7-10

FHF Strategic Tactical Operational Planning as a Function of Management 7-11

FHF Executive level managers Establish the long-range objectives & overall strategy to fulfill firm’s mission 2-10 years forward-looking Sustainability Diversification, divestiture, mergers & acquisitions Strategic Plans 7-12

FHF Short-range Strategy implementation 1 year or less Environmental change Periodically reviewed & updated Tactical Plans 7-13

FHF Very short-term Actionable, specific Individuals, work groups, departments 1 month, 1 week, 1 day Achieve tactical plans Operational Plans 7-14

FHF Focus on potential disasters Product tampering Oil spills Fire, earthquake, terrorist attack Unethical/illegal employee activity Crisis Management Contingency Planning 7-15

FHF Has reset how companies plan for and manage crises GE Struggled during the downturn; lost AAA credit rating New focus on products that capture government stimulus spending (clean energy, new healthcare tech) Global Financial Crisis 7-16

Management Functions FHF Organizing Structuring of resources & activities to accomplish objectives efficiently & effectively Importance: Creates synergy Establishes lines of authority Improves communication Improves competitiveness 7-17

FHF Staffing Hiring people to carry out the work of the organization Importance: Recruiting Determine skills Motivate & train Compensation levels Management Functions (continued) 7-18

FHF Elimination of significant numbers of employees rightsizing trimming the fat Downsizing 7-19

FHF Management Functions (continued) Directing Motivating and leading employees to achieve organizational objectives Motivation Incentives (raise, promotion) Employee involvement (cost reduction, customer service, new products) Recognition and appreciation 7-20

FHF 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 Controlling 7-21

FHF Top management Middle management First-line/supervisory management Levels of Management 7-22

FHF Top Managers President Chief Executive Officer (CEO) Chief financial Officer (CFO) Chief operations Officer (COO) Source: “CEO Compensation, 2009,” Forbes, April 22,

FHF Responsible for tactical planning Implement general guidelines established by top management Middle Management 7-24

FHF Supervise workers Oversee daily operations Directing and controlling primary functions First Line Management 7-25

FHF Finance Production Operations Human Resources Marketing Administration Areas of Management 7-26

[ ] FHF Financial Management Focus on obtaining money necessary for the successful operations and using funds to further organizational goals 7-27

[ ] FHF Develop & administer activities to transform resources into goods, services, and ideas for the marketplace. Production & Operations Mangement 7-28

] [ Handle staffing function and deal with employees in a formalized manner Human Resources Management 7-29

FHF Responses of Managers when asked if they are worried about their high-potential talent being recruited by competitors Managing Talent Source: “USA Today Snapshot,” USA Today, April 14, 2009, A1 7-30

[ ] FHF Marketing Management Responsible for planning, pricing, and promoting products and making them available to customers 7-31

[ ] FHF Responsible for implementing, maintaining, and controlling technology applications in business (computer networks) Information Technology (IT) Management 7-32

FHF Manage an entire business or major segment of the business Coordinate activities of specialized managers Administrative Managers 7-33

FHF Leadership Technical expertise Conceptual skills Analytical skills Human relations skills Skills Needed by Managers 7-34

FHF 7 Tips for Successful Leadership 7-35

FHF Autocratic Leaders Decision makers, “tell” employees Democratic Leaders Involve employees in decisions Free-Rein leaders Employees work without interference Types of Leaders 7-36

FHF 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 Where Do Managers Come From? 7-37

Decision Making FHF 7-38

FHF Utilities managers are struggling to truly go green Largest contributors to greenhouse gas emissions 40% of all CO2 emissions in the U.S. Expected to clean up production 83% reduction by 2050 Clash between goal of providing cheap energy and fighting climate change Forward-thinking leaders Profit in the long-term by anticipating expensive changes Going Green 7-39

FHF Not a cut-and-dried process Involves figuring out what to do despite uncertainty, diversity, and a great deal of potentially relevant information. Good managers get things done through a large and diverse set of people despite having little direct control over them Management Functions 7-40

FHF 7-41