1. Ronald J. Ebert & Ricky W. Griffin
BUSINESS
ESSENTIALS
Fourth Edition
PART
Understanding the Business of Managing
Ronald J. Ebert & Ricky W. Griffin
Copyright ©2003 Prentice Hall, Inc.

2. Managing the Business Enterprise
Chapter 5
Managing the Business Enterprise

3. “Some men see things as they are and say why
“Some men see things as they are and say why. I dream of things that never were and say why not.” ~ John F. Kennedy

4. Key Topics Setting goals and formulating strategies
The management process
Types of managers by level and area
The five basic management skills
The development and importance of corporate culture

5. Discussion
Some of you have worked in organizations with very different corporate cultures (e.g. an advertising agency, a law office, a film production company, a coffee house), you may speak for a few moments about the culture of your workplace.
Possible questions to answer: Who has power, and how do you know that? What is the level of formality, and how do you know that? How do people dress? How do people communicate regarding large issues? Regarding small issues? How are offices distributed and decorated? Who gets the good gossip? Is there a difference between who has official power, and who has “real” power?

6. Culture and development
One could easily argue that the key strengths of American business are vision and innovation. American entrepreneurs have developed breakthrough products and services that have changed the lives of people around the world.

7. An Invaluable Resource for Business
EFFECTIVE MANAGERS
An Invaluable Resource for Business
Managers are responsible for business performance and effectiveness.
Managers are accountable to all key stakeholders.

8. Setting Goals Is the Starting Point of Effective Management
Strategy: The broad set of action plans to achieve company goals
Corporate Strategy
Business Strategy
Functional Strategy

9. Setting Goals Is the Starting Point of Effective Management
Strategy: The broad set of action plans to achieve company goals.
Corporate strategy: Strategy for determining a firm’s overall attitude toward growth and the way it will manage its businesses or product lines. At times a company may decide to retrench, or reduce its activities or investment, rather than to grow.
Business or competitive strategy: Strategy, at the business-unit or product-line level, focusing on a firm’s competitive position.
Functional strategy: Strategy by which managers in specific areas (e.g. marketing, operations, etc.) decide how best to achieve corporate goals by being as productive as possible.

10. Business Goals Are Performance Targets
Goals are performance targets with a range of different purposes:
The purposes of goal-setting:
To provide direction for managers
To help firms allocate resources
To help define corporate culture
To help managers assess performance

11. The purposes of goal-setting
Providing direction: Goals help managers at all levels to focus on key priorities.
Allocating resources: Goals provide managers with direction in terms of allocating key resources (money, time, and talent).
Defining corporate culture: Goals help determine the values and environment of an organization.
Assessing performance: Goals help managers assess performance of both individual employees and the organization as a whole.
Example on this:

12. Effective Organizations Set Goals at Many Different Levels
Mission Statement: How a business will achieve its fundamental purpose
Long-term Goals
Intermediate Goals
Short-term Goals

13. Mission
IBM Mission: We strive to lead in the creation, development, and manufacture of the industry’s most advanced information technologies, including computer systems, software, networking systems, storage devices, and microelectronics. We translate these advanced technologies into value for our customers through our professional solutions and services businesses worldwide. (Source:

14. Strategic Management Terms (Cont’d)
Vision Statements
Answers the question: “What do we want to become?”
First step in strategic planning
Oftentimes a single sentence
Microsoft: “A computer on every desk, and in every home, running on Microsoft software”>
“Our vision is to take care of your vision.”
(Stokes Eye Clinic, Florence, South Carolina)

15. Vision & Mission (Cont’d)
Mission statement answers the question:
“What is our business?”

16. Components of Mission (Cont’d)
Components of mission and corresponding questions to be answered:
Customers:
“Who are the firm’s customers?”
Products or services:
“What are the firm's major products or services?”

17. Components of Mission (Cont’d)
Markets:
“Geographically, where does the firm compete?”
Technology:
“Is the firm technologically current?”

18. Components of Mission (Cont’d)
Concern for survival, growth, and profitability:
“Is the firm committed to growth and financial soundness?”
Philosophy:
“What are the basic beliefs, values, aspirations, and ethical priorities of the firm?”

19. Components of Mission (Cont’d)
Self-concept:
“What is the firm’s distinctive competence or major competitive advantage?”
Concern for employees:
“Are employees a valuable asset of the firm?”

20. Goals
Long-term goals are set for extended periods of time, typically 5+ years, and usually encompass the entire organization. Example: “Achieve number one market share in each industry where we compete.”
Intermediate goals are set for a period of one to five years, and are usually set in several areas (e.g. marketing, finance, production, etc.). Example: “Human resources might aim to decrease employee turnover by 10% in the next two years.”
Short-term goals are set for a year or less, and are usually developed in multiple areas. Example: “Process 100 orders each day in customer service.”

21. A Well-Formulated Strategy Is Vital to a Business’s Success
Strategy Formulation
Analyze the Organization
Match the Organization and its Environment
Formulate Strategy
Set Strategic Goals
Analyze the Environment

22. Steps to formulating a successful business strategy:
Set strategic goals: Strategic goals should fall directly from an organization’s mission statement. Possible example: “Match the market leader in terms of quality by the end of the next fiscal year.”
Analyze the organization and its environment: This step is also known as a SWOT analysis (strengths, weaknesses, opportunities, and threats). The starting point is organizational analysis: What are the strengths and weaknesses of the organization itself? Possible strengths include a strong brand name, technical expertise, seasoned management, etc., and possible weaknesses include poor financing, high worker turnover, etc. Next, the organization must examine the opportunities and threats in its external environment. Possible opportunities include lack of competition, changes in consumer attitudes, etc., and possible threats include intense competition, government regulation, etc.

23. Discussion
Do a SWOT analysis of your college. What are the internal strengths and weaknesses, and the external opportunities and threats? What action steps emerge from their analysis?
Match the organization and its environment: The final step is the heart of strategy formulation, leading to plans with a higher likelihood of success.

24. The Management Process
Planning
Strategic
Tactical
Operational
Contingency
Crisis
Organizing
Directing
Controlling

25. The Management Process
Management is the process of planning, organizing, directing, and controlling an organization’s resources to achieve its goals. All four aspects of management are interrelated, with fluid boundaries between them.
Planning, in the most basic sense, is determining what needs to be done and how best to do it.
Strategic plans reflect decisions about resource allocation and company priorities, and are usually created by top management.
Tactical plans involve implementing specific aspects of the strategic plans, and are usually created by upper and middle management.
Operational plans set short-term targets for daily, weekly, or monthly performance.
Contingency plans are hedges against changes that might occur in a business or its environment, and plans for how to respond.
Crisis plans are methods of dealing with emergencies (NY businesses engaged in crisis management after the 9/11 attacks). IUG engaged in crisis management during Israeli closures and separations to Gaza Strip.

26. The Management Process
Organizing is determining the best way to arrange an organization’s resources and activities into a coherent structure.
Directing, or leading, is the process of guiding and motivating employees to meet an organization’s objectives.
Controlling is the process of monitoring an organization’s performance to ensure that it is meeting its goals.

27. The Control Process YES NO Establish Standards Measure Performance
Does measured performance match standards? NO
Continue Current
Activities
Adjust Performance or Standards
5 - 27

28. Levels of Management
Top Managers
Middle Managers
First-Line Managers

29. Levels of Management
Top managers are responsible for a firm’s overall performance and effectiveness. Common titles include chief executive officer (CEO), president, vice-president, chief financial officer (CFO), and treasurer. Responsibilities include setting general policies, formulating strategies, approving significant decisions, and representing the company to other firms and governmental bodies.
Middle managers are responsible for implementing the policies, strategies, and decisions made by top managers. Common titles include plant manager, operations manager, and division manager.
First-line managers are responsible for directly supervising employees as they implement company tactics on a day-by-day basis. Common titles include supervisor, office manager, and group leader.

30. Areas of Management Human Resources Operations Marketing Information
Financial
Other

31. Areas of Management
Human resources managers: Hire and train employees, evaluate performance, and help determine compensation.
Operations managers: Handle production, inventory, and quality control, among other responsibilities.
Marketing managers: Handle the development, pricing, promotion, and distribution of goods and services.
Information managers: Design and implement systems to gather, organize, and distribute information.
Financial managers: Plan and oversee accounting and financial resources.
Other managers: This category encompasses a variety of other special functions. Two examples (among many possibilities) are public relations managers, and research and development managers.

32. Basic Management Skills
Technical Skills
Human Relations Skills
Conceptual Skills
Decision-Making Skills
Time Management Skills

33. Basic Management Skills
To be effective, managers must develop a range of skills. Also, they must be able to recognize their own limitations, and learn how to compensate. Key skills include:
Technical skills: Ability to perform specialized tasks (e.g. an animator’s ability to draw, an accountant’s ability to analyze spreadsheets, a salesperson’s ability to “close the deal”).
Human relations skills: Ability to understand and get along with other people. Communication skills often play a crucial role in strong human relations.
Conceptual skills: Ability to think in the abstract, to diagnose and analyze different situations, and to see beyond the present situation.
Decision-making skills: Ability to define problems and select the best course of action.
Time management skills: Ability to use time productively. Managers must learn to effectively address the four leading timewasters: paperwork, telephone, meetings, and .

34. Discussion
Which skills are most necessary at which levels of management? Why?
You should recognize that while all skills are needed at all levels,
technical skills are most necessary for first-line managers (directly supervising those who “do the work”),
human relations skills are most necessary for middle managers (acting as bridges between first-line and senior managers),
conceptual skills are most necessary for top managers (charting the course for the organization).
the transition through management ranks can be rather difficult, since different skills come more into play at different levels.

35. How to Spot the E-CEO Traditional CEO Encouraging Alert\vigilant
Cordial\friendly
Fast moving
Anti-ambiguity
Age: 57
Rich
E-CEO
Evangelizing\ very enthusiasm
Paranoid\fearful
Brutally frank
Faster moving
Pro-ambiguity
Age: 38
Richer

36. Management Skills for the Future
Global Management Skills
Information & Technology Skills

37. Management Skills for the Future
Looking to the future, new skill requirements for managers continue to emerge:
Global management skills: Managers will need to understand not only cultural differences, foreign markets, and the motives and practices of foreign rivals, but also the managerial complexities of international operations.
Information and technology skills: As organizations are bombarded with ever-increasing amounts of information, the ability to quickly process and interpret input will become even more important.

38. Management Is Tightly Linked to Corporate Culture
Corporate Culture: The shared experiences, stories, beliefs, and norms that characterize an organization
Communicating the Culture
Managing Change

39. Corporate culture
Corporate culture: The shared experiences, stories, beliefs, and norms that characterize an organization.
Successful managers understand and communicate the culture of an organization, quickly integrating newcomers.
Organization culture created by the founders and continue to be developed by the successors.
When corporate culture needs to change, direction must come from the top, with a new system of rewards that reflects the new culture.
Discussion: What is the “corporate culture” of your college or university? Is it a healthy culture? Why or why not?

40. Questions for Review
What are the four main purposes of setting goals in an organization?
To provide direction and guidance for managers at all levels
To help firms allocate resources
To help define corporate culture
To help managers assess performance
Identify and explain the three basic steps in strategy formulation.
Setting strategic goals, which stem from the organization’s mission statement
Analyzing the organization and its environment for strengths, weaknesses, opportunities, and threats
Matching environmental threats and opportunities against the organization’s strengths and weaknesses

41. Questions for Review
Relate the five basic management skills to the four activities in the management process. For example, which skills are most important in directing?
Technical skills may be most important in controlling. Human relations skills are especially important in organizing and directing. Conceptual skills are essential in planning. Decision making and time management skills are important for all management activities.
What is corporate culture? How is it formed? How is it sustained?
Corporate culture is the shared stories, experiences, beliefs, and norms that characterize an organization. Factors that form culture can range from the personality of the founder, to the firm’s overall philosophy, to daily operating methods. Culture is sustained by communicating the culture to all employees (especially newcomers), and by rewarding and promoting those who understand and maintain the culture.