1. 5
BUSINESS MANAGEMENT
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2. After reading this chapter, you should be able to:
L E A R N I N G O B J E C T I V E S
After reading this chapter, you should be able to:
Describe the nature of management and identify the four basic functions that constitute the management process.
Identify different types of managers likely to be found in an organization by level and area.
Describe the basic skills required of managers.
Explain the importance of strategic management and effective goal setting in organizational success.
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3. L E A R N I N G O B J E C T I V E S (cont’d)
After reading this chapter, you should be able to:
Discuss contingency planning and crisis management in today’s business world.
Describe the development and explain the importance of corporate culture.
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4. What’s in It for Me?
After reading this chapter, you’ll be better positioned to:
Carry out various management responsibilities yourself
More effectively assess and appreciate the quality of management in various companies from the perspective of a consumer or investor
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5. Who Are Managers? Good Managers
Are responsible for business performance and effectiveness
Effective—do the right things; achieve goals
Efficient—do things right; lower costs
Are accountable to all key stakeholders
Develop strategic plans and tactical plans
Analyze their competitive environments and plan, organize, direct, and control day-to-day operations
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6. The Management Process
The process of planning, organizing, leading, and controlling a firm’s financial, physical, human, and information resources to achieve its goals
Planning Setting Goals
Controlling Monitoring Performance
Organizing Structuring
Leading Guiding and Motivating
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7. Planning The Planning Process Determining firm’s goals
Developing strategy for achieving goals
Designing tactical and operational plans for implementing the strategy
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8. Organizing The Organizing Process
Arranging resources and activities in a coherent structure
Prepare organizational charts to help everyone understand roles and reporting relationships
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9. Leading
Leading
Guiding and motivating employees to meet the organization’s objectives
Uniting employees in a clear and targeted manner and motivating them to work in the best interests of their employer
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10. Controlling The Controlling Process
Monitoring a firm’s performance to make sure that it is meeting its goals
Begins when management establishes standards, often for financial performance
Can serve as a basis for providing rewards or reducing costs
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11. The Control Process Establish Standards Measure Performance
YES
Does measured performance match standards? NO
Continue Current
Activities
Adjust Performance or Standards
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12. Types of Managers Levels of Management
Top managers: Responsible for the overall performance of the firm
President, vice president, treasurer, CEO, CFO
Middle managers: Implement strategies and work toward goals set by top managers
Plant manager, operations manager, division manager
First-line managers: Work with and supervise employees
Supervisor, office manager, project manager, group leader
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13. Areas of Management Human Resources Operations Marketing Information
Financial
Other
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14. Basic Management Skills
Human Relations Skills
Technical Skills
Decision-Making Skills
Conceptual Skills
Time Management Skills
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15. Management Skills for the 21st Century
Global Management Skills
Understand foreign markets, cultural differences, and the motives and practices of foreign rivals
Understand how to collaborate with others around the world on a real-time basis
Management and Technology Skills
Needed to process increasing amounts of information
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16. Strategic Management: Setting Goals and Formulating Strategy
The process of helping an organization maintain an effective alignment with its environment
Goals
Starting point in effective strategic management
Objectives that a business hopes and plans to achieve
Strategy
The broad set of action plans to achieve company goal
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17. Setting Business Goals
Performance targets that organizations and their managers use to measure success or failure
Mission Statement
A statement of how a business will achieve its fundamental purpose
Effective organizations set goals at many different levels:
Long-term goals: five years or more
Intermediate goals: one to five years
Short-term goals: one year or less
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18. Purposes of Goal Setting
Provides direction and guidance for managers at all levels
Helps firms allocate resources
Helps to define corporate culture
Helps managers assess performance
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19. Types of Strategy Corporate Strategy
Determines what business or businesses a company will own and operate
Growth
Related diversification
Unrelated diversification
Retrenchment
Downsizing and divestiture
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20. Types of Strategy (cont’d)
Business (or Competitive) Strategy
Focuses on improving the company’s competitive position at the level of the business unit or product line
Functional Strategy
Guides managers in specific areas such as marketing, finance, and operations in deciding how best to achieve corporate goals by performing their functional activities most effectively
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21. FIGURE 5.2 Hierarchy of Strategy
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22. Formulating Strategy Step 1: Setting Strategic Goals
Strategic goals are derived from a firm’s mission statement
Step 2: Analyzing the Organization and the Environment: SWOT Analysis
Assessing internal strengths and weaknesses and external opportunities and threats
Environmental analysis
Organizational analysis
Step 3: Matching the Organization and Its Environment
Matching environmental threats and opportunities against corporate strengths and weaknesses
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23. FIGURE 5.3 Strategy Formulation
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24. A Hierarchy of Plans Strategic Plans Tactical Plans Operational Plans
Reflect decisions about resource allocations, company priorities, and the steps needed to meet strategic goals
Tactical Plans
Shorter-term plans for implementing specific aspects of the company’s strategic plans
Operational Plans
Mid-level and lower-level managers set short-term targets for daily, weekly, or monthly performance
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25. Contingency Planning and Crisis Management
Planning for change
Seeks to identify in advance important aspects of a business or its market that might change and the ways in which a company will respond to changes
Crisis Management
Involves an organization’s methods for dealing with a crisis—an unexpected emergency requiring immediate response
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26. Management and the Corporate Culture
Is the shared experiences, stories, beliefs, and norms that characterize an organization
Helps define the work and business climate that exists in an organization
Communicating the Culture
Managers must understand the culture
Managers must transmit the culture to others in the organization
Managers can support the culture by rewarding and promoting those who understand it and work toward maintaining it
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27. Managing Change in the Culture
Stages in the Change Process
At the highest level, analysis of the company’s environment highlights extensive change as the most effective response to its problems.
Top management begins to formulate a vision of a new company.
The firm sets up new systems for appraising and compensating employees who enforce the firm’s new values.
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28. K E Y T E R M S business (or competitive) strategy conceptual skills
contingency planning
controlling
corporate culture
corporate strategy
crisis management
decision-making skills
leading
environmental analysis
first-line manager
functional strategy
goal
human relations skills
intermediate goal
long-term goal
management
middle manager
mission statement
organizational analysis
organizing
operational plan
planning
short-term goal
strategic goal
strategic management
strategic plan
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29. K E Y T E R M S (cont’d) strategy strategy formulation SWOT analysis
tactical plan
technical skills
time management skills
top manager
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