Introduction to Business Dr. H. Ronald Moser Cumberland University

Introduction to Business Dr. H. Ronald Moser Cumberland University
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Management and Leadership
Chapter 07 Management and Leadership McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

JOHN MACKEY Whole Foods Market
PROFILE JOHN MACKEY Whole Foods Market Worked at a vegetarian co- op after attending the University of Texas. Opened SaferWay Natural Foods with his girlfriend before merging with a competitor to create Whole Foods. Now there are over 300 stores in the U.S. and U.K. 7-3

MANAGERS’ ROLES ARE EVOLVING
Today’s progressive managers tend to emphasize teamwork and cooperation rather than discipline and order giving. Today’s managers are more progressive. They emphasize team building and prefer teams for problem solving and getting work done. They create environments conducive to people working together. McGraw-Hill/Irwin Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. 4

Younger and more progressive.
Today’s Managers MANAGERS’ ROLES ARE EVOLVING Younger and more progressive. Growing numbers of women. Fewer from elite universities. Emphasis is on teams and team building. Managers need to be skilled communicators and team players. See Learning Goal 1: Describe the changes occurring today in the management function. As the demographic make-up of this country changes the typical manager is changing. Today more managers are women and less are from elite universities. Managers today act more like facilitators than supervisors. 7-5

What is Management THE FOUR FUNCTIONS OF MANAGEMENT Management -- The process used to accomplish organizational goals through planning, organizing, leading and controlling people and other organizational resources. See Learning Goal 1: Describe the changes occurring today in the management function. 7-6 6

Planning Organizing Leading Controlling
THE FOUR FUNCTIONS OF MANAGEMENT Planning Organizing Leading Controlling See Learning Goal 2: Describe the four functions of management. Planning: Anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives. Organizing: Designing the structure of the organization and creating conditions and systems in which everyone and everything works together to achieve goals. Leading: Creating a vision for the organization and communicating, guiding, training, coaching, and motivating others to achieve goals and objectives in a timely manner. Controlling: Establishing clear standards to determine whether an organization is progressing toward its goals and objectives, rewarding people for good work and taking corrective action if they are not performing. 7-7

Planning Organizing Leading Controlling
THE FOUR FUNCTIONS OF MANAGEMENT Establishing 1. Goals 2. Objectives Planning Two Components 1. People 2. Resources Organizing Concerned with 1. Leadership 2. Motivation Leading See Learning Goal 1: Describe the changes occurring today in the management function. Concerned with Adjustment 1. Goals 2. Objectives Controlling 7-8 8

THE FOUR FUNCTIONS OF MANAGEMENT
Motivation is the energizing force that causes behavior that satisfies a need. According to Maslow, human motivations are arranged in a hierarchy according to level of needs which is being satisfied. TO DEVELOP ONE’S POTENTIAL TO FEEL AT EASE WITH THE UNIVERSE SELF ACTUALIZATION NEEDS REALISTIC HIGH EVALUATION OF ONE’S SELF BY OTHERS, ABILITY TO COPE WITH DEMANDS, ACHIEVEMENT, GROUP MEMBERSHIP PERSONAL NEEDS See Learning Goal 1: Describe the changes occurring today in the management function. TO LOVE ANOTHER PERSON, TO BE LOVED, TO ESTABLISH AND MAINTAIN LOVE RELATIONSHIPS, TO BE ACCEPTED SOCIAL NEEDS PHYSICAL SAFETY ENSURING FUTURE RESOURCES OF SATIS- FACTION FOR PHYSILOGICAL NEEDS AND FAMILIAR SURROUNDINGS SAFETY NEEDS FOOD, WATER, SHELTER, EMPERATURE, SLEEP, OXYGEN, SEX, PROTEIN PHYSIOLOGICAL NEEDS 7-9 9

FOUR FUNCTIONS of MANAGEMENT
Planning – When managers identify a market trend that suggests a new opportunity and then devise a strategy to go after this new opportunity. Organizing – Includes designing the structure of the organization and creating conditions and systems in which everyone and everything works together to achieve the organization’s goals and objectives. See Learning Goal 2: Describe the four functions of management. Management is the process used to accomplish organizational goals through the four functions of management. The four functions of management are planning, organizing, leading and controlling. 7-10 10

FOUR FUNCTIONS of MANAGEMENT
3. Leading – Means creating a vision for the organization and communicating, guiding, training, coaching, and motivating others to achieve goals and objectives in a timely manner. 4. Controlling – Establishes clear standards to determine whether an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action it they are not. See Learning Goal 2: Describe the four functions of management. Management is the process used to accomplish organizational goals through the four functions of management. The four functions of management are planning, organizing, leading and controlling. 7-11 11

PLANNING AND DECISION MAKING
Sharing the Vision PLANNING AND DECISION MAKING Planning -- The first managerial function, is setting the organization’s vision (including its mission statement), goals, and objectives. Executives find planning to be their most valuable tool. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. Creating vision for the company is not merely setting a goal but rather creating a sense of purpose for the organization. Vision -- More than a goal, it’s a broad explanation of why the organization exists and where it’s trying to go. 7-12 12

Defining the Mission PLANNING AND DECISION MAKING Top management usually sets the vision for the organization and then often works with others in the firm to establish a Mission Statement. Mission Statement -- Outlines the organization’s fundamental purposes. It includes: The organization’s self–concept. Its philosophy. Long–term survival needs. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. The mission statement is the foundation for setting specific goals and objectives within the organization. Customer needs. Social responsibility. Nature of the product or service. 7-13 13

1. Tell anyone what the firm intends to do and how it plans to do it.
Defining the Mission PLANNING AND DECISION MAKING The organizational mission is a commitment to a type of business and to a distinctive role in the marketplace. The organizational mission is the organization’s fundamental purpose. 1. Tell anyone what the firm intends to do and how it plans to do it. 2. Mission statement often reflects Corporative Culture: cultural values are those values of greatest importance to the organization. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. The mission statement is the foundation for setting specific goals and objectives within the organization. Usually written by the CEO. 7-14 14

Defining the Mission PLANNING AND DECISION MAKING 1. Define the product offerings, customers to be served, and geographical areas to be served. 2. How the physical facilities, financial assets, and human resources will be used to create customer satisfaction. 3. How the firm intends to compete in its chosen markets. 4. How a company will show that it is socially responsible. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. The mission statement is the foundation for setting specific goals and objectives within the organization. Thanks for the check Mr. Adams. We hope you do well out their in Denver, Payton. 5. How the company plans to advertise its product offerings. 7-15 15

D Our Guests Our Team Members Our Hotel Our Company
MISSION STATEMENT Our mission is to provide excellent service and value to our guests through the successful and consistent operation of quality overnight lodging facilities. At Drury Inns, Inc., we strive to uphold these beliefs: D Our Guests Are our #1 priority Are welcome and special to us Are never an interruption of our work; they are why we are here Our Team Members Work together to exceed our guests’ expectations Offer friendly service Are professional and take pride in our work Are important to the company’s continued success Are treated equally and fairly Our Hotel Offers clean, well-maintained, relaxing accommodations Follows our company’s high standards for quality Represents an excellent value for the price Will continue to be a respected member of the community Our Company Promotes good employee relations Maintains good rapport with its suppliers Provides training and development opportunities 16

Setting Goals and Objectives
PLANNING AND DECISION MAKING The mission statement becomes the foundation for setting specific goals and objectives. Goals -- The broad, long- term accomplishments an organization wishes to attain. Objectives -- Specific, short-term statements detailing how to achieve the organization’s goals. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. 7-17

Planning Answers Fundamental Questions
PLANNING AND DECISION MAKING Planning Answers Fundamental Questions What is the situation now? SWOT Analysis -- Analyzes the organization’s Strengths, Weaknesses, Opportunities and Threats. How can we get to our goal from here? Strategic planning. Tactical planning. Operational planning. Contingency planning. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. As part of the internal analysis, the organization identifies the potential strengths that it can capitalize upon and potential weaknesses that it should improve upon. An organization, as part of an external environmental analysis, identifies the opportunities (factors that an organization can take advantage of) and threats (factors that an organization should avoid or minimize the impact of). An interesting exercise for the students – have them perform a SWOT analysis on themselves (At least the strengths and weaknesses part should be an eye opening experience for them.) 7-18

SWOT MATRIX PLANNING AND DECISION MAKING This matrix identifies potential strengths, weaknesses, opportunities, and threats organizations may consider is a SWOT Analysis. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. 7-19

Strategic and Tactical Planning
PLANNING AND DECISION MAKING How can we meet our goal from here? Answering this question is often the most important part of planning. It takes four forms: strategic, tactical, operational, and contingency. Strategic Planning -- Done by top management and determines the major goals of the organization and the policies, procedures, strategies and resources it will need to achieve them. Tactical Planning -- The process of developing detailed, short-term statements about what is to be done, who is to do it and how. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. 7-20

Operational and Contingency Planning
PLANNING AND DECISION MAKING Operational Planning -- The process of setting work standards and schedules necessary to implement the company’s tactical objectives. Contingency Planning -- The process of preparing alternative courses of action the firm can use if its primary plans don’t work out. If an organization doesn’t meet its sales goals by a certain date, the contingency plan may call for more advertising or a cut in prices at the time. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. 7-21

Planning Functions PLANNING AND DECISION MAKING Very few firms bother to make contingency plans. If something changes the market, some companies may be slow to respond. Most organizations do strategic, tactical, and operational planning. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. This slide covers the key areas of planning by business managers. Students should be reminded that planning requires preparation to be successful. More effort put into planning, will result in greater achievement. All planning should be in writing with an estimation of time and cost. Gantt charts are often used to compare planned results with actual accomplishments. Even the best prepared plans sometimes miss the unexpected problems. Managers should always be prepared to act in the event a plan fails. Poor contingency planning may result in significant problems for a company. 7-22

I’D Rather be Blue (Spotlight on Small Business)
PLANNING AND DECISION MAKING I’D Rather be Blue (Spotlight on Small Business) The original “Blue Men” manage over 500 employees; 70 are performers in 12 cities. Creators wrote a 132-page Blue Man manual helping them understand the importance of managing growth. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. 7-23 23

Decision Making: Finding the Best Alternative
PLANNING AND DECISION MAKING Decision Making: Finding the Best Alternative Decision Making Decision Making -- Choosing among two or more alternatives. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. 7-24 24

Rational Decision-Making Model
PLANNING AND DECISION MAKING Rational Decision-Making Model Decision Making: Finding the Best Alternative Define the situation. Describe and collect needed information. Develop alternatives. Develop agreement among those involved. Decide which alternative is best. Do what is indicated. Determine whether the decision was a good one and follow up. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. Managers don’t always go through this seven step process. However, they must always make sound decisions. It is easier said than done. As an interesting exercise, you can ask the students, working in a group, to go through a simple process of identifying an automobile to purchase using these steps. Everyone’s input should be obtained in the group. They either can select a group manager or all can have an equal say/vote. Both scenarios should produce different but interesting experiences for students. 7-25

PLANNING AND DECISION MAKING Rational Decision-Making Model Decision Making: Finding the Best Alternative The candid evaluation of the opportunities and potential problems facing a prospective or existing business is referred to as Situation Analysis. The questions “What is the firm’s current status?” and “In which direction should it be heading?” are evaluated in this strategy stage. Here we are concerned with the assessment of: (A) Environmental Assessment- Here we monitor threats and opportunities in the external environments. (B) and analyze firm’s resources, capabilities, internal Organizational Assessment- We identify strengths, and weaknesses. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. Managers don’t always go through this seven step process. However, they must always make sound decisions. It is easier said than done. As an interesting exercise, you can ask the students, working in a group, to go through a simple process of identifying an automobile to purchase using these steps. Everyone’s input should be obtained in the group. They either can select a group manager or all can have an equal say/vote. Both scenarios should produce different but interesting experiences for students. 7-27

PLANNING AND DECISION MAKING Rational Decision-Making Model Decision Making: Finding the Best Alternative WHAT: Monitor environment to identify threats and opportunities: 1. THREATS- FEDERAL GOVERNMENT 2. COMPETITION 3. ECONOMIC CONDITIONS 4. SOCIAL/CULTURAL 5. TECHNOLOGICAL 6. POLITICAL/LEGAL ENVIRONMENTAL ASSESSMENT -Variables we cannot control. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. Managers don’t always go through this seven step process. However, they must always make sound decisions. It is easier said than done. As an interesting exercise, you can ask the students, working in a group, to go through a simple process of identifying an automobile to purchase using these steps. Everyone’s input should be obtained in the group. They either can select a group manager or all can have an equal say/vote. Both scenarios should produce different but interesting experiences for students. WHEN: Constantly WHY: To adjust to changes in a positive manner 7-29

PLANNING AND DECISION MAKING Rational Decision-Making Model Decision Making: Finding the Best Alternative Controllable Variables WHAT: Analyze firm’s resources and capabilities. 1. Product 2. Price 3. Place 4. Promotion 5. Quality How can we obtain a competitive advantage in the market place? ORGANIZATIONAL ASSESSMENT Variables we can control. Price Quality Service Merger or Acquisition See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. Managers don’t always go through this seven step process. However, they must always make sound decisions. It is easier said than done. As an interesting exercise, you can ask the students, working in a group, to go through a simple process of identifying an automobile to purchase using these steps. Everyone’s input should be obtained in the group. They either can select a group manager or all can have an equal say/vote. Both scenarios should produce different but interesting experiences for students. WHY: Identify strengths, weaknesses, and distinctive competencies to make better decisions. 7-30

Problem Solving techniques include:
PLANNING AND DECISION MAKING Problem Solving Decision Making: Finding the Best Alternative Problem Solving -- The process of solving the everyday problems that occur; less formal than decision making and needs quicker action. Both decision making and problem solving call for a lot of judgment. Problem Solving techniques include: Brainstorming – Coming up with as many solutions as possible in a short period of time with no censoring of ideas. PMI – Listing all the pluses for a solution in one column, all the minuses in another and the implications in a third. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. 7-31

Problem Solving - PMI Decision Making: Finding the Best Alternative Engineers and New Generations Computer Company provided three design approaches for the new keyboard the company was planning to produce and sell. Designers got together and used a problem solving approach called PMI to finalize their selection. See Learning Goal 3: Relate the planning process and decision making to the accomplishment of company goals. PMI is an acronym for Pluses, Minuses, and Implications. PMI is used as a quick way to solve problems by listing the pluses, minuses, and implications of each alternative. 7-32

Organizational Charts
ORGANIZING: CREATING A UNIFIED SYSTEM Organizational Charts Organization Chart -- A visual device that shows relationships among people and divides the organization’s work; it shows who reports to whom. See Learning Goal 4: Describe the organizing function of management. 7-33

ORGANIZING: CREATING AND UNIFIED SYSTEM
Levels of Management ORGANIZING: CREATING AND UNIFIED SYSTEM This chart shows the three levels of management. In many firms, there are several levels of middle management. Recently, however, firms have been eliminating middle-level managers because fewer are needed to oversee self-managed teams of employees. See Learning Goal 4: Describe the organizing function of management. This slide shows a good visual of management levels within a corporation. Note the pyramid shape and the type of job positions that are in each level. It’s important for the student to know the necessary skill levels that each position in the pyramid requires. A Top-Level Manager needs good conceptual skills, and to be able to effectively communicate goals to the entire corporation. Middle-level managers typically develop the strategies for goal attainment and develop the tactics necessary to achieve stated goals. Middle managers require good analytical skills and the ability to communicate. First-line managers are responsible for execution of business plans. Technical skills and good communications skills are necessary. 7-34

Management Levels ORGANIZING: CREATING A UNIFIED SYSTEM Top Management -- The highest level consists of the president and other key company executives who develop strategic plans. Middle Management -- Includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling. Supervisory Management -- Those directly responsible for supervising workers and evaluating daily performance. See Learning Goal 4: Describe the organizing function of management. 7-35

Chief Executive Officer (CEO) Chief Operating Officer (COO)
ORGANIZING: CREATING A UNIFIED SYSTEM Top Management Chief Executive Officer (CEO) Introduces change into an organization. Chief Operating Officer (COO) Implements CEO’s changes. Chief Financial Officer (CFO) Obtains funds, plans budgets, collects funds, etc. Chief Information Officer (CIO) Gets the right information to the right people so decisions can be made. See Learning Goal 4: Describe the organizing function of management. 7-36

ORGANIZING: CREATING A UNIFIED SYSTEM
Managerial Skills Tasks and Skills at Different Levels of Management Technical Skills -- The ability to perform tasks in a specific discipline or department. Human Relations Skills -- Skills that involve communication and motivation; they enable managers to work through and with people. See Learning Goal 4: Describe the organizing function of management. Conceptual Skills -- Skills that involve the ability to picture the organization as a whole and the relationship among its various parts. 7-37 37

Tasks and Skills at Different Levels of Management
ORGANIZING: CREATING A UNIFIED SYSTEM Managerial Skills Tasks and Skills at Different Levels of Management As David progressed in his career from a territory sales manager to a regional sales manager, to the director of sales, he found that he utilized more conceptual skills and less technical skills. See Learning Goal 4: Describe the organizing function of management. Higher level managers more often utilize more conceptual skills and less technical skills. Lower level managers use more technical skills and less conceptual skills. All managers utilize human relations skills. 7-38 38

Skills Needed at Various Levels of Management
ORGANIZING: CREATING A UNIFIED SYSTEM Skills Needed at Various Levels of Management Tasks and Skills at Different Levels of Management All managers need human relations skills. At the top, managers need strong conceptual skills and rely less on technical skills. First-line managers need strong technical skills and rely less on conceptual skills. Middle managers need to have a balance between technical and conceptual skills. See Learning Goal 4: Describe the organizing function of management. The further up the managerial ladder one moves, the less important technical job skills become. 7-39 39

Staffing: Getting and Keeping the Right People
ORGANIZING: CREATING A UNIFIED SYSTEM Staffing Staffing: Getting and Keeping the Right People Staffing -- Recruiting, hiring, motivating and retaining the best people available to accomplish the company’s objectives. Recruiting good employees is critical. Woody Hayes said hire good people and let them do their job. Don’t hire relatives or close friends. Many people are not willing to work at companies unless they are treated well with fair pay. See Learning Goal 4: Describe the organizing function of management. 7-40

LEADING: PROVIDING CONTINUOUS VISION AND VALUES
Leadership LEADING: PROVIDING CONTINUOUS VISION AND VALUES Communicate a vision and rally others around that vision – The leader should be openly sensitive to the concerns of followers: Some worker like a lot of authority and responsibility. Establish corporate values – These include concern for employees, for customers, for the environment. Promote corporate ethics – Everyone is treaded fairly. Embrace change -- Being more effective (doing things better). Stress accountability and responsibility – For their actions. Leaders must: See Learning Goal 5: Explain the differences between leaders and managers, and describe the various leadership styles. “I said I was the man.” “You need to work harder.” 7-41 41

Accountability through Transparency
LEADING: PROVIDING CONTINUOUS VISION AND VALUES Accountability through Transparency Transparency -- The presentation of the company’s facts and figures in a way that is clear and apparent to all stakeholders. See Learning Goal 5: Explain the differences between leaders and managers, and describe the various leadership styles. What are these figures about? 7-42 42

Leadership styles Autocratic Leadership -- Making managerial decisions without consulting others. Participative or Democratic Leadership -- Managers and employees work together to make decisions. Free-Rein Leadership -- Managers set objectives and employees are free to do whatever is appropriate to accomplish those objectives. See Learning Goal 5: Explain the differences between leaders and managers, and describe the various leadership styles. Research tells us which leadership style is best depends on what the goals and values of the firm are, who’s being led, and in what situations. A successful leader in one organization may not be successful in another. Mike Krzyewski, Duke University 7-43

Leadership styles The most effective leadership style depends on who is being led and in what situation. Contemporary management theorists believe that leadership depends upon the situation and the nature of the persons you are leading. Some situations call for autocratic leadership, while others call for democratic or free reign style leadership. See Learning Goal 5: Explain the differences between leaders and managers, and describe the various leadership styles. Research tells us which leadership style is best depends on what the goals and values of the firm are, who’s being led, and in what situations. Mike Krzyewski, Duke University 7-44 44

Empowering Workers Some businesses realize that customer service is better when they utilize Employee Empowerment, whereby workers have the discretion to do what they believe is necessary—within reason—to satisfy the customer, even if this means bending some policies. Here we are allowing workers to have discretion to satisfy customers. See Learning Goal 5: Explain the differences between leaders and managers, and describe the various leadership styles. Research tells us which leadership style is best depends on what the goals and values of the firm are, who’s being led, and in what situations. 7-45 45

Empowering Workers Progressive leaders give employees the authority to make decisions on their own without consulting a manager. Customer needs are handled quickly. Manager’s role becomes less of a boss and more of a coach. Enabling -- Giving workers the education and tools they need to make decisions. See Learning Goal 5: Explain the differences between leaders and managers, and describe the various leadership styles. 7-46 46

Managing Knowledge LEADING: PROVIDING CONTINUOUS VISION AND VALUES
Knowledge Management -- Finding the right information, keeping the information in a readily accessible place and making the information known to everyone in the firm. We can do this with computers. Tries to keep people from reinventing the wheel. See Learning Goal 5: Explain the differences between leaders and managers, and describe the various leadership styles. 7-47 47

Five Steps of Controlling
CONTROLLING: MAKING SURE IT WORKS The whole control process is based on clear standards. Without such standards, the other steps are difficult, if not impossible. With clear standards, performance measurement is relatively easy and the proper action can been taken. See Learning Goal 6: Summarize the five steps of the control function of management. This slide presents the five steps of the control function. It should be pointed out to the students that the whole control process is based on clear standards. The control function completes the management function loop that starts with planning. Accounting and Finance are often the foundations for control systems, because they provide the numbers management needs to evaluate progress. 7-48 48

A Key Criterion for Measurement: Customer Satisfaction
Measuring Success Traditional forms of measuring success are financial. Here we are talking about making a profit. Pleasing employees, stakeholders and customers (both internal and external) are important. We satisfy employees and they satisfy our customers. External Customers -- Dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own use. Internal Customers -- Individuals and units within the firm that receive services from other individuals or units. See Learning Goal 6: Summarize the five steps of the control function of management. 7-49

Business is all about satisfying needs of your target market.
A Key Criterion for Measurement: Customer Satisfaction Traditional measures of success are usually financial; that is, they define success in terms of profits or return on investment. Certainly these measures are still important, but they’re not the whole purpose of the firm. Other purposes may include pleasing employees, stakeholders, and customers-including both external and internal customers. Customers Employees Suppliers Shareholders See Learning Goal 6: Summarize the five steps of the control function of management. More simply: Business is all about satisfying needs of your target market. “These guys are great!” 7-50

The End! See Learning Goal 6: Discuss the changing landscape of the global market and the issue of offshore outsourcing. 3-51 51

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