chapter 1
TRANSCRIPT
Who Are Managers?Manager
Someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals
Types of ManagersFirst-line Managers
Are at the lowest level of management and manage the work of nonmanagerial employees
Middle ManagersManage the work of first-line managers
Top ManagersAre responsible for making organization-wide
decisions and establishing plans and goals that affect the entire organization
Exhibit 1.1 Managerial Levels
TopManagers
Middle Managers
First-Line Managers
Nonmanagerial Employees
TopManagers
Middle Managers
First-Line Managers
Nonmanagerial Employees
Organization
A consciously coordinated social unit, composed of two or more people, that functions on a relatively continuous basis to achieve a common goal or set of goals.
Definition of Management:
Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims
Definitions of Effectiveness and EfficiencyProductivity implies effectiveness and
efficiency in individual and organizational performance
Effectiveness is the achievement of objectives
Efficiency is the achievement of the ends with the least amount of resources (time, money, etc.)
Managerial Concerns
Efficiency “Doing things right”
Getting the most output for the least input
Effectiveness “Doing the right things”
Attaining organizational goals
Managerial Activities
• Make decisions
• Allocate resources
• Direct activities of others to attain goals
Managerial Activities
• Make decisions
• Allocate resources
• Direct activities of others to attain goals
Managers (or administrators)
Individuals who achieve goals through other people.
What Do Managers Do?Functional Approach
PlanningOrganizingLeadingControlling
Planning
A process that includes defining goals, establishing strategy, and developing plans to coordinate activities.
Organizing
Determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made.
Leading
A function that includes motivating employees, directing others, selecting the most effective communication channels, and resolving conflicts.
Controlling
Monitoring activities to ensure they are being accomplished as planned and correcting any significant deviations.
Management Functions
Planning
Defining goals,establishingstrategy, anddevelopingsubplans tocoordinateactivities
Lead toOrganizing
Determiningwhat needsto be done,how it willbe done, andwho is to do it
Leading
Directing andmotivating allinvolved partiesand resolvingconflicts
Controlling
Monitoringactivitiesto ensurethat they areaccomplishedas planned
Achieving theorganization ’s
statedpurpose
What Do Managers Do? (cont’dMintzberg’s Management Roles Approach
Interpersonal roles Figurehead, leader, liaison
Informational roles Monitor, disseminator, spokesperson
Decisional roles Entrepreneur, disturbance handler, resource
allocator, negotiator
What Do Managers Do? (cont’d)Skills Approach
Technical skillsHuman skillsConceptual skills
Technical skillsThe ability to apply specialized knowledge or expertise.
Human skillsThe ability to work with, understand, and motivate other people, both individually and in groups.
Conceptual SkillsThe mental ability to analyze and diagnose complex situations.
Exhibit 1.4 Skills Needed at Different Management Levels
TopManagers
MiddleManagers
Lower-levelManagers
Importance
ConceptualSkills
HumanSkills
TechnicalSkills
What Is An Organization?An Organization Defined
A deliberate arrangement of people to accomplish some specific purpose
Common Characteristics of OrganizationsHave a distinct purpose (goal)Are composed of peopleHave a deliberate structure
Exhibit 1.6 The Changing OrganizationTraditional Stable Inflexible Job-focused Work is defined by job positions Individual-oriented Permanent jobs Command-oriented Managers always make
decisions Rule-oriented Relatively homogeneous
workforce Workdays defined as 9 to 5 Hierarchial relationships Work at organizational facility
during specific hours
New Organization Dynamic Flexible Skills-focused Work is defined in terms of tasks to
be done Team-oriented Temporary jobs Involvement-oriented Employees participate in decision
making Customer-oriented Diverse workforce Workdays have no time boundaries Lateral and networked
relationships Work anywhere, anytime
Management: DefinitionAcc to Harold Koontz: Management is the
art of getting things done through & with an formally organized group
Acc to Henry Fayol: To manage is to forecast & plan, to organize, to compound, to co-ordinate and to control
PODSCORB:- Planning, Organizing, Directing, Staffing,
Controlling, Co-ordinating, Reporting & Budgeting
Features of ManagementArt as well as ScienceManagement is an activityManagement is a continuous processManagement achieving pre-determined
objectivesOrganized activitiesManagement is a factor of productionManagement as a system Management is a discipline
Features of ManagementManagement is a distinct entityManagement aims at maximising profitManagement is a purposeful activityManagement is a professionUniversal applicationManagement is getting things doneManagement is needed at all levels
Importance of ManagementManagement meet the challenge of changeAccomplishment of group goalsEffective utilization of resourcesEffective functioning of businessResource DevelopmentSound organization StructureManagement directs the organizationIntegrates various interestsStability
Importance of ManagementInnovationCo-ordination and team-spiritTackling problemsA tool for Personality Development
Henry Fayol (1841-1925)Was a french industrialistGiven :
Elements of Management- Planning, Organizing, Commanding, Co-ordination & Control
Qualities of Manager: Physical, Mental, Moral, General Education, Special Knowledge & Experience
Principles of Management
Principles of ManagementDivision of workAuthority & responsibiltyDisciplineUnity of commandUnity of directionSubordinate of individual interest to group
interestRemuneration of personnelCentralizationScalar Chain
Principles of ManagementOrderEquityStability of tenure of personnelInitiativeEspirit De Corps
What Is Planning?Planning
Managerial function that involves: Defining the organization’s goals Establishing an overall strategy for achieving
those goals Developing a comprehensive set of plans to
integrate and coordinate organizational workTypes of planning
Informal: not written down, short-term focus; specific to an organizational unit
Formal: written, specific, and long-term focus, involves shared goals for the organization
Purposes of Planning
Provides directionReduces uncertaintyMinimizes waste and redundancySets the standards for controlling
Planning and PerformanceThe Relationship Between Planning and
PerformanceFormal planning is associated with:
Higher profits and returns on assets Other positive financial results
The quality of planning and implementation affects performance more than the extent of planning
The external environment can reduce the impact of planning on performance
How Do Managers Plan?Elements of Planning
Goals (also objectives) Desired outcomes for individuals, groups, or entire
organizations Provide direction and performance evaluation criteria
Plans Documents that outline how goals are to be
accomplished Describe how resources are to be allocated
Steps in Planning 1. Being Aware of Opportunities 2. Establishing Objectives or Goals3. Developing Premises 4: Determining Alternative Courses 5. Evaluating Alternative Courses 6. Selecting a Course 7. Formulating Derivative Plans8. Quantifying Plans by Budgeting
Types of Plans
Types of PlansBREADTH
Strategic PlansApply to the entire organizationEstablish the organization’s overall goalsSeek to position the organization in terms of its
environmentCover extended periods of time
Operational PlansSpecify the details of how the overall goals are to
be achievedCover short time period
Types of Plans (cont’d) TIME FRAME
Long-Term PlansTime frames extending beyond three years
Short-Term PlansTime frames of one year or less
SPECIFICITYSpecific Plans
Clearly defined and leave no room for interpretationDirectional Plans
Flexible plans that set out general guidelines, provide focus, yet allow discretion in implementation
Exhibit 3.4 Specific Vs. Directional Plans
Types of Plans (cont’d)FREQUENCY OF USE
Single-use PlanA one-time plan specifically designed to meet
the needs of a unique situationStanding Plans
Ongoing plans that provide guidance for activities performed repeatedly
Types of PlansPlans can be classified as (1) mission or purposes, (2) objectives or goals, (3) strategies, (4) policies, (5) procedures, (6) rules, (7) programs, and (8) budgets
Types of PlansThe mission, or purpose, identifies the basic
purpose or function or tasks of an enterprise or agency or any part of it
Objectives, or goals, are the ends toward which activity is aimed
Strategy is the determination of the basic long‑term objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals
Policies are general statements or understandings that guide or channel thinking in decision making
Procedures are plans that establish a required method of handling future activities
Types of Plans – cont. Rules spell out specific required actions or
nonactions, allowing no discretionPrograms are a complex of goals, policies,
procedures, rules, task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a given course of action
A budget is a statement of expected results expressed in numerical terms
Developing Plans
Contingency Factors in PlanningDegree of environmental uncertainty
Stable environment: specific plans Dynamic environment: specific but flexible
plansLength of future commitments
Current plans affecting future commitments must be sufficiently long-term to meet the commitments
Approaches to Establishing Goals
Traditional Goal SettingBroad goals are set at the top of the
organizationGoals are then broken into subgoals
for each organizational levelGoals are intended to direct, guide,
and constrain from above
Approaches to Establishing Goals (cont’d)
Management By Objectives (MBO)Specific performance goals are jointly
determined by employees and managersProgress toward accomplishing goals is
periodically reviewedRewards are allocated on the basis of
progress toward the goalsKey elements of MBO:
Goal specificity, participative decision making, an explicit performance/evaluation period, feedback
Steps in a Typical MBO Program
Specific objectivescollaboratively set
with employees
Objectives allocated todivisional and
departmental units
Action plansimplemented
Give Rewards forAchieved Objectives
Jointly Set Objectives
Overall objectivesand strategies of
organization
Develop Action Plansto Achieve Objectives
Managers andemployees work on
action plans together
Review Objectives andProvide Feedback
Does MBO Work?Reason for MBO Success
Top management commitment and involvement
Potential Problems with MBO ProgramsNot as effective in dynamic environments
that require constant resetting of goalsOveremphasis on individual
accomplishment may create problems with teamwork
Benefits of Management by Objectives
Clear goals: Motivate Improve managing through results-
oriented planning Clarify organizational roles, structures
and the delegation of authority Encourage personal commitment to
their own and organizational goals. Facilitate effective controlling,
measuring results, and leading to corrective actions
Failures of Management by ObjectivesList some failures and limitations of MBOWhat would you do to overcome the failures?
Criticisms of PlanningPlanning may create rigidityPlans cannot be developed for dynamic
environmentsFormal plans cannot replace intuition and
creativityPlanning focuses managers’ attention on
today’s competition, not tomorrow’s survivalFormal planning reinforces today’s success,
which may lead to tomorrow’s failure
Organizational StrategyStrategic Management
The set of managerial decisions and actions that determines the long-run performance of an organization
The Strategic Management Process
SWOT Analysis
Identify the
organization's
current mission, goals,
and strategies
Internal Analysis
• strengths
• weaknesses
External Analysis
• opportunities
• threats
Formulate
Strategies
Implement
Strategies
Evaluate
Results
Strategic Management ProcessStep 1: Identify the Organization’s Current
Mission, Objectives, and StrategiesMission: the firm’s reason for being
The scope of its products and servicesGoals: the foundation for further planning
Measurable performance targetsStep 2: Conduct an Internal Analysis
Assessing organizational resources, capabilities, activities, and culture: Strengths (core competencies) create value for the
customer and strengthen the competitive position of the firm
Weaknesses (things done poorly or not at all) can place the firm at a competitive disadvantage
Strategic Management Process (cont’d)
Step 3: Conduct an External AnalysisThe environmental scanning of specific and
general environments Focuses on identifying opportunities and threats
Steps 2 and 3 combined are called a SWOT analysis. (Strengths, Weaknesses, Opportunities, and Threats)
Strategic Management Process (cont’d)
Step 4: Formulate StrategiesDevelop and evaluate strategic alternativesSelect appropriate strategies for all levels in
the organization that provide relative advantage over competitors
Match organizational strengths to environmental opportunities
Correct weaknesses and guard against threats
Strategic Management Process (cont’d)
Step 5: Implement StrategiesImplementation: effectively fitting organizational
structure and activities to the environmentThe environment dictates the chosen strategy;
effective strategy implementation requires an organizational structure matched to its requirements
Step 6: Evaluate ResultsHow effective have strategies been?What adjustments, if any, are necessary?
Levels of Organizational Strategy
Research andDevelopment
Manufacturing Marketing HumanResources
Finance
StrategicBusiness Unit 1
StrategicBusiness Unit 2
StrategicBusiness Unit 3
MultibusinessCorporation
FunctionalLevel
BusinessLevel
CorporateLevel
Types of Organizational StrategiesCorporate-level Strategy
The company’s grand strategy for the entire organization and its strategic business units
Types of Grand StrategiesGrowth: expansion into new products and
marketsStability: maintenance of the status quoRetrenchment: addresses organizational
weaknesses that are leading to performance declines
Combination: simultaneous pursuit of two or more of the strategies above
Corporate-Level StrategiesGrowth Strategy
Seeking to increase the organization’s business by expansion into new products and markets
Stability StrategyA strategy that seeks to maintain the status
quo to deal with the uncertainty of a dynamic environment, when the industry is experiencing slow- or no-growth conditions, or if the owners of the firm elect not to grow for personal reasons
Corporate-Level Strategies (cont’d)
Retrenchment StrategyReduces the company’s activities or
operationsRetrenchment strategies include:
Cost reductions Closing underperforming units Closing entire product lines or services
Corporate-Level Strategies (cont’d)
Combination StrategySimultaneous pursuit by the
organization of two or more of growth, stability, and retrenchment strategies
Business-Level StrategyBusiness-Level Strategy
A strategy that seeks to determine how an organization should compete in each unit within the organization to create a competitive advantage
Competitive advantage An organization’s distinctive competitive edge that is
sourced and sustained in its core competencies
Forces in an Industry Analysis(Five Forces Model Given by: Porter
Substitutes
Buyers
BargainingPower ofBuyers
Threat ofSubstitutes
Suppliers
BargainingPower ofSuppliers
NewEntrants
Threat ofNew Entrants
Intensity ofRivalry Among
CurrentCompetitors
Five Competitive ForcesThreat of New Entrants
The ease or difficulty with which new competitors can enter an industry
Threat of SubstitutesThe extent to which switching costs and
brand loyalty affect the likelihood of customers adopting substitute products and services
Bargaining Power of BuyersThe degree to which buyers have the
market strength to hold sway over and influence competitors in an industry
Five Competitive Forces (cont’d)Bargaining Power of Suppliers
The relative number of buyers to suppliers and threats from substitutes and new entrants affect the buyer-supplier relationship
Current RivalryIntensity among rivals increases when
industry growth rates slow, demand falls, and product prices descend
Functional-Level StrategyFunctional-level strategies support the
business-level strategyi.e., Marketing, human resources,
research and development, and finance all support the business-level strategy
Problems occur when employees or customers don’t understand a company’s strategy
BenchmarkingThe search for the best practices among
competitors and noncompetitors that lead to their superior performance
By analyzing and copying these practices, firms can improve their performance
Decision MakingDecision making is defined as the selection
of a course of action from among alternatives
Decision Making Process1. Identification of a problem2. Identification of decision criteria3. Allocation of weights to criteria4. Development of alternatives5. Analysis of alternatives6. Selection of an alternative7. Implementation of the alternative8. Evaluating decision effectiveness
Limited, or "Bounded," Rationality Limitations of information, time, and
certainty limit rationality, even though a manager tries earnestly to be completely rational
Satisficing is picking a course of action that is satisfactory or good enough under the circumstances
Development of Alternatives and the Limiting Factor A limiting factor is something that stands in
the way of accomplishing a desired objective The principle of the limiting factor: By
recognizing and overcoming those factors that stand critically in the way of a goal, the best alternative course of action can be selected
Simon’s model of decision making Contribution of Herbert Simon The decision making process can be broken
into series of three sequential steps:1. Intelligent activity2. Design activity3. Choice activity
Intelligent activity refers to the initial phase of searching the environment for conditions calling for decisions.
Design activity refers to the phase of inventing, developing, and analyzing possible course of action to take place.
Choice activity refers to the final phase of actual choice selecting a particular course of action from those available.
Marginal AnalysisMarginal analysis is to compare additional
revenues and the additional cost arising from increasing output
Cost Effectiveness AnalysisCost effectiveness analysis seeks the best
ratio of benefit and cost
Selecting an Alternative: Three ApproachesWhen selecting from among alternatives,
managers can use:1. Experience, 2. Experimentation, and 3. Research and analysis.
Programmed And Nonprogrammed Decisions
Programmed decisions are used for structured or routine work
Nonprogrammed decisions are used for unstructured, novel, and ill‑defined situations of a nonrecurring nature
Creativity and Innovation Creativity refers to the ability and power to
develop new ideas Innovation means the use of new ideas
The Creative Process The creative process is seldom simple
and linear It generally consists of four
overlapping and interacting phases:
1. Unconscious scanning 2. Intuition3. Insight 4. Logical formulation or verification
Rules for Brainstorming1. No ideas are criticized2. The more radical the ideas are, the
better3. The quantity of idea production is
stressed4. The improvement of ideas by others is
encouraged