In this chapter we will examine the topic of business management. We will describe the nature of management and identify the four basic functions that constitute the management process. We will identify different types of managers likely to be found in an organization by level and area. We will describe the basic skills required of managers. We will explain the importance of strategic management and effective goal setting in organizational success. Teaching Tips: Ask the class to engage in the following way with the each objective: Objective 1: Describe the nature of management and identify the four basic functions that constitute the management process. Please join with another student and list the four basic function of management. We will share our answers with the class. Answers should include planning, leading, organizing and controlling. Objective 2 : Identify different types of managers likely to be found in an organization by level and area. Please remain in your teams from Objective 1. I would like you to give some examples of the different types of managers likely to be found in an organization by level and area. We will share our answers with the class. Answers will vary. They can include marketing manager, chief financial officer, chief executive officer, human resources manager, accounting manager, finance manager, operations manager, production manager, information technology manager and others. Objective 3: Describe the basic skills required of managers. Please form new pairs of two students. Each pair will list four key skills of a manager. Let’s share our responses with the class. Answers will vary. You can allow the students to name those they come up with but return to the topic later in the chapter. Answers will include human relations skills, conceptual skills, technical skills, time-management skills, decision-making skills. Objective 4: Explain the importance of strategic management and effective goal setting in organizational success. In your same student teams, please choose a company whose products you like or use frequently. Discuss why you think strategic management and effective goal setting is important within that organization. What might happen to that organization without the use of strategic planning? We will share our answers with the class. Answers will vary based on the company chosen.
We will also discuss contingency planning and crisis management in today’s business world, and we will describe the development and explain the importance of corporate culture. Teaching Tips Objective 5: Discuss contingency planning and crisis management in today’s business world. In your teams, please discuss two examples of the types of crises that could occur for a company. We will share these with the class. Answers will vary. Objective 6: Describe the development and explain the importance of corporate culture. In your student teams, please think back and remember the companies you discussed earlier, either during this class or another class. Please discuss what you think the corporate culture would be like in these companies. For example, would they be very structured companies with highly structured organizational charts and authority rituals or would they be more horizontally organized where people work in teams? Answers will vary.
What’s in this for you? By understanding the material discussed in this chapter, you’ll be better prepared 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. Teaching Tips: Which of these two points will be most interesting to you and why? Also, as you discuss this in your teams, please think of two ways you will be affected. We will then share with the class. Answers will vary.
First, let’s define managers. Good managers: Are responsible for business performance and effectiveness Effective means doing the right things and achieving goals Efficient means doing things right and achieving lower costs Are accountable to all key stakeholders They develop strategic plans and tactical plans They analyze their competitive environments and plan, organize, direct and control day-to-day operations Teaching Tips: Please return to your student team and choose one of the ways good managers are accountable to all key stakeholders. Develop an example of what they might do within the area you chose. We will share the answers with the class. Answers will vary, but should reflect: Developing strategic plans Developing tactical plans Analyzing their competitive environments Planning day-to-day operations Organizing day-to-day operations Directing day-to-day operations Controlling day-to-day operations
Let’s review management: It is the process of planning, organizing, leading, and controlling a firm’s financial, physical, human and information resources to achieve its goals. The steps in the management process include: Planning: setting goals Organizing: structuring Leading: guiding and motivating Controlling: monitoring performance Teaching Tips: In your student teams, please choose one of these four steps in the management process. Return to an example company that you have discussed earlier, either this week or during another class session. Please provide two examples of the management process step your team chose. Let’s discuss them with the class. Answers will vary.
Let’s examine the planning process:. First it entails determining the firm’s goals. These can include establishing where the company wants to be in six months, one year, three years or five years. The firm’s goals answer the question, “Where do we want to go?”. Next we need to develop strategy for achieving the goals. This strategy tells us how we are going to get where we want to go. Then we design tactical and operation plans for implementing the strategy. These tactics allow us to follow our strategy and achieve our goals. We may need to adjust tactics and operations if we judge that we are off the mark in meeting our goals. These tactics answer the question, “Did we arrive where we wanted to be?”. Teaching Tips: In your student teams, please choose a different company, one that you buy products from or are familiar with in the marketplace. Then prepare a simulated new goal for the company, develop a sample strategy for achieving the goal and, finally, design a tactical or operational example of implementation steps for your new strategy. We will then share our examples with the class. Answers will vary. Be sure each student team is addressing each of the three points made above in the planning process.
The organizing process includes arranging resources and activities in a coherent structure. This can include preparing organizational charts to help everyone understand roles and reporting relationships. Organizational charts can be shaped like a pyramid, with one CEO at the top, a number of vice presidents reporting to the CEO or President, and then different functional areas reporting to the vice presidents. Organizational charts can also be horizontal in nature, with many dotted line relationships between teams or divisions. Teaching Tips: Form a new team of two students. Within your team, please draw an example of an organizational chart for a company with whom you are somewhat familiar. Discuss what this type of organizational chart or structure might mean within that company. We will share our ideas with the class. Answers could include many different types of organization charts, from very hierarchical to very horizontal, or somewhere in between. Be sure the examples from the companies discussed match the style of organizational chart prepared by each team.
Let’s examine the organizational function of leading. Leading involves guiding and motivating employees to meet the organization’s objectives. To lead within an organization is to unite employees in a clear and targeted manner and motivate them to work in the best interests of the employer. Teaching Tips: In your student teams, continue to discuss the company for which you just prepared an organizational chart. Please discuss the type of leadership you believe would guide and motivate employees to meet the organization’s objectives. Please consider whether the type of leadership you suggest would unite employees and motivate them. Answers will vary.
The Controlling Process involves monitoring a firm’s performance to make sure that it is meeting its goals. This process begins when management established standards, often for financial performance. This process can serve as a basis for providing rewards or reducing costs within the organization. Teaching Tips: Continuing in your same student teams and using the same company you have been discussing, please determine what types of standards would best help to monitor the firm’s performance. What type of standard might the company set to serve as a basis for providing rewards? Or reducing costs? Answers will vary but could reflect financial ratios, return on investment, return on assets, dividends per share, etc. Cost comparisons with previous quarter results could be used as a basis for employee year-end bonuses.
Let’s review the Control Process: First the company needs to establish the standards, some like we just discussed. These could include return on investment, return on assets, meeting a specific sales goal for a quarter or year, etc. The company then needs to measure the actual performance of the company against those standards. If the measured performance matches the standards set, the company will most likely continue with its current tactics and strategies. However, if the measured performance does not match the desired standards set, the company will need to adjust performance or adjust the standard that was set. Teaching Tips: In your student teams, please choose a standard that you may have suggested for your company example earlier in our discussion. Please establish what you believe would be a reasonable measurable standard that can be achieved within a specific timeframe and write it down. Please discuss in your teams whether you believe the company is meeting the standard you set or not and discuss consequences for the firm. Let’s share our results. Answers will vary based on the type of firm chosen. Standards set should be measurable and time bound. The student’s measure and response to meeting or not meeting the standard should focus on reality and reflect the current state of the economy.
Let’s examine the types and levels of management that can exist within an organization: Top managers are those who are responsible for the overall performance of the firm. These can include the president, vice president, treasurer, CEO, CFO Middle managers implement strategies and work toward goals set by top managers. These can include plant managers, operations managers, division managers. First-line managers work with and supervise other employees. These can include supervisors, office managers, project managers or group leaders. Teaching Tips: In your student teams, please select one of the three levels of managers. Once you have selected the level of manager, please provide three examples of actual titles of managers and a basic one-sentence description of their duties. Answers will vary but should reflect the three levels of managers discussed in this slide and should include specific titles such as those you reviewed. Descriptions of duties should reflect back on the definition of the three types of managers.
Here are some basic areas of management that you will find in most firms: Human Resources, which manages the recruitment of new employees, employee benefits and record-keeping about employees. Marketing, which manages getting information about the company’s product or service to the correct consumer market group. Financial, which manages the costs, revenues and expenses of the firm. Operations, which manages the actual production of the product or design and delivery of the service to the end user. Information, which manages the information technology for the company. Other, which could encompass many other areas depending on the type of business. Teaching Tips: In your student teams, please choose one of these areas of management we have just discussed. Please write down two management titles with a brief description of their responsibility within the firm. Let’s share our examples with the class. Answers will vary but should fall within the six categories discussed above.
Let’s examine the basic management skills that are needed to be a good manager: time-management skills: It is very important for a manager to be able to manage his or her agenda and schedule. It is important to create a “to do” list and stick to it, by prioritizing the things you need to get done in terms of dates or priorities. A manager should also keep track of time spent on phone calls or interruptions by other officemates. In some cases, managers schedule blocks of times during which to return phone calls. Conceptual skills: Being able to analyze strategies and decisions as well as performance and outcome is essential as a manager. Thinking conceptually means a manager needs to see the big picture, or “fly at 20,000 feet” to view a situation from a holistic perspective. Technical skills: Technical skills in one’s field of responsibility are key. For example, an accounting manager needs to have the technical skills to understand the concepts involved in accounting to manage this functional area. The same is true of a marketing, production, financial or human resources manager. Human relations skills: To be a successful manager, a person needs to be able to relate successfully to those who report to him or her and be able to interact socially in teams of peers. Decision-making skills: A manager needs to be able to take action on information provided or performance observed. Making the correct decision is all-important when managing in any capacity. Teaching Tips: In your student teams, please select one of the basic management skills we have just discussed. Then choose a specific management position. Then please discuss the specific skills needed within your chosen management skill that a specific type of manager would need to be successful. Answers will vary but should focus around the discussion topics.
There are four leading time wasters for managers as they work on time-management skills. Let’s review them: Paperwork: One rule-of-thumb is to only handle a piece of paper once. Take care of the situation and don’t let it pile up! Telephone calls: Try to limit calls to the business situation at hand and defer personal calls to break or lunch times. Some managers may wish to schedule a block of time to return phone calls from earlier in the day that they allowed to go to their voice mail while completing another project. Meetings: In general, most organizations hold too many meetings. As a manager, when calling a meeting, be sure there are clear goals set and outcomes achieved for any meetings you call. E-mail: We are all aware how many crazy e-mails and spam mails we receive. Try to limit your e-mail reading and responses to specific times during the day, checking frequently to make sure you have not missed a key issue. Some organizations prefer to work by e-mail, even when offices are located near to each other. Teaching Tips: In your student teams, choose one of the four leading time wasters. Then list at least three ways you can avoid wasting productive time with that particular process. We will share our answers with the class. Answers will vary but could include some of the material discussed earlier.
As we move through the 21 st century, there are a number of management skill sets we need to address to stay on top of our game. Global management skills are extremely important with the globalization of our markets and organizations. We need to understand: Foreign markets. Cultural differences. The motives and practices of foreign rivals. Management and technology skills are also needed to process increasing amounts of information. Teaching Tips: Please form into a new student team of two students. In your teams, please choose one of the global or information technology skills that are required for the 21 st century manager and list three examples of your chosen skill set. We will share our answers with the class. Answers will vary.
Let’s examine strategic management, setting goals and formulating strategy. Strategic management is the process of helping an organization maintain an effective alignment with its environment. For example, an organization needs to examine both its internal environment, which are elements within its control, such as people, places and things, as well as its external environments that are outside of its control. Goals are a great starting point in effective strategic management. Goals are objectives that a business hopes and plans to achieve. These should be measurable within a specific period of time. For example, the goal of a company might be to sell 100,000 widgets within the next six months. The 100,000 widgets represents the amount of goods they are selling to the market and six months is the timeframe in which they will measure and hope to reach their goal. Goals answer the question, “Where do we want to be in a certain period of time?”. Strategy is the broad set of action plans that are set into motion to achieve a company goal. The strategy answers the question, “How will we get there?” or “How will we achieve our goal of selling 100,000 widgets in the next six months?”. Teaching Tips: In our student teams, please think of a consumer products company that you are familiar with in terms of purchasing their products or using their services. Please state one business goal that is both measurable and time bound for that firm. Then please develop two strategies that will allow the firm to achieve its goal. Answers will vary but should answer the questions, “Where do we want to go in what period of time?” and “How are we going to get there?”.
As an organization sets business goals, there are a few more points we need to review. Goals are performance targets that organizations and their managers use to measure success or failure. Every organization needs to have a mission statement. A mission statement is a statement of how a business will achieve its fundamental purpose, and it also directs the types of goals an organization will set. Effective organizations set goals at many different levels: Long-term goals will be for a period of five years or more. Intermediate goals will be for a period of one to five years. Short-term goals will be set for a period of one year or less. Teaching Tips: In our student teams, let’s think back to the company we chose for our last team discussion. Please write down what you believe that company’s mission is and come up with one long-term, one intermediate-term and one short-term goal for that firm. We will share our answers with the class. Answers will vary.
Why should managers set goals? Goals provide direction and guidance for managers at all levels. Goals help firms allocate resources. Goals help to define corporate culture. Goals help managers to assess performance. Teaching Tips: In your student teams, take the three goals you set for the firm you chose a few moments ago. Please describe the purpose of one of the goals you set based on the four purposes of goal setting we just reviewed. Answers will vary based on company chosen, but should address and include the four purposes just discussed.
Let’s examine the different types of strategy an organization can set. Corporate strategy determines what business or businesses a company will own and operate. A company can use a growth strategy, in which they engage in related diversification. Related diversification means the company will acquire firms or products that are in their same or similar industry. An example of this would be when Miller and Coors combined to form Miller-Coors. It is interesting to note that Coors had previously purchased the Stroh Brewing Company, which had previously purchased The Joseph Schlitz Brewing Company. A company can also engage in unrelated diversification. In this case, a company purchases another, unrelated business. An example of this would be when GE purchased NBC. Another strategy the company can use is retrenchment. This type of strategy is used to downsize or divest a portion of the company and focus more closely on a specific market or product. Teaching Tips: In your student teams, please think of three examples of growth or retrenchment strategies that you have heard about or read about. Answers will vary.
In addition, there is also business or competitive strategy. This type of strategy focuses on improving a company’s competitive position at the level of the business unit or product line. An example of this in the brewing industry would be that Miller-Coors has different strategies for the sale of MGD beer brand versus Coors Light. 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. Teaching Tips: In your student teams, please refer back to your same example company. Then please write down an example of either a business or functional strategy. We will share our examples with the class. Answers will vary.
When we formulate strategy, there are three steps we need to take: First we must set strategic goals. Strategic goals are derived from a firm’s mission statement. The second step is to analyze the organization and the environment by performing a SWOT analysis. A SWOT Analysis includes assessing the internal strengths and weaknesses of a company, which are all the things that are within the control of the company. A SWOT Analysis also includes assessing the external opportunities and threats, or all the things that are outside of the control of the company. The third step is matching the organization and its environment This includes matching environmental threats and opportunities against corporate strengths and weaknesses.
This figure shows a visual picture of strategy formulation and the SWOT analysis. Teaching Tips: In your student teams, please focus once again on the same example company you looked at earlier. Please perform a basic SWOT analysis on this firm, listing at least two strengths, weaknesses, opportunities and threats. Answers will vary by company, but remember that strengths and weaknesses are always internal and inside the company’s control, while opportunities and threats are outside the control of the company.
There is also a hierarchy of plans. Let’s examine these: Strategic plans reflect decisions about resource allocations, company priorities and the steps needed to meet strategic goals. Tactical plans are shorter-term plans for implementing specific aspects of the company’s strategic plans. Operational plans are short-term targets for daily, weekly or monthly performance set by mid- and lower-level managers. Teaching Tips: In your same teams and using the same company for which you just prepared a SWOT analysis, please give an example of either a tactical or operational plan. Answers will vary.
Contingency planning and crisis management are also important parts of planning for any organization. Contingency planning includes planning for change. It seeks to identify in advance important aspects of a business or its market that might change. It also seeks to identify in advance 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. Teaching Tips: In your student teams, think of the company you have analyzed during the past few minutes in this class. Please pick an example crisis or change that might occur to or with that company. Then please determine a possible plan to address that change or crisis. We will share our examples with the class. Answers will vary based on the companies chosen.
Corporate culture is another important aspect of any company, and it includes: The shared experiences, stories, beliefs and norms that characterize an organization. The corporate culture also helps define the work and business climate that exists in an organization. Communicating the culture is also extremely important. 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. Teaching Tips: In your student teams, please take a moment to describe the corporate culture of the firm you have analyzed during this class session. We will share our answers with the class. Answers will vary.
It is extremely important to manage change in the culture of the corporation. There are three stages in the change process that we will look at: 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. Teaching Tips: In your student teams, examine how the example company you have worked with during this class might change, and try to discover a new vision for that company. We will share our answers with the class. Answers will vary.
There are many key terms that we learned in this chapter. Teaching Tips: Please form teams of two students. Each team will be assigned a number of terms. Your team should write an appropriate sentence using the key terms assigned to your group, which we will share with the class.
There are many key terms that we learned in this chapter. Teaching Tips: Please form teams of two students. Each team will be assigned a number of terms. Your team should write an appropriate sentence using the key terms assigned to your group, which we will share with the class.
