Chapter 1 - Management and Entrepreneurship


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Chapter 1 - Management and Entrepreneurship

  1. 1. Management and Entrepreneurship
  2. 2. Learning Outcomes <ul><li>Describe a manager’s responsibility. </li></ul><ul><li>List and explain the three management skills. </li></ul><ul><li>List and explain the four management functions. </li></ul><ul><li>Identify the three management role categories. </li></ul><ul><li>List the hierarchy of management levels. </li></ul><ul><li>Describe the three different types of managers. </li></ul><ul><li>Describe the differences among management levels in terms of skills needed and functions performed. </li></ul><ul><li>Explain the difference between an entrepreneur and an intrapreneur. </li></ul><ul><li>Define the key terms listed at the end of the chapter. </li></ul>After studying this chapter, you should be able to:
  3. 3. IDEAS ON MANAGEMENT at Gap Inc. <ul><li>What resources does Gap Inc. use to sell its merchandise? </li></ul><ul><li>What management functions are performed at Gap stores? </li></ul><ul><li>What levels and types of managers have careers at Gap Inc.? </li></ul><ul><li>Is Gap Inc. entrepreneurial and/or intrapreneurial? </li></ul>
  4. 4. Why Study Management? <ul><li>The better you can work with people, the more successful you will be in both your personal and your professional lives. </li></ul><ul><ul><li>Employers want to hire employees who can participate in managing the firm. </li></ul></ul><ul><ul><li>Even nonmanagers are being trained to perform management functions. </li></ul></ul>
  5. 5. Why Study Management? (cont’d) <ul><li>The study of management builds the skills needed in today’s workplace to succeed in: </li></ul><ul><ul><li>Becoming a partner in managing your organization through participative management. </li></ul></ul><ul><ul><li>Working in a team and sharing in decision making and other management tasks. </li></ul></ul><ul><li>The study of management also applies directly to your personal life in helping you to: </li></ul><ul><ul><li>Communicate with and interact with people daily. </li></ul></ul><ul><ul><li>Make personal plans and decisions, set goals, prioritize what you will do, and get others to do things for you. </li></ul></ul>
  6. 6. What Is a Manager’s Responsibility? <ul><li>Manager </li></ul><ul><ul><li>The individual responsible for achieving organizational objectives through efficient and effective utilization of resources. </li></ul></ul><ul><li>The Manager’s Resources </li></ul><ul><ul><li>Human, financial, physical, and informational </li></ul></ul><ul><li>Performance </li></ul><ul><ul><li>Means of evaluating how effectively and efficiently managers use resources to achieve objectives. </li></ul></ul>
  7. 7. Exhibit 1 – 1 ● A Day in the Life of a Manager <ul><li>8:00 A.M. </li></ul><ul><ul><li>Enter the store and walk the sales floor to ensure a proper closing took place the night before. </li></ul></ul><ul><ul><li>Project the payroll cost for the week as a percentage of my forecasted sales, and call it in. </li></ul></ul><ul><ul><li>Perform opening procedures on the controller (computer that records sales transactions and inventory count for all cash registers in the store). </li></ul></ul><ul><li>8:30 A.M. </li></ul><ul><ul><li>Walk the sales floor with staff and assign projects for them to create new displays for merchandise during the day (create a “to do” list for employees and myself). </li></ul></ul><ul><li>9:00 A.M. </li></ul><ul><ul><li>Before the store opens, call voice mail and check e-mail for messages left by other store managers or my boss, the district manager. </li></ul></ul><ul><ul><li>Make business telephone calls for the day. </li></ul></ul><ul><li>9:30 AM. </li></ul><ul><ul><li>Assign sales associates to store zones. </li></ul></ul><ul><ul><li>Put money in computer cash register drawers. </li></ul></ul><ul><li>10:00 A.M. </li></ul><ul><ul><li>Open the store. </li></ul></ul><ul><ul><li>Make sure sales associates are in their zones on the floor for proper floor coverage. </li></ul></ul><ul><ul><li>Make sure everyone who enters the store is greeted and has his or her needs determined. </li></ul></ul><ul><ul><li>Provide floor coverage. (Help out as needed—greet customers, assist customers with sales, stock shelves, assist at the changing room, etc.) </li></ul></ul><ul><li>12:00 P.M. </li></ul><ul><ul><li>Do business analysis for previous month from operating statement and gross margin reports. </li></ul></ul>
  8. 8. Exhibit 1 – 1 ● A Day in the Life of a Manager (cont’d) <ul><li>12:30 P.M . </li></ul><ul><ul><li>Provide floor coverage as needed for staggered employee breaks. </li></ul></ul><ul><li>1:30–2:30 P.M. My break, then: </li></ul><ul><ul><li>Prepare customer request transfers (merchandise our store has but other stores do not have) to be delivered. Enter transfers into computer and get merchandise. </li></ul></ul><ul><li>3:00 PM. </li></ul><ul><ul><li>Leave for district meeting. </li></ul></ul><ul><li>3:15 P.M. </li></ul><ul><ul><li>Drop off transfers and pick up another store manager; continue on to district meeting. </li></ul></ul><ul><li>4:00 P.M. </li></ul><ul><ul><li>Meeting is conducted by district manager with the seven general and store managers. Meeting begins with discussion of the following topics: </li></ul></ul><ul><ul><li>Previous week’s sales, previous week’s payroll, payroll projections for next month (cost as a percentage of sales), cleanliness, and standards of the stores. </li></ul></ul><ul><ul><li>New information items, mail, general discussion, questions, etc. </li></ul></ul><ul><ul><li>Meeting ends with a walk-through of the store at which the meeting is held. During a walk-through, the host store manager discusses new display ideas that the other store managers may want to use. In addition, the other store managers give the host manager ideas for improving the store visually. In other words, this is a time to share ideas that will help all team members in the Gap district. </li></ul></ul><ul><li>6:00 P.M. </li></ul><ul><ul><li>Call my store to see how sales are going for the day, then leave for home. </li></ul></ul>
  9. 9. What Does It Take to Be a Successful Manager? <ul><li>Management Qualities </li></ul><ul><ul><li>Integrity, industriousness, and the ability to get along with people </li></ul></ul><ul><li>Management Skills </li></ul><ul><ul><li>Technical skills </li></ul></ul><ul><ul><li>Interpersonal skills </li></ul></ul><ul><ul><li>Decision-making skills </li></ul></ul><ul><li>AACSB Competencies </li></ul><ul><ul><li>Self-management; global, multicultural, diversity, and ethics environment; planning and administration; strategic action; communication; and teamwork </li></ul></ul><ul><li>The Ghiselli Study </li></ul><ul><ul><li>Initiative, self-assurance, decisiveness, intelligence, need for occupational achievement, and supervisory ability </li></ul></ul>
  10. 10. Exhibit 1 –2 ● Management Skills <ul><li>Communication skills </li></ul><ul><li>Team skills </li></ul><ul><li>Diversity skills </li></ul><ul><li>Power, political, negotiation, and networking skills </li></ul><ul><li>Motivation skills </li></ul><ul><li>Conflict management skills </li></ul><ul><li>Ethics skills </li></ul><ul><li>Conceptual skills </li></ul><ul><li>Diagnostic, analytical, and critical-thinking skills </li></ul><ul><li>Quantitative reasoning skills </li></ul><ul><li>Time management skills </li></ul>
  11. 12. What Do Managers Do? <ul><li>Management Functions: </li></ul><ul><ul><li>Planning </li></ul></ul><ul><ul><ul><li>Setting objectives and determining in advance exactly how the objectives will be met. </li></ul></ul></ul><ul><ul><li>Organizing </li></ul></ul><ul><ul><ul><li>Delegating and coordinating tasks and allocating resources to achieve objectives. </li></ul></ul></ul><ul><ul><li>Leading </li></ul></ul><ul><ul><ul><li>Influencing employees to work toward achieving objectives. </li></ul></ul></ul><ul><ul><li>Controlling </li></ul></ul><ul><ul><ul><li>Establishing and implementing mechanisms to ensure that objectives are achieved. </li></ul></ul></ul>
  12. 13. Exhibit 1 –3 ● Management Skills and Functions
  13. 15. Management Roles <ul><li>Role </li></ul><ul><ul><li>A set of expectations of how one will behave in a given situation. </li></ul></ul><ul><li>Management Role Categories (Mintzberg) </li></ul><ul><ul><li>Interpersonal </li></ul></ul><ul><ul><ul><li>Figurehead, leader, and liaison </li></ul></ul></ul><ul><ul><li>Informational </li></ul></ul><ul><ul><ul><li>Monitor, disseminator, and spokesperson </li></ul></ul></ul><ul><ul><li>Decisional </li></ul></ul><ul><ul><ul><li>Entrepreneur, disturbance handler, resource allocator, and negotiator </li></ul></ul></ul>
  14. 16. Exhibit 1 –4 ● Ten Roles Managers Play
  15. 18. Differences Among Managers <ul><li>The Three Levels of Management </li></ul><ul><ul><li>Top managers </li></ul></ul><ul><ul><ul><li>CEO, president, or vice president </li></ul></ul></ul><ul><ul><li>Middle managers </li></ul></ul><ul><ul><ul><li>Sales manager, branch manager, or department head </li></ul></ul></ul><ul><ul><li>First-line managers </li></ul></ul><ul><ul><ul><li>Crew leader, supervisor, head nurse, or office manager </li></ul></ul></ul><ul><ul><li>Nonmanagement operative employees </li></ul></ul><ul><ul><ul><li>Workers in the organization who are supervised by first-line managers </li></ul></ul></ul>
  16. 19. Exhibit 1 –5 ● Management Levels and Functional Areas
  17. 21. Types of Managers <ul><li>General Managers </li></ul><ul><ul><li>Supervise the activities of several departments. </li></ul></ul><ul><li>Functional Managers </li></ul><ul><ul><li>Supervise the completion of related tasks. </li></ul></ul><ul><ul><li>Common functional areas: </li></ul></ul><ul><ul><ul><li>Marketing </li></ul></ul></ul><ul><ul><ul><li>Operations/production </li></ul></ul></ul><ul><ul><ul><li>Finance/accounting </li></ul></ul></ul><ul><ul><ul><li>Human resources/personnel management </li></ul></ul></ul><ul><li>Project Managers </li></ul><ul><ul><li>Coordinate employees across several functional departments to accomplish a specific task. </li></ul></ul>
  18. 22. Join the Discussion Ethics & Social Responsibility <ul><li>Executive Compensation </li></ul><ul><ul><li>Do executives deserve to make 200 times more than the average worker? </li></ul></ul><ul><ul><li>Is it ethical for managers to take large pay increases when laying off employees? </li></ul></ul><ul><ul><li>Are companies being socially responsible when paying executives premium compensation? </li></ul></ul>
  19. 23. Exhibit 1 –6 ● Skills Needed and Functions Performed at Different Management Levels
  20. 24. Exhibit 1 –7 ● Differences between Large and Small Businesses
  21. 25. Managing the Old versus New Workplace <ul><li>Old Workplace </li></ul><ul><ul><li>Autocratic leadership </li></ul></ul><ul><ul><li>Domestic view </li></ul></ul><ul><ul><li>Specialized jobs performed by individuals </li></ul></ul><ul><ul><li>Homogeneous employees </li></ul></ul><ul><ul><li>Slow change </li></ul></ul><ul><li>New Workplace </li></ul><ul><ul><li>Participative leadership </li></ul></ul><ul><ul><li>Global view </li></ul></ul><ul><ul><li>Flexible jobs performed by teams </li></ul></ul><ul><ul><li>Diverse employees </li></ul></ul><ul><ul><li>Rapid change </li></ul></ul>
  22. 26. Managing the New Workplace <ul><li>Learning Organizations </li></ul><ul><ul><li>Have everyone engaged in identifying and solving problems, enabling change, and continuous improvement. </li></ul></ul><ul><ul><ul><li>Team-based structure </li></ul></ul></ul><ul><ul><ul><li>Participative management </li></ul></ul></ul><ul><ul><ul><li>The sharing of information through knowledge management </li></ul></ul></ul><ul><li>Knowledge Management </li></ul><ul><ul><li>Involves everyone in an organization in sharing knowledge and applying it to continuously improve products and processes. </li></ul></ul><ul><ul><li>Is the firm’s core capability and is important to sustained ability to compete. </li></ul></ul>
  23. 27. Entrepreneurship <ul><li>Entrepreneurship Activities </li></ul><ul><ul><li>Creating new products or processes </li></ul></ul><ul><ul><li>Entering new markets </li></ul></ul><ul><ul><li>Creating new business ventures </li></ul></ul>
  24. 28. New Venture Entrepreneurs and Intrapreneurs <ul><li>New Venture </li></ul><ul><ul><li>A new business or a new line of business. </li></ul></ul><ul><li>Entrepreneur </li></ul><ul><ul><li>One who starts a new small business venture. </li></ul></ul><ul><li>Intrapreneur </li></ul><ul><ul><li>One who starts a new line of business within a large organization. </li></ul></ul>
  25. 29. New Venture Entrepreneurs and Intrapreneurs (cont’d) <ul><li>Small Business Defined </li></ul><ul><ul><li>Is independently owned and operated </li></ul></ul><ul><ul><li>Is not dominant in its field </li></ul></ul><ul><ul><li>Has annual receipts not in excess of $500,000 </li></ul></ul><ul><ul><li>Fact: In 2005, there were approximately 25.8 million small businesses in the U.S. </li></ul></ul>
  26. 30. Contributions of Entrepreneurs Society Economic Growth Support of Large Businesses Job Creation Innovation
  27. 31. Join the Discussion Ethics & Social Responsibility <ul><li>Virtual Internships </li></ul><ul><ul><li>What are the benefits of virtual internships to employers and to interns? </li></ul></ul><ul><ul><li>Should a student be given college credit for a virtual internship, or should he or she receive only pay without credit—a part-time job? </li></ul></ul><ul><ul><li>Is it ethical and socially responsible to use interns instead of regular employees? </li></ul></ul><ul><ul><li>Will the use of virtual interns become the norm, or will the practice fade? </li></ul></ul>
  28. 32. Selecting the New Venture <ul><li>Factors in Selecting a New Venture </li></ul><ul><ul><li>Good growth potential and profit opportunities </li></ul></ul><ul><ul><li>Previous work experience </li></ul></ul><ul><ul><li>Observing others’ mistakes and successes </li></ul></ul><ul><ul><li>Finding an overlooked market segment or niche </li></ul></ul><ul><ul><li>Systematic search or hobby </li></ul></ul><ul><li>Competitive Advantage </li></ul><ul><ul><li>Specifies how the organization offers unique customer value. </li></ul></ul><ul><ul><ul><li>First-mover advantage involves offering a unique customer value before competitors do so. </li></ul></ul></ul>
  29. 33. Selecting the New Venture (cont’d) <ul><li>Five Most Commonly Used Entrepreneurial Strategies </li></ul><ul><ul><li>Creating a competitive advantage </li></ul></ul><ul><ul><li>Maintaining innovation </li></ul></ul><ul><ul><li>Lowering the costs of developing and/or maintaining one’s venture </li></ul></ul><ul><ul><li>Defending an existing product/service </li></ul></ul><ul><ul><li>Creating a first-mover advantage </li></ul></ul>
  30. 34. The Business Plan <ul><li>The well-prepared business plan answers the following questions: </li></ul><ul><ul><li>What is the purpose and mission of this business? </li></ul></ul><ul><ul><li>What products (goods and/or services) will the business provide? Who is in the target market? </li></ul></ul><ul><ul><li>Who are my competitors? </li></ul></ul><ul><ul><li>What is my competitive advantage? How will my business be successful? </li></ul></ul><ul><ul><li>How much money do I need to get started? </li></ul></ul><ul><ul><li>Where do I secure the money to finance the new venture? </li></ul></ul><ul><ul><li>What are the potential revenues, expenses, and profits? </li></ul></ul><ul><ul><li>How do I control the business? </li></ul></ul><ul><ul><li>What are possible expansion plans? </li></ul></ul>
  31. 35. Elements of a Business Plan <ul><li>Executive Summary </li></ul><ul><li>Introduction </li></ul><ul><li>Location and Layout </li></ul><ul><li>Operations </li></ul><ul><li>Marketing </li></ul><ul><li>Human Resources </li></ul><ul><li>Accounting </li></ul><ul><li>Controls </li></ul><ul><li>Financing </li></ul>
  32. 36. Exhibit 1 –8 ● Information Commonly Included in a Business Plan <ul><li>Executive Summary. Although presented first, this section is written after the rest of the business plan has been completed. </li></ul><ul><li>Introduction. This section describes the business, answering these questions: What is the business? What goods or services does the business provide? Who are the business’s competitors? What is the business’s competitive advantage? It also introduces key managers and describes the legal form of the business (sole proprietorship, partnership, or corporation) and the type of business (an existing business, a new startup, a franchise, or a new line). </li></ul><ul><li>Location and Layout. Where will business be conducted, and how will the facilities be organized? </li></ul><ul><li>Operations. This section describes the systems process for transforming inputs into outputs. </li></ul><ul><li>Marketing. This section describes the marketing mix of the four Ps for the business: (1) products to be sold, (2) place products will be sold, (3) price of products, and (4) promotion to let target customers know about your products. </li></ul><ul><li>Human Resources. How many employees will the business need, and how will it recruit and hire them? </li></ul><ul><li>Accounting. How will the business keep records? The business plan should include a three-year projection ( pro forma ) for three important financial reports: balance sheet, income statement, and cash flow. The accounting plan indicates the company’s potential revenues, expenses, and profits. Potential creditors (people who will lend you money, assets, and inventory) and investors (co-owners with you) generally require projected financial statements. </li></ul><ul><li>Controls. This section describes the mechanisms to ensure that objectives are achieved. </li></ul><ul><li>Financing. The financial plan specifies how much money and other assets will be required to start and operate the new venture and where the financing will come from. (As a general rule, you should not start a new venture unless you can operate the business for one year without drawing money from the business for personal expenses. In other words, you need to live for a year without a salary. Paying rent, car payments, and so on with business profits during first years is rarely possible, and doing so can cause your business to run out of funds and close.) </li></ul>
  33. 37. Sources of Assistance in Planning, Starting, and Opening the New Venture <ul><li>Palo Alto Software </li></ul><ul><ul><li> </li></ul></ul><ul><li>Small Business Administration (SBA) </li></ul><ul><ul><li> </li></ul></ul><ul><ul><li>Service Corps of Retired Executives (SCORE) </li></ul></ul><ul><ul><li>Women’s Business Centers (WBCs) </li></ul></ul><ul><ul><li>Small Business Development Centers (SBDCs) </li></ul></ul><ul><li>Minority Business Development Agency (MBDA) </li></ul><ul><ul><li> </li></ul></ul>
  34. 38. Exhibit 1 –9 ● Features of This Book’s Three-Pronged Approach and Table of Contents
  35. 39. KEY TERMS <ul><li>manager </li></ul><ul><li>manager’s resources </li></ul><ul><li>performance </li></ul><ul><li>management skills </li></ul><ul><li>technical skills </li></ul><ul><li>interpersonal skills </li></ul><ul><li>decision-making skills </li></ul><ul><li>management functions </li></ul><ul><li>planning </li></ul><ul><li>organizing </li></ul><ul><li>leading </li></ul><ul><li>controlling </li></ul><ul><li>management role categories </li></ul><ul><li>levels of management </li></ul><ul><li>types of managers </li></ul><ul><li>knowledge management </li></ul><ul><li>new venture </li></ul><ul><li>entrepreneurs </li></ul><ul><li>intrapreneurs </li></ul><ul><li>small business </li></ul><ul><li>competitive advantage </li></ul><ul><li>first-mover advantage </li></ul><ul><li>business plan </li></ul>