BA 100 Chapter 7

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CHAPTER 7
Management and
Leadership

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LEARNING OBJECTIVES 1 of 2
1. Describe the changes occurring today in the
management function.
2. Describe the four functions of management.
3. Relate the planning process and decision making
to the accomplishment of company goals.

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LEARNING OBJECTIVES 2 of 2
4. Describe the organizing function of management.
5. Explain the differences between leaders and
managers, and describe the various leadership
styles.
6. Summarize the five steps of the control function
of management.

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SHERYL SANDBERG
Facebook
Displayed her leadership skills
as a child and took that with her
to Harvard.
She joined Facebook in 2008
and made the company
profitable in two years.
Now shares her knowledge in
her book, Lean In.
Photo credit: © Rick Friedman/Corbis

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NAME that COMPANY
This company knows that finding the right people
and keeping them happy is the key to long-term
business success. So it has its own gourmet chefs
prepare delicious lunches, dinners and snacks for its
employees.
Name that company!

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WHAT IS MANAGEMENT? LO 7-2
Management -- The process used to accomplish
organizational goals through planning, organizing,
leading and controlling people and other organizational
resources.
Photo credit: © Jason Plotkin/York Daily Record/AP Images

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TODAY’S MANAGERS LO 7-1
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.
Photo credit: Ingram Publishing/age Fotostock

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RESPECT and HOW to GET IT LO 7-1
Jump to Appendix 1 for long image description
Source: Entrepreneur, www.entrepreneur.com, accessed November 2014.

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EDUCATION MATTERS
Alma Maters of CEOs LO 7-1
Rank School # of CEOs
1 Harvard University 25
2 Stanford University 11
3 University of Pennsylvania 8
4 Massachusetts Institute of Technology 7
5 Cornell University 6
6 University of Chicago 6
7 Northwestern University 6
8 Columbia University 6
9 Yale University 6
10 Southern Methodist University 5
Source: Best Colleges, www.bestcolleges.com, accessed November 2014.

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FOUR FUNCTIONS of
MANAGEMENT LO 7-2
Jump to Appendix 2 for long image description

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TEST PREP
• What are some of the changes happening in
management today?
• What’s the definition of management used in this
chapter?
• What are the four functions of management?

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SHARING the VISION LO 7-3
Vision -- More than a goal, it’s a broad explanation of
why the organization exists and where it’s trying to go.
Photo credit: Shutterstock / Rawpixel.com

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DEFINING THE MISSION LO 7-3
Mission Statement -- Outlines the organization’s
fundamental purposes. It includes:
- the organization’s self–concept
- its philosophy
- long–term survival needs
- customer needs
- social responsibility
- nature of the product or service

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SETTING
GOALS and OBJECTIVES LO 7-3
Goals -- The broad, long-term accomplishments an
organization wishes to attain.
Objectives -- Specific, short-term statements detailing
how to achieve the organization’s goals.
Photo credit: Design Pics / Kelly Redinger

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PLANNING ANSWERS
FUNDAMENTAL QUESTIONS LO 7-3
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

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SWOT MATRIX LO 7-3
Jump to Appendix 3 for long image description

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PLANNING FUNCTIONS LO 7-3
Jump to Appendix 4 for long image description

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STRATEGIC and TACTICAL
PLANNING LO 7-3
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.

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OPERATIONAL and CONTINGENCY
PLANNING LO 7-3
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.
Photo credit: © Jonathan Ernst/Reuters/ Corbis

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DECISION MAKING LO 7-3
Decision Making -- Choosing among two or more
alternatives.
Photo credit: ©Ariel Skelley/Blend Images LLC

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WHAT MAKES a GREAT CEO
Decision Making Skills of Top CEOs LO 7-3
Keep global business issues in mind and be a citizen
of the world.
Identify and manage risks before they grow.
Change strategies and models with the times.
Skillfully manage relationships with governments as
government involvement rises.
Source: Fortune, www.fortune.com, accessed November 2014.

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RATIONAL DECISION-MAKING
MODEL LO 7-3
1. Define the situation.
2. Describe and collect needed information.
3. Develop alternatives.
4. Decide which alternative is best.
5. Do what is indicated.
6. Determine whether the decision was a good one
and follow up.

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PROBLEM SOLVING LO 7-3
Problem Solving -- The process of solving the
everyday problems that occur; less formal than decision
making and needs quicker action.
Problem-solving techniques include brainstorming
and PMI -- Listing all the pluses for a solution in one
column, all the minuses in another and the implications
in a third.

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TEST PREP 1 of 2
1. What is the difference between goals and
objectives?
2. What does a company analyze when it does a
SWOT analysis?
3. What are the differences between strategic,
tactical and operational planning?
4. What are the six Ds in decision making?

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LEVELS of MANAGEMENT LO 7-4
Jump to Appendix 5 for long image description

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MANAGEMENT LEVELS LO 7-4
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.

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TOP MANAGEMENT LO 7-4
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.

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AMERICA’S MOST POWERFUL FEMALE
MANAGERS LO 7-4
Rank Name Organization
1 Ginni Rometty IBM
2 Mary Barra GM
3 Indra Nooyi PepsiCo
4 Marillyn Hewson Lockheed Martin
5 Meg Whitman Hewlett-Packard
6 Irene Rosenfeld Mondelez International
7 Patricia Woertz Archer Daniels Midland
8 Abigail Johnson Fidelity
9 Ellen Kullman DuPont
10 Sheryl Sandberg Facebook
Source: Fortune Magazine, www.fortune.com, accessed November 2014.

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MANAGERIAL SKILLS LO 7-4
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.
Conceptual Skills -- Skills that involve the ability to
picture the organization as a whole and the relationship
among its various parts.

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SKILLS NEEDED at VARIOUS
LEVELS of MANAGEMENT LO 7-4
Jump to Appendix 6 for long image description

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THANK YOU
The Most Basic Human Relations Skill LO 7-4
Saying “thank you” has led to happier employees
and greater profits for companies.
Whom should a manager thank?
1. Interns - Doing lots of work for little money, they are the
future of the company and industry.
2. Lawyers - Many do pro bono work, even for nonprofit
companies.
3. The little people - Mailroom, repair, and cleaning staff
keep the office running day-to-day.
Source: Fast Company, www.fastcompany.com, accessed November 2014.

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BACK to SCHOOL for
TOP MANAGERS
Business leaders need to study international
political, legal, and regulatory systems.
Each local market requires their own set of global
standards.
Some companies, like Coca-Cola, Nestle, and IBM
have done a noteworthy job of assessing and
understanding global challenges.

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STAFFING LO 7-4
Staffing -- Recruiting, hiring, motivating and retaining
the best people available to accomplish the company’s
objectives.
Recruiting good employees is
critical.
Many people are not willing to
work at companies unless they
are treated well with fair pay.
Photo credit: © robert hyrons/AlamyStock Photo

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STAFFING is TRICKY BUSINESS
Six Sins of Staffing LO 7-4
1. Don’t hire someone because someone else says
so.
2. Don’t get caught up in applicants’ appearances.
3. Don’t give someone the wrong job.
4. Don’t forget about feedback.
5. Don’t give promotions just because it’s time.
6. Don’t cheat your employees.
Source: CareerBuilder, www.careerbuilder.com, accessed November 2014.

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LEADERSHIP LO 7-5
Leaders must:
- Communicate a vision and
rally others around that vision.
- Establish corporate values.
- Promote corporate ethics.
- Embrace change.
- Stress accountability and
responsibility.
Photo credit: © Dina Rudick/The Boston Globe/Getty Images

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WHAT DO YOU TELL the TEAM?
As a first-line manager, you have new information
that your department head hasn’t seen yet. The
findings of the report indicate your manager’s plans
should fail. If they do fail, you could be promoted.
Will you give your department head the report?
What is the ethical thing to do?
What might be the consequences?

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ACCOUNTABILITY through
TRANSPARENCY LO 7-5
Transparency -- The presentation of the company’s
facts and figures in a way that is clear and apparent to all
stakeholders.
Photo credit: Nonwarit / Shutterstock

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LEADERSHIP STYLES LO 7-5
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.
Photo credit: © Jeff Kowalsky/Bloomberg/Getty Images

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VARIOUS LEADERSHIP STYLES LO 7-5
Jump to Appendix 7 for long image description

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NATURAL BORN LEADERS?
Four Types of Executives LO 7-5
Rationalists Humanists
Politicists Culturists

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EMPOWERMENT LO 7-5
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.

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WORK SMARTER
How to Ease Pressure on Workers LO 7-5
Manage output instead of hours.
Train workers to be ready for a more complex
corporate structure.
Allow lower-level managers to make decisions.
Use new technology to foster teamwork.
Shift hiring emphasis to collaboration.
Source: Bloomberg BusinessWeek, www.businessweek.com, accessed November 2014.

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MANAGING KNOWLEDGE LO 7-5
Knowledge Management --
Finding the right information,
keeping the information in a readily
accessible place and making the
information known to everyone in
the firm.
Tries to keep people from
reinventing the wheel.
Photo credit: © Sam Edwards/age fotostock

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USING SOCIAL MEDIA DURING
the WORST of TIMES
Many companies use sites like
Twitter and Facebook to
proactively and reactively
communicate with their
customers.
When GM was going through a
massive recall, CEO, Mary Barra,
insisted on using social media.
Complaints were quickly read,
responded to, and resolved.
Photo credit: © Michael Spooneybarger/Reuters/Corbis

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FIVE STEPS of CONTROLLING LO 7-6
Jump to Appendix 8 for long image description

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ARE YOU a MICROMANAGER? LO 7-6
Do you have strategic initiatives that you have not
addressed?
Do you often check on employees for quality
control?
Do you often check on subordinates throughout the
day?
Do you rarely take vacations?
Is there a lot of turnover?
Source: CFO Magazine, www.cfo.com, accessed November 2014.

47. ©McGraw-Hill Education.
MEASURING SUCCESS LO 7-6
Traditional forms of measuring success are financial.
Pleasing employees, stakeholders and customers is
important.
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.

48. ©McGraw-Hill Education.
TEST PREP 2 of 2
1. How does enabling help achieve empowerment?
2. What are the five steps in the control process?
3. What’s the difference between internal and
external customers?

49. ©McGraw-Hill Education.
Appendix 1: RESPECT and HOW to GET IT
Strong management: 27 percent
Sound business strategy: 28 percent
Ethical practices: 20 percent
Competitive edge: 10 percent
Product innovation: 4 percent
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Appendix 2: FOUR FUNCTIONS of
MANAGEMENT
Planning:
Setting organizational goals
Developing strategies to reach those goals
Determining resources needed
Setting precise standards
Leading:
Guiding and motivating employees to work effectively to accomplish organizational goals and objectives
Giving assignments
Explaining routines
Clarifying policies
Providing feedback on performance
Organizing:
Allocating resources, assigning tasks, and establishing procedures for accomplishing goals
Preparing a structure (organization chart) showing lines of authority and responsibility
Recruiting, selecting, training, and developing employees
Placing employees where they’ll be most effective
Controlling:
Measuring results against corporate objectives
Monitoring performance relative to standards
Rewarding outstanding performance
Taking corrective action when necessary
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Appendix 3: SWOT MATRIX
Potential Internal Strengths: Core competencies in key areas, An
acknowledged market leader, Well-conceived functional area strategies,
Proven management, Cost advantages, Better advertising campaigns
Potential Internal Weaknesses: No clear strategic direction, Obsolete
facilities, Subpar profitability, Lack of managerial depth and talent, Weak market
image, Too narrow a product line
Potential External Opportunities: Ability to serve additional customer groups,
Expand product lines, Ability to transfer skills/technology to new products,
Falling trade barriers in attractive foreign markets, Complacency among
rival firms, Ability to grow due to increases in market demand
Potential External Threats: Entry of lower-cost foreign competitors, Rising
sales of substitute products, Slower market growth, Costly regulatory
requirements, Vulnerability to recession and business cycles, Changing buyer
needs and tastes
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52. ©McGraw-Hill Education.
Appendix 4: PLANNING FUNCTIONS
Strategic planning: The setting of broad, long-
range goals by top managers
Tactical planning: The identification of specific,
short-range objectives by lower-level managers
Operational planning: The setting of work
standards and schedules
Contingency planning: Backup plans in case
primary plans fail
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53. ©McGraw-Hill Education.
Appendix 5: LEVELS of MANAGEMENT
The levels of management are depicted in a
pyramid shape in the following order from top to
bottom:
Top management: president and vice presidents
Middle management: plant managers, division
heads, and branch managers
Supervisory (first-line) management: supervisors,
foremen, department heads, and section leaders
Nonsupervisory: employees
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54. ©McGraw-Hill Education.
Appendix 6: SKILLS NEEDED at VARIOUS
LEVELS of MANAGEMENT
All managers need human relations skills. 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.
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55. ©McGraw-Hill Education.
Appendix 7: VARIOUS LEADERSHIP STYLES
A continuum places boss-centered leadership on the left and
subordinate-centered leadership on the right. Boss-centered leadership
shows a large amount of authority used by managers, while
subordinate-centered leadership shows a large area of freedom for
employees. Along the continuum, a manager’s authority decreases as it
moves toward subordinate-centered leadership, while an employee’s
freedom increases. Placed beneath the continuum from left to right are
the three leadership styles: autocratic, participative/democratic, and
free rein. In autocratic leadership, a manager makes a decision and
announces it, the manager then “sells” the decision, and then the
manager presents ideas and invites questions. In
participative/democratic leadership, a manager presents tentative
decisions subject to change; the manager presents a problem, gets
suggestions, and makes a decision; and the manager defines limits and
asks the group to make the decision. In free rein leadership, the
manager permits employees to function within limits defined by their
superior.
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Appendix 8: FIVE STEPS of CONTROLLING
Step 1: Establish clear standards
Step 2: Monitor and record performance
Step 3: Compare results against standards
Step 4: Communicate results
Step 5: If needed, take corrective action
Feedback results in determining if standards are
realistic
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