5 chapter

Business Management

Business Essentials, 7th Edition Ebert/Griffin

Instructor Lecture PowerPoints

PowerPoint Presentation prepared by

2009 Pearson Education, Inc.

Carol Vollmer Pope Alverno College

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LEARNING OBJECTIVES
After reading this chapter, you should be able to:
1. Describe the nature of management and identify the four basic functions that constitute the management process.
2. Identify different types of managers likely to be found in an organization by level and area. 3. Describe the basic skills required of managers. 4. Explain the importance of strategic management and effective goal setting in organizational success.
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L E A R N I N G O B J E C T I V E S (contd)
After reading this chapter, you should be able to: 5. Discuss contingency planning and crisis management in todays business world. 6. Describe the development and explain the importance of corporate culture.

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Whats in It for Me?

By understanding the material discussed in this chapter, youll 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

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Who Are Managers? Good Managers

Are responsible for business performance and effectiveness
Effectivedo the right things; achieve goals Efficientdo things right; lower costs

Are accountable to all key stakeholders

Develop strategic plans and tactical plans Analyze their competitive environments and plan, organize, direct, and control day-to-day operations

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The Management Process Management

The process of planning, organizing, leading, and controlling a firms financial, physical, human, and information resources to achieve its goals
Planning
Setting Goals

Controlling
Monitoring Performance

Organizing
Structuring

Leading
Guiding and Motivating
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Planning
The Planning Process
Determining firms goals Developing strategy for achieving goals Designing tactical and operational plans for implementing the strategy

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Organizing
The Organizing Process
Arranging resources and activities in a coherent structure
Prepare organizational charts to help everyone understand roles and reporting relationships

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Leading
Leading
Guiding and motivating employees to meet the organizations objectives
Uniting employees in a clear and targeted manner and motivating them to work in the best interests of the employer

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Controlling The Controlling Process

Monitoring a firms performance to make sure that it is meeting its goals
Begins when management establishes standards, often for financial performance Can serve as a basis for providing rewards or reducing costs

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FIGRE 5.1 The Control Process

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Types of Managers
Levels of Management
Top managers: Responsible for the overall performance of the firm

President, vice president, treasurer, CEO, CFO

Middle managers: Implement strategies and work toward goals set by top managers Plant manager, operations manager, division manager First-line managers: Work with and supervise employees Supervisor, office manager, project manager, group leader

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Areas of Management
Human Resources

Operations

Marketing

Information

Financial

Other

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Basic Management Skills

Technical Skills
Conceptual Skills timemanagement skills Human Relations Skills

DecisionMaking Skills

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time-management skills
Four leading time wasters:
Paperwork Telephone calls Meetings E-mail

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Management Skills for the 21st Century

Global Management Skills
Understand foreign markets, cultural differences, and the motives and practices of foreign rivals Understand how to collaborate with others around the world on a real-time basis

Management and Technology Skills

Needed to process increasing amounts of information
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Strategic Management: Setting Goals and Formulating Strategy

Planning
Set goals (SMART)

Goals
Objectives that a business hopes and plans to achieve

Strategy
The broad set of action plans to achieve company goals

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SWOT Analysis
A. B. C. D. STRENGTHS - internal, positive WEAKNESSES - internal, negative OPPORTUNITIES - external, positive THREATS - external, negative

Setting Business Goals

Goals
Performance targets that organizations and their managers use to measure success or failure

Mission Statement
A statement of how a business will achieve its fundamental purpose

Effective organizations set goals at many different levels:

Long-term goals: five years or more Intermediate goals: one to five years Short-term goals: one year or less

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Purposes of Goal Setting

Goal Setting:
Provides direction and guidance for managers at all levels Helps firms allocate resources Helps to define corporate culture Helps managers assess performance

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Types of Strategy
Corporate Strategy
Determines what business or businesses a company will own and operate

Growth
Related diversification Unrelated diversification

Retrenchment
Downsizing and divestiture

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Types of Strategy (contd)

Business (or Competitive) Strategy
Focuses on improving the companys competitive position at the level of the business unit or product line

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

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Formulating Strategy
Step 1: Setting Strategic Goals Strategic goals are derived from a firms mission statement Step 2: Analyzing the Organization and the Environment: SWOT Analysis Assessing internal strengths and weaknesses and external opportunities and threats
Environmental analysis Organizational analysis

Step 3: Matching the Organization and Its Environment Matching environmental threats and opportunities against corporate strengths and weaknesses
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Figure 5.2 Strategy Formulation

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A Hierarchy of Plans
Strategic Plans
Reflect decisions about resource allocations, company priorities, and the steps needed to meet strategic goals

Tactical Plans
Shorter-term plans for implementing specific aspects of the companys strategic plans

Operational Plans
Mid-level and lower-level managers set shortterm targets for daily, weekly, or monthly performance 2009 Pearson Education, Inc.

Contingency Planning and Crisis Management Contingency Planning

Planning for change Seeks to identify in advance important aspects of a business or its market that might change and the ways in which a company will respond to changes

Crisis Management
Involves an organizations methods for dealing with a crisisan unexpected emergency requiring immediate response
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Management and the Corporate Culture Corporate Culture

Is the shared experiences, stories, beliefs, and norms that characterize an organization Helps define the work and business climate that exists in an organization

Communicating the Culture

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
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Managing Change in the Culture

Stages in the Change Process
At the highest level, analysis of the companys 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 firms new values.

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Key Terms
business (or competitive) strategy conceptual skills contingency planning controlling corporate culture corporate strategy crisis management decision-making skills leading environmental analysis first-line manager functional strategy goal human relations skills intermediate goal long-term goal management middle manager mission statement organizational analysis organizing operational plan planning short-term goal strategic goal strategic management strategic plan

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Key Terms (cont.)

strategy strategy formulation SWOT analysis tactical plan technical skills time-management skills top manager

2009 Pearson Education, Inc.