BUSINESS ESSENTIALS, 6 TH EDITION EBERT Ch.6: Managing the business 1

BUSINESS ESSENTIALS, 6TH EDITION EBERT

Ch.6: Managing the business

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After reading this chapter, you should be able to:1. Describe the four activities that constitute the management

process.2. Identify types of managers by level and area.3. Describe the five basic management skills.4. Explain the importance of goal setting and strategic

management in organizational success.5. Discuss contingency planning and crisis managementin today's business world . 6. Explain the idea of corporate culture and why It is important.

L E A R N I N G O B J E C T I V E SL E A R N I N G O B J E C T I V E S

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What’s in It for Me?

• 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

© 2009 Pearson Education, Inc.

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Who Are Managers?• Who are Good Managers?– Are responsible for business performance and

effectiveness• Effective—do the right things; achieve goals• Efficient—do things right; lower costs

– Are accountable to all key stakeholders: they :• Develop strategic plans and tactical plans• Analyze their competitive environments and

plan, organize, direct, and control day-to-day operations

© 2009 Pearson Education, Inc.4

The Management Process

LeadingLeadingGuiding and MotivatingGuiding and Motivating

LeadingLeadingGuiding and MotivatingGuiding and Motivating

ControllingControllingMonitoring PerformanceMonitoring Performance

ControllingControllingMonitoring PerformanceMonitoring Performance

PlanningPlanningSetting GoalsSetting Goals

PlanningPlanningSetting GoalsSetting Goals

OrganizingOrganizingStructuringStructuring

OrganizingOrganizingStructuringStructuring

• Management– The process of planning, organizing, leading, and

controlling a firm’s financial, physical, human, and information resources to achieve its goals

© 2009 Pearson Education, Inc. 5

Planning• The Planning Process– Determining firm’s goals– Developing strategy for achieving goals– Designing tactical and operational plans for

implementing the strategy


Let’s examine the planning process

1.The firm’s goals answer the question, “Where do we want to go?”. During 1 year more or less.

2.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.

3.Then we design tactical and operation plans for implementing the strategy. These tactics allow us to follow our strategy and achieve our goals. These tactics answer the question, “Did we arrive where we wanted to be

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Homework

A. Every one should prepare action plan in one page that includes: objective- strategy, activities and others. Should be written in a form of matrix.

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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


Leading

• Leading– Guiding and motivating employees to meet the

organization’s objectives• Uniting employees in a clear and targeted manner and

motivating them to work in the best interests of the employer


Controlling• The Controlling Process–Monitoring a firm’s performance to make

sure that it is meeting its goals• Begins when management establishes

standards, often for financial performance. These could include return on investment, return on assets, meeting a specific sales goal for a quarter or year, etc.• Can serve as a basis for providing rewards

or reducing costs


FIGRE 5.1 The Control Process


Types of Managers• Levels of Management

– Top managers: Responsible for the overall performance of the firm.

• Titles: President, vice president, treasurer, CEO, CFO

– Middle managers: Implement strategies and work toward goals set by top managers

• Titles: Plant manager, operations manager, division manager

– First-line managers: Work with and supervise employees

• Titles: Supervisor, office manager, project manager, group leader


Human Human ResourcesResources

Human Human ResourcesResources

MarketingMarketingMarketingMarketing

FinancialFinancialFinancialFinancial

OperationsOperationsOperationsOperations

InformationInformationInformationInformation

OtherOtherOtherOther

Areas of Management (Business functions)


Areas of Management1.Human Resources, which manages the recruitment

of new employees, employee benefits and record-keeping about employees.

2.Marketing, which manages getting information about the company’s product or service to the correct consumer market group. Perform the 4ps.

3.Financial, which manages the costs, revenues and expenses of the firm.

4.Operations, which manages the actual production of the product or design and delivery of the service to the end user. Manages quality.

5.Information, which manages the information technology for the company.

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Basic Management Skills

Human Human Relations Relations

SkillsSkillsTechnical Technical

SkillsSkills

Conceptual Conceptual SkillsSkills

time-time-management management

skillsskills

Decision-Decision-Making Making SkillsSkills


Management skills1.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.

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time-management skills

• Four leading time wasters:– Paperwork– Telephone calls– Meetings– E-mail


Management skills2. Conceptual skills: Being able to analyze

strategies and decisions as well as performance and outcome is essential as a manager. To view a situation from a holistic perspective.

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Management skills3. 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

4. Human relations skills: be able to interact socially in teams of peers.

5. Decision-making skills: Making the correct decision is all-important when managing in any capacity.

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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© 2009 Pearson Education, Inc. 21

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Strategic Management: a set of managerial decisions and actions that determines the long-run performance of a corporation. Includes:

• Internal and external environment scanning• Strategy formulation: vision, mission,

goals, strategies.• Strategy implementation: objectives,

activities, budget.• Evaluation and control

Prentice Hall, 2012 chapter 104/21/23Prentice Hall, Inc. ©2012

Strategic Management: Setting Goals and Formulating Strategy

• Strategic Management– The process of helping an organization maintain an

effective alignment/arrangement with its environment. Conduct SWOT.

• Goals– Starting point in effective strategic management – Objectives that a business hopes and plans to achieve.

E.g., sell 100,000 units within the next 6 months.• Strategy– The broad set of action plans to achieve company

goals. How will we achieve our goal of selling 100,000, e.g., advertising


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. Business identity.• 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


Purposes of Goal Setting

• Goal Setting: Benefits 1. – Provides direction and guidance for managers

at all levels.2. Define priorities. 3. – Helps firms allocate resources4. – Helps to define corporate culture5. – Helps managers assess performance


Types of Strategy

• Corporate Strategy– Determines what business or businesses a company will

own and operate. It includes:

1- Growth• Related diversification• Unrelated diversification

2- Retrenchment• Downsizing and divestiture

3- Stability


Types of Strategy (cont’d)• Business (or Competitive) Strategy– Focuses on improving the company’s competitive

position at the level of the business unit or product line. Types: cost leadership- differentiation- focus.

• 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


Formulating StrategyStep 1: Setting Strategic Goals

– Strategic goals are derived from a firm’s 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


Example on IUG

Strength: experience of signing agreements with many U.

Weaknesses: limited financial resources.

Opportunities: open cooperation with Egyptian Universities.

Threats: economic recession. 29

5chapter

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TOWS Matrix

2012 Prentice Hall

Figure 5.2 Strategy Formulation


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 company’s strategic plans, involve upper and mid-level management

• Operational Plans– Mid-level and lower-level managers set short-

term targets for daily, weekly, or monthly performance © 2009 Pearson Education, Inc. 32

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. E.g., expect to reach sale 10%, but may not happen because of new possible competitors.

• Crisis Management– Involves an organization’s methods for dealing

with a crisis—an unexpected emergency requiring immediate response.


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


Stages in the Change Process in culture– changing organization culture is difficult, it takes

time.

-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.


Homework

Page 166, questions 1-6

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Review

Explain the importance of strategic management and effective goal setting in organizational success.

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Review A. Identify different types of managers likely to

be found in an organization by level and area.

B. Define and explain the four basic functions that constitute the management process.

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BUSINESS ESSENTIALS, 6 TH EDITION EBERT Ch.6: Managing the business 1