Managing for Quality and Competitiveness - · PDF fileManaging for Quality and Competitiveness ... organizing, staffing, ... o Downsizing has helped companies reduce costs quickly

Part 3 Managing for Quality and

Competitiveness

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any

manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

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CHAPTER 6 The Nature of Management

CHAPTER 7 Organization, Teamwork, and Communication

CHAPTER 8 Managing Service and Manufacturing Operations

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

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Learning Objectives

LO 6-1 Define management and explain its role in the achievement of organizational objectives. LO 6-2 Describe the major functions of management. LO 6-3 Distinguish among three levels of management and the

concerns of managers at each level. LO 6-4 Specify the skills managers need in order to be

successful. LO 6-5 Summarize the systematic approach to decision making

used by many business managers. LO 6-6 Recommend a new strategy to revive a struggling

business.


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Management and Managers

Management • A process designed to achieve an organization’s

objectives by using its resources effectively and efficiently in a changing environment

Managers • Those individuals in organizations who make decisions

about the use of resources and who are concerned with planning, organizing, staffing, directing and controlling the organization’s activities to reach its objectives

Effectively means having the intended result Efficiently means accomplishing the objectives with a minimum of

resources © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,

duplicated, forwarded, distributed, or posted on a website, in whole or part.

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The Importance of Management Every organization must acquire resources to effectively pursue its

objectives and coordinate their use to turn out final goods and services

Employees

• Important in helping a firm attain its objectives

• Recruit, train, compensate, and provide benefits to foster loyalty

Acquiring Supplies

• Ensuring that products are made available to customers

• In global markets firms enlist hundreds of diverse suppliers

Financial Resources

• To pay for essential activities

• Primary funding comes from owners, shareholders, banks, and other financial institutions


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Management Functions

Although we discuss each of the five functions separately, they are interrelated; managers may perform two or more

of them at the same time


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Planning • Planning is the process of determining the organization’s

objectives and deciding how to accomplish them; the first function of management

Mission is the statement of an organization’s fundamental

purpose and basic philosophy

Goals are the results the company wants to achieve (almost always has multiple

goals illustrating the complex nature of business)

Objectives are measurable statements on common issues

such as profit, competitive advantage, efficiency and growth

Plans specify what should be done, by whom, where, when

and how

Planning


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Strategic Plans

• Those plans that establish long-range objectives and overall strategy or course of action by which a firm fulfills its mission

• Generally cover periods ranging from one year or longer

• Include: • Plans to add products • Purchase companies • Sell unprofitable segments of the

business • Issue stock • Move into international markets

Strategic Plans

Apollo Global Management and Metropoulos made the strategic plan to purchase the

Hostess snack business after the firm declared bankruptcy


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Tactical and Operational Plans

• Short-range plans designed to implement the activities and objectives specified in the strategic plan

• Usually cover 1 year or less • Help keep the firm on the course established in the

strategic plan • An ever-changing market requires firms to develop short-

run or tactical plan to deal with the changing environment

Tactical Plans

• Very short-term plans that specify what actions individuals, work groups, or departments need to accomplish in order to achieve the tactical plan and ultimately the strategic plan

• Apply to details in executing activities in 1 month, week, or even day

Operational Plans


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Retail Store Example A retailing store with a five-year strategic plan to invest

$5 billion in 500 new retail stores may develop 5 tactical plans (each covering 1 year) specifying: ► How much to spend to set up each new store ► Where to locate ► When to open each new store

Tactical plans are designed to execute the overall strategic plan ► They are easier to adjust or abandon if changes in the

environment or the company’s performance so warrant Operational plans may specify the schedule for:

► opening 1 new store ► Hiring and training new employees ► Obtaining merchandise ► Opening for actual business


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Crisis Management or Contingency Planning

Crisis Management or Contingency Planning • An element in planning that deals with potential

disasters such as product tampering, oil spills, fire, earthquake, computer virus, or airplane crash

~51% of companies have outdated disaster recovery and business continuity plans

Herbalife does businesses in 90 countries, and contingency plans must often be made for fluctuating exchange rates


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Organizing

Organizing • The structuring of resources and activities to

accomplish objectives in an efficient and effective manner

Organizing is important for several reasons: Helps create synergy Establishes lines of authority Improves communication Helps avoid duplication of resources Can improve competitiveness by speeding up decision

making


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Staffing

Staffing • The hiring of people to carry out the work of the

organization

Manager’s duties include: o Recruiting o Determining what skills are needed for specific jobs o Motivating and training employees o Determining pay and benefits o Preparing employees for higher-level jobs


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Monster.com and Staffing

» Some companies choose to recruit people to hire through online job websites such as Monster.com

» Monster.com is one of the world’s largest employment websites

» Using websites like Monster.com falls under the staffing function of management


http://www.monster.com/

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Downsizing

Downsizing • The elimination of a significant number of

employees from an organization o Production, sales and technical positions can be

outsourced to countries with lower labor costs o Downsizing has helped companies reduce costs

quickly o However, this involves loss of jobs and lowered morale

for remaining employees • An effective manager will promote optimism and positive

thinking while minimizing criticism and fault-finding © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


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Directing

Directing • Motivating and leading employees to achieve

organizational objectives Telling employees what to do and when to do it using

deadlines, then encourage them to do their work Also involves determining and administering appropriate

rewards and recognition May motivate by providing incentives but recognition and

appreciation are often the best motivators Ask workers to contribute ideas for reducing costs, making

equipment more efficient, improving customer service, or even developing new products


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Controlling

Controlling • The process of evaluating and correcting activities

to keep the organization on course Control involves five activities: Measuring performance Comparing performance with standards or objectives Identifying deviations from the standards Investigating the causes of deviations Taking corrective action when necessary

The control function helps managers assess the success of their plans


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Levels of Management

As the pyramid shape implies, there are generally more middle managers than top managers, and still more first-line managers


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Time Spent on Management Functions

Importance of

Management Functions to Managers in Each Level


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Top Management

Top Managers • The president and other top executives of a business,

such as the chief executive officer (CEO), chief financial officer (CFO), and chief operations officer (COO), who have overall responsibility for the organization

In publically owned corporations, the CEO’s boss is the board of directors

Compensation committees work with boards of directors and CEOs to try and keep pay in line with performance

Workforce diversity is good for workers and for the bottom line

DID YOU KNOW? Only 4.6 percent of Fortune 500 CEOs are women


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Facebook’s Top Management Mark Zuckerberg, CEO and founder of Facebook,

manages the overall strategic direction of the company Plays a key role in representing the company to

stakeholders Sheryl Sandberg, Facebook’s chief operating officer, is

responsible for the daily operation of the company COO reports to CEO and is often considered to be

number two in command

In public corporations, even chief executive officers have a boss—the firm’s board of directors

In 2012 Mark Zuckerberg announced he would go from a salary of $600,000 to an annual salary of just $1


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The Highest Paid CEOs

The compensation packages of

different CEOs

$ Top managers generally have many years of varied experience and command top salaries

$ Compensation packages typically include bonuses, long-term incentive awards, stock, and stock options


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Five Rules of Successful Diversity Recruiting

Managers from companies devoted to

workforce diversity devised five rules

that make diversity recruiting work

A diverse workforce is better at making decisions regarding issues related to consumer diversity


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Middle Managers

Middle Managers • Those members of an organization responsible for

the tactical planning that implements the general guidelines established by top management

Middle managers have more focused responsibilities and spend more time organizing than other managers

In business, plant managers, division mangers and department mangers make up middle management

The ranks of middle managers have been shrinking as more companies downsize to be more productive


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First-Line Managers

First-Line Managers • Those who supervise both workers and the daily

operations of an organization

Responsible for implementing plans established by middle management and directing workers’ daily performance

Spend most of their time directing and controlling Commonly called foreman, supervisor and office service

manager


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Areas of Management

At each level, managers specialize in: finance, production and operations, human resources, marketing and administration

While larger firms will most likely have all of these managers, in smaller firms these important tasks may fall onto the owner


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Managing Automation and Robots in the Workplace

As digital technology and automation came to the forefront in business operations, many thought the managerial function would no longer be necessary—however, the opposite has proven to be true Technical and leadership skills are valued more highly

among today’s managers as their former roles of overseeing employees on a production line have declined

These duties are now delegated to the employees who oversee the operations of the machines on the production lines


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Managerial Roles


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Technical Expertise and Conceptual Skills

Technical Expertise • The specialized

knowledge and training needed to perform jobs that are related to particular areas of management

• Needed most by first-line managers and least critical to top-level managers

Conceptual Skills • The ability to think in

abstract terms and to see how parts fit together to form the whole

• Needed most by top level managers

• Evaluate continually where the company will be in the future


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Financial Manager

o This financial manager of a city hedge fund analyzes data from financial charts

o Financial managers are responsible for obtaining the necessary funding for organizations to succeed, both in the short term and in the long term


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Analytical Skills and Human Relations Skills

Analytical Skills • The ability to identify

relevant issues, recognize their importance, understand the relationships between them and perceive the underlying causes of a situation

• Most important to the success of top level managers

• Resolving ethical issues often require analytical skills

Human Relation Skills • The ability to deal with

people, both inside and outside the organization

• Those who can relate, communicate well, understand the needs, and show a true appreciation for others are more successful

• Important in organizations that provide services, such as hospitals, airlines and banks


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Seven Tips for Successful Leadership

Leadership • The ability to influence employees to work toward

organizational goals


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Leadership Styles

Autocratic leaders make all the decisions then tell employees what must be done and how to do it Martha Stewart is an example of an autocratic leader

Democratic leaders involve their employees in decisions Herb Kelleher, co-founder of Southwest Airlines, had a

democratic leadership style

Free-rein leaders let their employees work without much interference; setting performance standards and letting employees find their own way to meet them Warren Buffett, CEO of Berkshire Hathaway exhibits

free-rein leaders © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


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Authentic Leadership

• A bit different from the other three leadership styles because it is not exclusive

• Both democratic and free-rein leaders could qualify as authentic leaders

• Passionate about the goals and mission of the company, display corporate values in the workplace, and form long-term relationships with stakeholders

• Kim Jordan of New Belgium Brewing is an authentic leader

Authentic Leadership


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Howard Schultz’s Leadership o Howard Schultz, CEO of Starbucks, has great human

relations skills and leadership abilities, as demonstrated by his ability to relate to others

o Under his leadership, Starbucks decided to offer health insurance to its part-time workers


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Employee Empowerment

Employee Empowerment • Occurs when employees are provided with the ability

to take on responsibilities and make decisions about their jobs

Participative corporate culture has been found to be beneficial because employees feel like they are taking an active role in the firm’s success

Leaders must adopt systems that support an employee’s ability to provide input and feedback on company decisions

Manager should be trained in ways to empower employees to make decisions even in challenging situations in which the right decision may not be so clear


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Leadership in Teams

In today’s business world, decisions made by teams are becoming the norm

An effective way for encouraging employee empowerment Decision making in teams is collective

Most effective teams are when all employees are encouraged to contribute their ideas and recommendations

Common for more outspoken employees to dominate the team and engage in groupthink, in which team members go with the majority rather than what they think is the right decision Training employees how to listen to one another and

provide relevant feedback can help to prevent these challenges


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Steps in the Decision Making Process

Steps in the Decision Making Process


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Recognizing and Defining the Decision Situation

The first step in decision making is recognizing and defining the situation

Situations may be positive or negative Situations calling for small-scale decisions occur

without warning Large-scale decisions generally occur after some

warning signs Managers must pay attention to such signals

Once a situation is recognized, management must define it


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Developing Options and Analyzing Options

Developing options is the second step in the decision making process A list of possible courses of action should include both

standard and creative plans Analyzing options is the third step

Management must look at the practicality and appropriateness of each option

Decision maker should consider whether the proposed option adequately addresses the situation

Technology can help managers maintain an

agenda, analyze option, and make decisions


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Selecting the Best Option, Implementing the Decision, and Monitoring the Consequences

Step four is Selecting the best option Often a subjective procedure

Step five is Implementing the Decision This step can be fairly simple, or very complex,

depending on the nature of the decision Prepare for unexpected consequences

Monitoring the Consequences is the final step Has the implementation of the decision accomplished

the desired result? Is yes, then the decision was sound If no, then more analysis is warranted


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Factors that Affect Decision Making The use of intuition is usually a result of years of experience in a

specific situation or environment

The manager will recognize patterns or similarities between the current situation and previous ones and use that information to make decisions

Stress and emotion can also influence decisions negatively

Defensiveness, overreaction, and obsession are indicators that stress and emotion are being factored into the decision making process

How the problem or situation is framed will determine the final decision, whether it is negative or positive

Managers need to ensure that they are seeing the situation objectively

Finally, confidence and risk propensity are delicate factors in decision making

Both attributes must be kept in balance if decisions are to be reasonable and effective


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Management in Practice Management is not a cut-and-dried process; there is no

mathematical formula for managing a firm and achieving goals

Management expert, John P. Kotter says manager’s functions can be boiled down to 2 basic activities

Figuring out what to do despite uncertainty, great

diversity, and an enormous amount of potentially relevant information

Getting things done through a large and diverse

set of people despite having little direct control

over most of them © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


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Agendas and Networking Agenda

• A calendar, containing both specific and vague items that covers short-term goals and long-term objectives

Agenda helps the manager figure out what must be done and how to get it done to meet the objectives set by the organization

Technology tools such as smartphones can help manage agendas, contacts communications, and time

Networking • The building of relationships and sharing of information

with colleagues who can help managers achieve the items on their agendas


Provide information and advice on diverse topics Social media sites have increased the ability to network

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Challenges of the Business World

Managers spend a great deal of time

confronting the complex and

difficult challenges of the business world today

Rapid changing technology Increased scrutiny of individual

and corporate ethics and social responsibility

Impact of social media Changing nature of workforce New laws and regulations Increased global competition Declining education standards Making the best use of time


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LinkedIn

Websites like LinkedIn are helping managers and employees network with one another to achieve their

professional goals © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


http://www.linkedin.com/about-us

Infinity Computers Inc. produces notebook computers, which sell through direct mail catalog companies under the Infinity name and in some retail computer stores under their

private brand name ► Products are not significantly different from competitors’ ► Do not have extra product-enhancing features ► Very price competitive ► Strength from the company’s CEO/president George

Anderson and the highly motivated, loyal staff ► Weakness from having too many employees and too

great a reliance on 1 product

Solve the Dilemma Making Infinity Computers Competitive

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Solve the Dilemma Making Infinity Computers Competitive (cont.)

Shelly has several options:

• Maintain current production levels and raises prices

• Expand the facility and staff while maintaining the current price

• Contract the production of the pies to a national chain, giving Shelly a percentage of profits with minimal involvement

Discussion Questions

• Evaluate Infinity’s current situation and analyze its strengths and weaknesses.

• Evaluate the opportunities for Infinity, including using its current strategy, and propose alternative strategies.

• Suggest a plan for infinity to complete successfully over the next 10 years.


? Name the five functions of management and briefly describe each function.

? What skills do managers need? Give examples of how managers use these skills to do their jobs.

? Identify the three levels of management. What is the focus of managers at each level?

? Explain the steps in the decision-making process.

Discussion

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Managing for Quality and Competitiveness - · PDF fileManaging for Quality and Competitiveness ... organizing, staffing, ... o Downsizing has helped companies reduce costs quickly