5

chapter Business Management

Business Essentials, 7th Edition

Ebert/Griffin

Instructor Lecture PowerPoints

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2
 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.
 L E A R N I N G O B J E C T I V E S (cont’d)

After reading this chapter, you should be able to:

5. Discuss contingency planning and crisis
management in today’s business world.
6. Describe the development and explain the
importance of corporate culture.
 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
 Who Are Managers?
• Good Managers
– Are responsible for business performance
and effectiveness
• Effective—do the right things; achieve goals
• Efficient—do things right; lower costs
– Managers are :
• Develop strategic plans
• Develop tactical plans
• Analyze their competitive environments and
plan, organize, direct, and control day-to-day
operations
 The Management Process
• Management
– The process of planning, organizing, leading, and
controlling a firm’s financial, physical, human,
and information resources to achieve its goals
Planning
Setting Goals

Controlling Organizing
Monitoring Performance Structuring

Leading
Guiding and Motivating
 Managers Vs Leaders

A leader : is one who knows the way, goes

the way, and shows the way
 Managers Vs Leaders

A manager : is one who knows the way,

goes the way, and not share the way
 Managers Vs Leaders

A leader = A manager + SHARING

In business: we need both styles

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

Vision :
The idea of the project containing everything
about project, title (name), field, resources,
…….etc

Mission :
The objective of project containing goals,
aims, profit, ….etc
 Planning

Long term Planning :

The details of vision containing the future of project for
certain time ( 3, 5, 7 )

Short term Planning:

All small details that related for Long Term plan
containing monthly / daily plan
 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
• 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
• 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
Areas of Management

Human
Operations
Resources

Marketing Information

Financial Other
 Basic Management Skills
Human
Relations
Skills
Technical
Decision-
Skills
Making
Skills

time-
management
skills
 time-management skills

• Four leading time wasters:

– Paperwork
– Telephone calls
– Meetings
– E-mail
 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
 Strategic Management:
Setting Goals and Formulating Strategy
• Strategic Management
– The process of helping an organization maintain an
effective alignment with its environment
• Goals
– Starting point in effective strategic management
– Objectives that a business hopes and plans to achieve
• Strategy
– The broad set of action plans to achieve company goals
 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
 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
 Formulating Strategy

Step 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
SWOT Analysis
SWOT Analysis

• Strengths
Analysing a company’s: • Weaknesses

• Opportunities

• Threats
History of SWOT Analysis
• Developed at Stanford
• Funded by Fortune 500
companies
• Took 9 years to develop
• Involved 5000 interviews
SWOT Analysis is…

… A strategic planning tool that separates

influences on a business’s future success into
internal and external factors.
SWOT Analysis allows businesses to…

• Define realistic goals

• Improve capability

• Overcome weaknesses with strengths

• Identify threats than can be turned into opportunities

A SWOT Matrix…

Internal
…separates and strengths, weaknesses
compares internal and External
external influencers: opportunities, threats
A strength

• Superior product quality

Can be a competitive • Lowest price
advantage like…
• Best expertise

• Location
A weakness

• A tired brand

Can be a disadvantage • Inferior location

such as…
• High overheads

• A lack of R&D
An opportunity can be…

• A regulatory or tax change

• A high-profile event (marketing opportunity)

• An untapped market

• A gap left by a failed competitor

A threat can be…

• Unfavourable regulation changes

• A new entrant into the market

• Problems with the economy

• Market shrinkage
 Strategies

S-O
Strategies that can
come from SWOT
W-O
Analysis… S-T
W-T
Matching strengths to opportunities

Otherwise known as: S-O or Maxi-Maxi strategy

Using a strength to maximise

an opportunity
Matching weaknesses to opportunities

Otherwise known as:

Otherwise known as: W-O or Mini-Maxi strategy

Improving capability to
maximise an opportunity
Matching strengths to threats

Otherwise known as:

Otherwise known as: S-T or Maxi-Mini strategy

Minimising a threat with a

strength
Matching weaknesses to threats

Otherwise known as:

Otherwise known as: W-T or Mini-Mini strategy

Minimising weaknesses and

threats at same time

(often last choice)

 Vision

Mission

Short term Planning Long term Planning

Marketing plan
SWOT

Sales Forecasting
Organization Chart

Conclusion
Figure 5.2 Strategy Formulation

© 2009 Pearson Education, Inc.

 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
• Operational Plans
– Mid-level and lower-level managers set short-term
targets for daily, weekly, or monthly performance
 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 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
 Managing Change in the Culture

• Stages in the Change Process

– 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.
 Key Terms

business (or competitive) strategy human relations skills

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

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

© 2009 Pearson Education, Inc.