BUSN 1200 - Chapter 6 PDF

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BUSN 1200 Chapter 6 Managing the Business Enterprise The Management Process A series of activities developed to allow businesses to achieve their goals. The Four Functions of Business Management: Planning Setting organizational goals (end results) and strategies (how to attain goals). Organizing Set...

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BUSN 1200 Chapter 6 - Managing the Business Enterprise The Management Process - A series of activities developed to allow businesses to achieve their goals. The Four Functions of Business Management:  Planning – Setting organizational goals (end results) and strategies (how to attain goals).  Organizing – Setting organizational structure by grouping jobs together that allows for both effectiveness and efficiency.  Leading – Coaching and motivating employees.  Controlling – Measuring actual performance and then comparing actual to planned performance. Celebrate if accomplished and if not, identifying what went wrong or if standards were not appropriate in the first place.

Planning - Determining what the business needs to do (goal) and the best way to achieve it (strategy). Includes all management levels.

Hierarchy of Plans:  Strategic plans o associated with senior management o establish long-term plans (2-5 years)  Tactical plans o usually created by middle managers o support the strategic plans & define resource allocation (1-2 years) Operational plans  o executed and finalized by first-line managers o for short-term targets of less than a year (usually monthly, weekly or daily)

Planning Steps: 1. Goals are established. 2. Managers identify if a gap exists between the company’s desired and actual position. 3. Managers develop plans to achieve the desired objectives. 4. The plans have been desired upon are implemented. 5. The effectiveness of the plan is assessed. Organizing - Determining how to use existing resources to implement the plan and arranging jobs in a structure to create an efficient task system.

Leading - Guiding and motivating subordinates to meet objectives. Managers have various responsibilities with regard to their employees.

Controlling - Managers monitor the firm’s actual performance and compares it to planned goals.

Types of Managers:  Levels of Management o Top Management - responsible for overall performance of the firm  President  CEO (Chief Executive Officer)

 CFO (Chief Financial Officer)  COO (Chief Operating Officer)  CIO (Chief Information Officer)  Vice Presidents  Treasurer o Middle Management - responsible for implementing decisions of top managers  Plant Manager  Operations Manager  Division Manager  Department Manager o First-line Management - responsible for supervising employees  Supervisor  Office Manager  Foreman  Project Manager  Team Leader

Management Functional Areas:  Marketing Managers o get products and services to buyers  Financial Managers o plan and oversee financial resources  Operations Managers o control production, inventory, and quality  Human Resource Managers o hire, train, evaluate, and compensate employees  Information Managers o design and implement systems to collect, process, and organize information needed to make decisions

Basic Management Skills:  Technical Skills - the ability to do specialized tasks such as keyboarding, artwork, accounting, marketing etc.  Human Relations skills - “people skills” that enable managers to understand employees’ needs and get along with others  Conceptual skills - the ability to view problems creatively and abstractly, and to accurately analyze situations  Time Management skills - productive use of time. o Leading causes of wasted time  paperwork  telephone  meetings  email  Decision-Making skills – Skills in defining problems and selecting the best course of action. o Decision Making Process  Recognizing and Defining the Decision Situation  Identifying Alternatives  Evaluating Alternatives  Selecting the Best Alternative  Implementing the Chosen Alternative  Following up and Evaluating the Results o Behavioral Aspects of Decision Making • Organizational Politics – actions that people take in order to get what they want. • Intuition – Managers sometimes decide to do something based on their “gut feeling” or years of experience in the field. • Escalation of Commitments – Sticking to finishing a job based on your decision even if it wasn’t a good one. • Risk Propensity – How much a manager is willing to risk when making a decision.

Setting Goals and Formulating Strategy:  Strategic Management - process of aligning the organization with its external environment  Strategic Goals - performance objectives that a firm plans to achieve o Purpose of Setting Goals  Provides direction, guidance, and motivation  Assists in allocating resources  Helps to define corporate culture  Helps managers assess performance o Kinds of Goals  Long-term – Five or more years  Intermediate – One to five years  Short-term – Less than one year o SMART Goals  Specific  Measurable  Attainable  Realistic  Time-Bound  Mission Statement - How the organization will achieve its purpose (reason for being) o Clarifies who the organization serves, what it offers, and how it will be provided o Includes core values and ethical commitment  Analyzing the Organization and Its Environment o SWOT Analysis  Strengths

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 Weaknesses  Opportunities  Threats Levels of Strategies o Corporate-level strategy - What businesses will we pursue and how do these businesses relate to each other?  Types of Corporate Level Strategies: • Concentration - Focusing the company on current product line(s) or product(s). This allows the company to focus its strengths. • Growth - Steps to increase revenue. Market penetration (marketing more aggressively); market development (finding new markets for existing products); product development (developing new products to market to customers). • Integration - Takeovers of various types of organizations, either horizontal (competitors) or vertical (suppliers or retailers). • Diversification - Adding new elements to the existing business, including concentric (new but related products) or conglomerate (new and unrelated products). • Investment reduction - Reducing the company’s investment in one or more of its business lines o Business-Level (competitive) strategy - How will we compete in our chosen area?  Types of Business Level Strategies: • Cost Leadership - Striving to have the lowest costs in the industry. It permits the firm to lower prices to gain customers or to respond to the competition’s pricing policies (competition based on price). Useful in industries that are price sensitive • Differentiation - Striving to provide goods and services that are distinctive from its competitors. • Selling similar products that have some distinction and therefore, can charge different prices. Distinction may be based on factors such as: • product design / quality • packaging • promotion / branding • customer service • Focus - Serving a particular market sub-segment. They may involve the use of one of the other generic strategies to serve the needs of the market niche more effectively o Functional strategy - What actions can our department pursue to reach the overall goals?

Contingency Planning and Crisis Management:  Contingency Planning - Identify in advance changes that might occur and ways the company can respond to changes  Crisis Management - methods for dealing with emergencies

Management and Corporate Culture:  Corporate Culture - A firm’s personality. o Shared experience of employees o Stories, beliefs, and norms that characterize the organization o Culture can direct employee’s efforts  Communicating the Culture o Ensure new and existing managers understand the culture o Develop a clear mission statement o Communicate the culture to employees o Reward those who understand and maintain the culture  Managing Change o Cultural change process • management formulates vision of new company • new systems of appraisal and compensation...