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Chapter 1: The Changing Environment for Management.

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1 Chapter 1: The Changing Environment for Management

2 This chapter will discuss: Understanding the concept of management Appreciating what managers do & why it is important Considering the role of management in a global environment Being aware of the basic management functions of planning, decision-making, organizing, leadership & controlling

3 The Critical Nature of Management Why is General Motors an example of poor management? By 1985, out of touch with the motor vehicle industry Evolving customer demands Modern theories of business practice Change to a mixed demographic of customers & workers Managers all white, middle-aged men Most new ideas rejected GM sold 54% of the vehicles sold in the U.S. in ‘54; by 2010, that market share had fallen to 17½%. In 2007 alone, GM lost nearly $40 billion! Many clues disregarded --

4 GM Lessons: What Management Ignored Customer complaints about quality Mileage concerns as gasoline prices rose steadily higher beginning in the ‘70s Technological innovation Size, particularly for urban driving & parking Safety Price Women as an increasingly important customer

5 What is Management? Coordinates & directs the activities of employees & members of other constituent groups to accomplish the organization’s goals efficiently & effectively Efficiency means deriving the highest degree of output of goods & services from the fewest units of input Various tools & techniques Effectiveness is concerned with the accomplishment of an organization’s goals Mission statement: announcement to the stakeholders (those groups affected by the organization) of the broad purpose & intentions Let’s look at some mission statements --

6 Mission Statements GM is a multinational corporation engaged in socially responsible operations, worldwide. It is dedicated to provide products & services of such quality that our customers will receive superior value while our employees & business partners will share in our success & our stockholders will receive a sustained superior return on their investment What does this tell us about the mission of GM? Vague – could apply to any business! Contrast with McDonald’s, Google, Walt Disney

7 Thoughtful Mission Statements McDonald's vision is to be the world's best quick service restaurant experience Being the best means providing outstanding quality, service, cleanliness, & value, so that we make every customer in every restaurant smile Google's mission is to organize the world's information & make it universally accessible and useful Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services & consumer products

8 Goals & Objectives Management works from this “mission” to develop goals -- specific statements on how the mission will be accomplished: profitability, sales, new product development, maintaining the company’s credit rating, energy conservation, diversity actions, world- class manufacturing Objectives are specific expectations for a company or a significant business segment Requires measurement using specific quantities; e.g., “increase sales by 15,000 units or 20%” A stretch or an expansion from normal results

9 Management-by-Objectives (MBOs) I Specific units of a company are assigned their share of the company’s objectives Then translated into specific assignments for each senior manager & onto their subordinates Problems in the Use of MBOs Relevance of the goals, objectives & MBOs: can become an end in themselves without regard to changing business conditions Quantity not quality: MBOs measure quantity but do not measure the quality of performance Validity of objectives: who knows if a set of MBOs is the right set of objectives?

10 M Management-by-Objectives (MBOs) II Change in Goals/Objectives/MBOs: during the course of a year, downsizing, reassignments & new business initiatives may change management's allocation of resources Irrelevance of Aggregated MBO Results: MBOs only work in situations when an employee has fairly close control over his or her accomplishments or failures Soft MBO Targets: an employee may soften his or her objectives to assure success in meeting or exceeding the MBO expectations

11 The Functions of Management Planning: setting goals, developing strategies to achieve goals that have been accepted by the company coordinating & integrating the use of resources Decision-making: uses knowledge & analysis to select a course of action among various alternatives Organizing: managers structure work so that the company’s goals can be accomplished Directing (or leading): accomplishing work through the managers & employees of a company Controlling: determines if a business is producing results consistent with plans

12 The Five Management Functions Planning Decision- Making Organ- izingDirecting Controll- ing RESULT IN Set goals, establish strategies, develop plans Determine critical factor in problem, analyze alter- natives, make decision Resolve needs to achieve goals, how strategies will be done, who will do these tasks Motivate, lead and act to complete tasks through employees Monitor activities to determine that plans are accom- plished, and make necessary adjust- ments ACCOMP- LISHING THE ORGANI- ZATION’S MISSION AND GOALS Figure 1-2

13 Skill Requirements of Managers First-line (supervisory) managers typically are responsible for employees who have an objective essential to accomplish the organization’s goals Require technical skills (job-specific techniques); some human relations skills Mid-level (middle) managers have responsibility for several first-line managers Require technical skills (job-specific techniques) & human relations skills (directing workers) Senior managers are the organization’s leaders Need fewer technical & significantly greater conceptual skills (thinking through difficult, often new situations) than mid-level managers

14 Primary Skills Conceptual Human Resources Technical Secondary Skills AnalyticalTechnical Human Resources Planning Decision- Making OrganizingDirecting Controll- ing 1 st -Level  Mid-Level    Senior Level    Figure 1-3 Manager Skills Sets (by primary and secondary skills required)

15 Other Concerns of Senior Managers I Technology. How do we deal with robotization & automation, mass customization, information technologies including mobile computing, contacts from & demands by customers for immediate responses including pricing, etc.? Ethics & Law. World governments have passed laws & regulations that seriously constrain the freedom of companies to utilize their resources Global Competition. The development of the industrial age may have started in the West, but competitors now exist in nearly part of the globe

16 Other Concerns of Senior Managers II Security Threats. There are various security threats that can attack an organization to destroy, steal & eavesdrop on confidential information Sustainability & Stakeholder Expectations Sustainability is the ability of a business to accomplish its mission & goals while being socially, environmentally & socially responsible Stakeholders of a company include all of the constituencies that may be affected by corporate decisions, including employees, investors, vendors, vendors, customers, the public & government

17 Discussion & Review Questions How do managers contribute value to their organizations? Could organizations effectively & efficiently function without managers to provide the various activities associated with management? What is efficiency? What is effectiveness? Why do organizations publish mission statements, & how do they assist in managing? What is a management goal? An objective? What does it mean to “manage by objectives” (MBOs)? Are there any problems in using MBOs? If there are problems, why are MBOs used? What are the specific functions of management & how do they differ? How do the responsibilities of first-line, middle & senior managers vary?

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