BUSINESS 7e Copyright 2004 Prentice Hall, Inc.1 PART 2 UNDERSTANDING THE BUSINESS OF MANAGING

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.2 CHAPTER 6 Managing the Business Enterprise

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.3 Chapter Outline  Who Are Managers?  Setting Goals and Formulating Strategy  The Management Process  Types of Managers  Basic Management Skills  Management and the Corporate Culture

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.4 Who Are Managers?  All corporations depend on effective management.  The principles of management apply to all kinds of organizations.  Managers are among an organization’s most important resources.

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.5 What Are Goals? Objectives that a business hopes and plans to achieve

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.6 What Is Strategy? Broad set of organizational plans for implementing the decisions made for achieving organizational goals

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.7 Types of Strategy  Corporate strategy determines the firm’s overall attitude toward growth and the way it will manage its businesses or product lines  Business (or Competitive) strategy takes place at the business-unit or product-line level and focuses on a firm’s competitive position  Functional strategy involves managers in specific areas who decide how best to achieve corporate goals through productivity

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.8 Hierarchy of Strategy

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.9 Purposes of Goal Setting 1.Goal setting provides direction and guidance for managers at all levels. 2.Goal setting helps firms allocate resources. 3.Goal setting helps to define corporate culture. 4.Goal setting helps managers assess performance.

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.10 What Is a Mission Statement? Organization’s statement of how it will achieve its purpose in the environment in which it conducts its business

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.11 Kinds of Goals  Long-term goals are set for an extended time, typically five years or more  Intermediate goals are set for a period of one to five years  Short-term goals are set for the very near future, typically less than one year

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.12 What Is Strategy Formulation? Creation of a broad program for defining and meeting an organization’s goals

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.13 Strategy Formulation

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.14 Setting Strategic Goals  Strategic goals are long-term goals derived directly from a firm’s mission statement  SWOT analysis is a process involving the assessment of organizational strengths and weaknesses (the S and W) and environmental opportunities and threats (the O and T)

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.15 Analyzing the Organization and Its Environment  Environmental analysis is the process of scanning the business environment for threats and opportunities  Organizational analysis is the process of analyzing a firm’s strengths and weaknesses

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.16 Matching the Organization and Its Environment  The matching process is the heart of strategy formulation.  The matching process may determine whether a firm typically takes risks or behaves more conservatively.

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.17 A Hierarchy of Plans  Strategic plans reflect decisions about resource allocations, company priorities and steps needed to meet strategic goals  Tactical plans are shorter-range plans for implementing specific aspects of the company’s strategic plans  Operational plans set short-term targets for daily, weekly or monthly performance

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.18 Contingency Planning and Crisis Management  Contingency planning identifies aspects of a business or its environment that might entail changes in strategy  Crisis management involves an organization’s methods for dealing with emergencies

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.19 What Is Management? Process of planning, organizing, directing and controlling an organization’s resources to achieve its goals

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.20 The Management Process  Planning determines what an organization needs to do and how best to get it done  Organizing determines how best to arrange an organization’s resources and activities into a coherent structure  Directing involves guiding and motivating employees to meet an organization’s objectives  Controlling monitors an organization’s performance to make sure that the firm is meeting its goals

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.21 The Control Process

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.22 Types of Managers  Top managers are responsible to the board of directors and stockholders for a firm’s overall performance and effectiveness  Middle managers are responsible for implementing the strategies, policies and decisions made by top managers  First-line managers are responsible for supervising the work of employees

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.23 Areas of Management  Human Resource Managers  Operations Managers  Marketing Managers  Information Managers  Financial Managers  Other Managers

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.24 Basic Management Skills  Technical skills are needed to perform specialized tasks  Human relations skills are required in understanding and getting along with other people  Conceptual skills are abilities to think in the abstract, diagnose and analyze different situations and to see beyond the present situation  Decision-making skills include the ability to define problems and select the best course of action  Time management skills are associated with the productive use of time

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.25 The Decision-Making Process

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.26 Management Skills for the 21 st Century  Global management skills include the need to understand foreign markets, cultural differences and the motives and practices of foreign rivals  Management and technology skills refer to the ability to process, organize and interpret a wealth of data and information

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.27 What Is Corporate Culture? The shared experiences, stories, beliefs and norms that characterize an organization

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.28 Communicating the Culture Managers must:  Understand the culture.  Transmit the culture to others in the organization.  Maintain the culture by rewarding and promoting those who understand it and work toward maintaining it.

BUSINESS 7e Copyright 2004 Prentice Hall, Inc.29 Managing Change Three-stage process:  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.