1. 7-1

2. Business in a Changing World McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved. Chapter 7 Managerial Decision Making 2

3. 7-3

4. 7-4 Vivace Espresso Vivace Espresso All things coffee Local Seattle establishment – “espresso roasting and preparation specialists”

5. 7-5 The Importance of Management Achieving objectives requires skilled management Management – planning, organizing, staffing, directing, & controlling

6. 7-6 The Importance of Management Process designed to achieve an organization’s objectives by using its resources effectively & efficiently in a changing environment. Management

7. 7-7 The Importance of Management Make decisions – utilization of resources – achieve objectives : Planning Organizing Staffing Directing Controlling What Managers Do

8. 7-8 The Importance of Management Boeing Airline’s 787 Dreamliner787 Dreamliner 892 sold @ $169 million each $145 billion total sales 57 global customers New Product Development

9. 7-9 The Importance of Management Resources People Raw materials Equipment Money Information Resource acquisition & coordination

10. 7-10 Management Functions

11. 7-11 Management Functions Planning – Process of determining the organization’s objectives and deciding how to accomplish them.

12. 7-12 Management Functions Objectives – results desired by organization Mission – organization’s purpose and philosophy Planning

13. 7-13 Management Functions Common & Elaborate Organizational Objectives -- Profit, competitive advantage, efficiency, growth Service, ethics, community responsibility Objectives

14. 7-14 Management Functions Strategic Plans Tactical Plans Operational Plans Plans

15. 7-15 Management Functions Executive level managers Establish the long-range objectives & overall strategy to fulfill firm’s mission 2-10 years forward-looking Sustainability diversification, divestiture, mergers & acquisitions, Strategic Plans

16. 7-16 Management Functions Short-range – strategy implementation 1 year or less Environmental change Periodically reviewed & updated Tactical Plans

17. 7-17 Management Functions Very short-term – actionable, specific Individuals, work groups, departments 1 month, 1 week, 1 day Achieve tactical plans Operational Plans

18. 7-18 Management Functions Focus on potential disasters Product tampering Oil spills Fire, earthquake, terrorist attack Unethical/illegal employee activity Crisis Management Contingency Planning

19. 7-19 Management Functions Crisis/Contingency Planning Crisis Management Teams – Ashland Oil Ashland Oil – J.J. Heinz J.J. Heinz – Johnson & Johnson Johnson & Johnson 19

20. 7-20 Management Functions Organizing – Structuring of resources & activities to accomplish objectives efficiently & effectively.

21. 7-21 Management Functions Organizing Importance – – Creates synergy – Establishes lines of authority – Improves communication – Improves competitiveness 21

22. 7-22 Management Functions Staffing – Hiring people to carry out the work of the organization.

23. 7-23 Management Functions Staffing Importance – – Recruiting – Determine skills – Motivate & train – Compensation levels 23

24. 7-24 Management Functions Downsizing – Elimination of significant numbers of employees (rightsizing, trimming the fat)

25. 7-25 Management Functions Directing – Motivating and leading employees to achieve organizational objectives.

26. 7-26 Management Functions -- Directing Motivation Incentives (raise, promotion) Employee involvement (cost reduction, customer service, new products) Recognition and appreciation

27. 7-27 Management Functions Controlling – Process of evaluating and correcting activities to keep organization on course,

28. 7-28 Management Functions Controlling Five Activities – – Measuring performance – Comparing performance against standards – Identifying deviations from standards – Investigating causes of deviations – Taking corrective action

29. 7-29 Types of Management Levels of Management – Top management Middle management First-line/supervisory management

30. 7-30 Types of Management President Chief Executive Officer (CEO) Chief financial officer (CFO) Chief operations officer (COO) Top Management

31. 7-31 Levels of Management The 5 Highest Paid CEO’s in 2007

32. 7-32 Types of Management Responsible for tactical planning Implement general guidelines established by top management Middle Management

33. 7-33 Types of Management Supervise workers Oversee daily operations Directing and controlling primary functions First-Line Management

34. 7-34 Areas of Management Finance Production Operations Human Resources Marketing Administration

35. 7-35 Areas of Management Financial Management – Focus on obtaining money necessary for the successful operations and using funds to further organizational goals.

36. 7-36 Areas of Management Production & Operations Management– Develop & administer activities to transform resources into goods, services, and ideas for the marketplace.

37. 7-37 Areas of Management Human Resources Management – Handle staffing function and deal with employees in a formalized manner

38. 7-38 Areas of Management Marketing Management – Responsible for planning, pricing, and promoting products and making them available to customers

39. 7-39 Areas of Management Information Technology (IT) Management – Responsible for implementing, maintaining, and controlling technology applications in business (computer networks)

40. 7-40 Areas of Management Administrative Managers – Manage an entire business or major segment of the business. Coordinate activities of specialized managers.

41. 7-41 Skills Needed by Managers Leadership Technical expertise Conceptual skills Analytical skills Human relations skills

42. 7-42 Managerial Skills Leadership – Ability to influence employees to work toward organizational goals.

43. 7-43 Managerial Skills Seven Tips for Successful Leadership

44. 7-44 Skills Needed by Managers Autocratic Leaders Decision makers, “tell” employees Democratic Leaders Involve employees in decisions Free-rein leaders Employees work without interference

45. 7-45 America’s Most Admired Companies, 2008 CompanyChief Executive Officer AppleSteve Jobs Berkshire HathawayWarren Buffett General ElectricJeffrey Immelt GoogleEric Schmidt Toyota MotorKatsuaki Watanabe Most Admired Companies & CEO’s

46. 7-46 Management – Going Green Compact Fluorescent Light Bulbs: A Bright Idea – CFL’s use 75 percent less energy. Technical Consumer Products, Inc. largest provider of CFL’s in the United States.Technical Consumer Products, Inc

47. 7-47 Decision Making

48. 7-48 The Realities of Management According to J.P. Kotter, management functions boil down to: 1.Figuring out what to do despite uncertainty, diversity, and a great deal of potentially relevant information. 2.Getting things done through a large and diverse set of people despite having little direct control over them.