Who Are Managers?ManagerSomeone who works with and through

other people by coordinating their work activities in order to accomplish organizational goals

Types of ManagersFirst-line ManagersAre at the lowest level of management and

manage the work of nonmanagerial employees

Middle ManagersManage the work of first-line managers

Top ManagersAre responsible for making organization-wide

decisions and establishing plans and goals that affect the entire organization

Exhibit 1.1 Managerial LevelsTop Managers Middle Managers First-Line Managers Nonmanagerial Employees

OrganizationA consciously coordinated social unit, composed of two or more people, that functions on a relatively continuous basis to achieve a common goal or set of goals.

Definition of Management:Management is the process of designing and

maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims

Definitions of Effectiveness and EfficiencyProductivity implies effectiveness and

efficiency in individual and organizational performance Effectiveness is the achievement of objectives Efficiency is the achievement of the ends with the least amount of resources (time, money, etc.)

Managerial ConcernsEfficiency

Doing things right Getting the most output for the least input Doing the right things Attaining organizational goals

Effectiveness

Managers (or administrators)Individuals who achieve goals through other people. Managerial Activities Make decisions Allocate resources Direct activities of others to attain goals

What Do Managers Do?Functional ApproachPlanning Organizing Leading Controlling

PlanningA process that includes defining goals, establishing strategy, and developing plans to coordinate activities.

OrganizingDetermining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made.

LeadingA function that includes motivating employees, directing others, selecting the most effective communication channels, and resolving conflicts.

ControllingMonitoring activities to ensure they are being accomplished as planned and correcting any significant deviations.

Management FunctionsPlanning Defining goals, establishing strategy, and developing subplans to coordinate activities Organizing Determining what needs to be done, how it will be done, and who is to do it Leading Directing and motivating all involved parties and resolving conflicts Controlling Lead to Monitoring activities to ensure that they are accomplished as planned Achieving the organization s stated purpose

What Do Managers Do? (contdMintzbergs Management Roles ApproachInterpersonal roles

Figurehead, leader, liaison Monitor, disseminator, spokesperson Entrepreneur, disturbance handler, resource allocator, negotiator

Informational roles

Decisional roles

What Do Managers Do? (contd)Skills ApproachTechnical skills Human skills Conceptual skills

Technical skillsThe ability to apply specialized knowledge or expertise.

Human skillsThe ability to work with, understand, and motivate other people, both individually and in groups.

Conceptual SkillsThe mental ability to analyze and diagnose complex situations.

Exhibit 1.4 Skills Needed at Different Management LevelsTop Managers Middle Managers Lower-level Managers Importance Conceptual Skills Human Skills Technical Skills

What Is An Organization?An Organization DefinedA deliberate arrangement of people to

accomplish some specific purpose

Common Characteristics of

OrganizationsHave a distinct purpose (goal) Are composed of people Have a deliberate structure

Exhibit 1.6 The Changing OrganizationTraditional

Stable Inflexible Job-focused Work is defined by job positions Individual-oriented Permanent jobs Command-oriented Managers always make decisions Rule-oriented Relatively homogeneous workforce Workdays defined as 9 to 5 Hierarchial relationships Work at organizational facility during specific hours

New Organization

Dynamic Flexible Skills-focused Work is defined in terms of tasks to be done Team-oriented Temporary jobs Involvement-oriented Employees participate in decision making Customer-oriented Diverse workforce Workdays have no time boundaries Lateral and networked relationships Work anywhere, anytime

Management: DefinitionAcc to Harold Koontz: Management is the

art of getting things done through & with an formally organized group Acc to Henry Fayol: To manage is to forecast & plan, to organize, to compound, to co-ordinate and to control PODSCORB: - Planning, Organizing, Directing, Staffing, Controlling, Co-ordinating, Reporting & Budgeting

Features of ManagementArt as well as Science Management is an activity Management is a continuous process Management achieving pre-determined

objectives Organized activities Management is a factor of production Management as a system Management is a discipline

Features of ManagementManagement is a distinct entity Management aims at maximising profit Management is a purposeful activity Management is a profession Universal application Management is getting things done Management is needed at all levels

Importance of ManagementManagement meet the challenge of change Accomplishment of group goals Effective utilization of resources Effective functioning of business Resource Development Sound organization Structure Management directs the organization Integrates various interests Stability

Importance of ManagementInnovation Co-ordination and team-spirit Tackling problems A tool for Personality Development

Henry Fayol (1841-1925)Was a french industrialist Given :Elements of Management- Planning, Organizing,

Commanding, Co-ordination & Control Qualities of Manager: Physical, Mental, Moral, General Education, Special Knowledge & Experience Principles of Management

Principles of ManagementDivision of work Authority & responsibilty Discipline Unity of command Unity of direction Subordinate of individual interest to group

interest Remuneration of personnel Centralization Scalar Chain

Principles of ManagementOrder Equity Stability of tenure of personnel Initiative Espirit De Corps

What Is Planning?Planning Managerial function that involves:

Defining the organizations goals Establishing an overall strategy for achieving those goals Developing a comprehensive set of plans to integrate and coordinate organizational work Types of planning Informal: not written down, short-term focus; specific to an organizational unit Formal: written, specific, and long-term focus, involves shared goals for the organization

Purposes of PlanningProvides direction Reduces uncertainty Minimizes waste and redundancy Sets the standards for controlling

Planning and PerformanceThe Relationship Between Planning and

Performance Formal planning is associated with:Higher profits and returns on assets Other positive financial results

The quality of planning and implementation affects

performance more than the extent of planning The external environment can reduce the impact of planning on performance

How Do Managers Plan?Elements of PlanningGoals (also objectives)

Desired outcomes for individuals, groups, or entire organizations Provide direction and performance evaluation criteria

Plans

Documents that outline how goals are to be accomplished Describe how resources are to be allocated

Steps in Planning1. Being Aware of Opportunities 2. Establishing Objectives or Goals 3. Developing Premises 4: Determining Alternative Courses 5. Evaluating Alternative Courses 6. Selecting a Course 7. Formulating Derivative Plans 8. Quantifying Plans by Budgeting

Types of Plans

Types of PlansBREADTH Strategic Plans Apply to the entire organization Establish the organizations overall goals Seek to position the organization in terms of its

environment Cover extended periods of time

Operational Plans Specify the details of how the overall goals are to

be achieved Cover short time period

Types of Plans (contd) TIME FRAME Long-Term Plans Time frames extending beyond three years

Short-Term Plans Time frames of one year or less

SPECIFICITY Specific Plans

interpretation Directional Plans Flexible plans that set out general guidelines, provide focus, yet allow discretion in implementation

Clearly defined and leave no room for

Exhibit 3.4 Specific Vs. Directional Plans

Types of Plans (contd)FREQUENCY OF USE Single-use Plan A one-time plan specifically designed to meet the needs of a unique situation Standing PlansOngoing plans that provide guidance for

activities performed repeatedly

Types of PlansPlans can be classified as (1) mission or purposes, (2) objectives or goals, (3) strategies, (4) policies, (5) procedures, (6) rules, (7) programs, and (8) budgets

Types of PlansThe mission, or purpose, identifies the basic

purpose or function or tasks of an enterprise or agency or any part of it Objectives, or goals, are the ends toward which activity is aimed Strategy is the determination of the basic longterm objectives of an enterprise and the adoption of courses of action and allocation of resources necessary to achieve these goals Policies are general statements or understandings that guide or channel thinking in decision making Procedures are plans that establish a required method of handling future activities

Types of Plans cont.Rules spell out specific required actions or

nonactions, allowing no discretion Programs are a complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to be employed, and other elements necessary to carry out a given course of action A budget is a statement of expected results expressed in numerical terms

Developing PlansContingency Factors in PlanningDegree of environmental uncertainty Stable environment: specific plans Dynamic environment: specific but flexible plans Length of future commitments Current

plans affecting future commitments must be sufficiently long-term to meet the commitments

Approaches to Establishing GoalsTraditional Goal SettingBroad goals are set at the top of

the organization Goals are then broken into subgoals for each organizational level Goals are intended to direct, guide, and constrain from above

Approaches to Establishing Goals (contd)Management By Objectives (MBO) Specific performance goals are jointly determined by employees and managers Progress toward accomplishing goals is periodically reviewed Rewards are allocated on the basis of progress toward the goals Key elements of MBO:

Goal specificity, participative decision making, an explicit performance/evaluation period, feedback

Steps in a Typical MBO Program

Jointly Set Objectives

Develop Action Plans to Achieve Objectives

Review Objectives and Provide Feedback

Give Rewards for Achieved Objectives

Overall objectives and strategies of organization

Managers and employees work on action plans together

Objectives allocated to divisional and departmental units

Action plans implemented

Specific objectives collaboratively set with employees

Does MBO Work?Reason for MBO SuccessTop management commitment and

involvement

Potential Problems with MBO

Programs

Not as effective in dynamic

environments that require constant resetting of goals Overemphasis on individual accomplishment may create problems with teamwork

Benefits of Management by ObjectivesClear goals:

Motivate Improve managing through resultsoriented planning Clarify organizational roles, structures and the delegation of authority Encourage personal commitment to their own and organizational goals. Facilitate effective controlling, measuring results, and leading to corrective actions

Failures of Management by ObjectivesList some failures and limitations of MBO What would you do to overcome the failures?

Criticisms of PlanningPlanning may create rigidity Plans cannot be developed for dynamic

environments Formal plans cannot replace intuition and creativity Planning focuses managers attention on todays competition, not tomorrows survival Formal planning reinforces todays success, which may lead to tomorrows failure

Organizational StrategyStrategic Management The set of managerial decisions and actions that determines the long-run performance of an organization

The Strategic Management ProcessExternal Analysis opportunities threats

Identify the organization's current mission, goals, and strategies SWOT Analysis Formulate Strategies Implement Strategies Evaluate Results

Internal Analysis strengths weaknesses

Strategic Management ProcessStep 1: Identify the Organizations Current

Mission, Objectives, and Strategies Mission: the firms reason for being

The scope of its products and services Goals: the foundation for further planning Measurable performance targets

Step 2: Conduct an Internal Analysis Assessing organizational resources, capabilities,

activities, and culture: Strengths (core competencies) create value for the customer and strengthen the competitive position of the firm Weaknesses (things done poorly or not at all) can place the firm at a competitive disadvantage

Strategic Management Process (contd)Step 3: Conduct an External Analysis The environmental scanning of specific and general environments

Focuses on identifying opportunities and threats

Steps 2 and 3 combined are called a SWOT

analysis. (Strengths, Weaknesses, Opportunities, and Threats)

Strategic Management Process (contd)Step 4: Formulate Strategies Develop and evaluate strategic alternatives Select appropriate strategies for all levels in the organization that provide relative advantage over competitors Match organizational strengths to environmental opportunities Correct weaknesses and guard against threats

Strategic Management Process (contd)Step 5: Implement StrategiesImplementation: effectively fitting

organizational structure and activities to the environment The environment dictates the chosen strategy; effective strategy implementation requires an organizational structure matched to its requirements

Step 6: Evaluate ResultsHow effective have strategies been? What adjustments, if any, are necessary?

Levels of Organizational Strategy

Corporate Level Business Level Functional Level Research and Development Strategic Business Unit 1

Multibusiness Corporation Strategic Business Unit 2 Strategic Business Unit 3 Human Resources Finance

Manufacturing

Marketing

Types of Organizational StrategiesCorporate-level Strategy The companys grand strategy for the entire organization and its strategic business units Types of Grand Strategies Growth: expansion into new products and markets Stability: maintenance of the status quo Retrenchment: addresses organizational weaknesses that are leading to performance declines Combination: simultaneous pursuit of two

Corporate-Level StrategiesGrowth StrategySeeking to increase the organizations

business by expansion into new products and markets

Stability StrategyA strategy that seeks to maintain the

status quo to deal with the uncertainty of a dynamic environment, when the industry is experiencing slow- or nogrowth conditions, or if the owners of the firm elect not to grow for personal reasons

Corporate-Level Strategies (contd)Retrenchment StrategyReduces the companys activities or

operations Retrenchment strategies include: Cost

reductions Closing underperforming units Closing entire product lines or services

Corporate-Level Strategies (contd)Combination StrategySimultaneous pursuit by the

organization of two or more of growth, stability, and retrenchment strategies

Business-Level StrategyBusiness-Level StrategyA strategy that seeks to determine how an

organization should compete in each unit within the organization to create a competitive advantage Competitive advantage

An organizations distinctive competitive edge that is sourced and sustained in its core competencies

Forces in an Industry Analysis (Five Forces Model Given by: PorterNew Entrants Threat of New Entrants Bargaining Power of Buyers Buyers

Suppliers Bargaining Power of Suppliers

Intensity of Rivalry Among Current Competitors

Threat of Substitutes Substitutes

Five Competitive ForcesThreat of New Entrants The ease or difficulty with which new competitors can enter an industry Threat of Substitutes The extent to which switching costs and brand loyalty affect the likelihood of customers adopting substitute products and services Bargaining Power of Buyers The degree to which buyers have the market strength to hold sway over and influence competitors in an industry

Five Competitive Forces (contd)Bargaining Power of SuppliersThe relative number of buyers to

suppliers and threats from substitutes and new entrants affect the buyersupplier relationship

Current RivalryIntensity among rivals increases when

industry growth rates slow, demand falls, and product prices descend

Functional-Level StrategyFunctional-level strategies support the

business-level strategyi.e., Marketing, human resources,

research and development, and finance all support the business-level strategy Problems occur when employees or customers dont understand a companys strategy

BenchmarkingThe search for the best practices among

competitors and noncompetitors that lead to their superior performanceBy analyzing and copying these practices,

firms can improve their performance

Decision MakingDecision making is defined as the selection

of a course of action from among alternatives

Decision Making Process1. Identification of a problem 2. Identification of decision criteria 3. Allocation of weights to criteria 4. Development of alternatives 5. Analysis of alternatives 6. Selection of an alternative 7. Implementation of the alternative 8. Evaluating decision effectiveness

Limited, or "Bounded," RationalityLimitations of information, time, and certainty

limit rationality, even though a manager tries earnestly to be completely rational Satisficing is picking a course of action that is satisfactory or good enough under the circumstances

Development of Alternatives and the Limiting FactorA limiting factor is something that stands in

the way of accomplishing a desired objective The principle of the limiting factor: By recognizing and overcoming those factors that stand critically in the way of a goal, the best alternative course of action can be selected

Simons model of decision making Contribution of Herbert Simon The decision making process can be broken

into series of three sequential steps: 3. Intelligent activity 4. Design activity 5. Choice activity

Intelligent activity refers to the initial phase of searching the environment for conditions calling for decisions. Design activity refers to the phase of inventing, developing, and analyzing possible course of action to take place. Choice activity refers to the final phase of actual choice selecting a particular course of action from those available.

Marginal AnalysisMarginal analysis is to compare additional

revenues and the additional cost arising from increasing output

Cost Effectiveness AnalysisCost effectiveness analysis seeks the best

ratio of benefit and cost

Selecting an Alternative: Three ApproachesWhen selecting from among alternatives, managers can use: 2. Experience, 3. Experimentation, and 4. Research and analysis.

Programmed And Nonprogrammed DecisionsProgrammed decisions are used for

structured or routine work Nonprogrammed decisions are used for unstructured, novel, and illdefined situations of a nonrecurring nature

Creativity and InnovationCreativity refers to the ability and power to

develop new ideas Innovation means the use of new ideas

The Creative Process The creative process is seldom simple

and linear It generally consists of four overlapping and interacting phases:3. Unconscious scanning 4. Intuition 5. Insight 6. Logical formulation or verification

Rules for Brainstorming1. No ideas are criticized 2. The more radical the ideas are, the better 3. The quantity of idea production is

stressed 4. The improvement of ideas by others is encouraged