Who Are Managers?Manager

Someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals

Types of ManagersFirst-line Managers

Are 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 Levels

TopManagers

Middle Managers

First-Line Managers

Nonmanagerial Employees

TopManagers

Middle Managers

First-Line Managers

Nonmanagerial Employees

Organization

A 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 Concerns

Efficiency “Doing things right”

Getting the most output for the least input

Effectiveness “Doing the right things”

Attaining organizational goals

Managerial Activities

• Make decisions

• Allocate resources

• Direct activities of others to attain goals

Managerial Activities

• Make decisions

• Allocate resources

• Direct activities of others to attain goals

Managers (or administrators)

Individuals who achieve goals through other people.

What Do Managers Do?Functional Approach

PlanningOrganizingLeadingControlling

Planning

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

Organizing

Determining 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.

Leading

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

Controlling

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

Management Functions

Planning

Defining goals,establishingstrategy, anddevelopingsubplans tocoordinateactivities

Lead toOrganizing

Determiningwhat needsto be done,how it willbe done, andwho is to do it

Leading

Directing andmotivating allinvolved partiesand resolvingconflicts

Controlling

Monitoringactivitiesto ensurethat they areaccomplishedas planned

Achieving theorganization ’s

statedpurpose

What Do Managers Do? (cont’dMintzberg’s Management Roles Approach

Interpersonal roles Figurehead, leader, liaison

Informational roles Monitor, disseminator, spokesperson

Decisional roles Entrepreneur, disturbance handler, resource

allocator, negotiator

What Do Managers Do? (cont’d)Skills Approach

Technical skillsHuman skillsConceptual 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 Levels

TopManagers

MiddleManagers

Lower-levelManagers

Importance

ConceptualSkills

HumanSkills

TechnicalSkills

What Is An Organization?An Organization Defined

A deliberate arrangement of people to accomplish some specific purpose

Common Characteristics of OrganizationsHave a distinct purpose (goal)Are composed of peopleHave 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 ScienceManagement is an activityManagement is a continuous processManagement achieving pre-determined

objectivesOrganized activitiesManagement is a factor of productionManagement as a system Management is a discipline

Features of ManagementManagement is a distinct entityManagement aims at maximising profitManagement is a purposeful activityManagement is a professionUniversal applicationManagement is getting things doneManagement is needed at all levels

Importance of ManagementManagement meet the challenge of changeAccomplishment of group goalsEffective utilization of resourcesEffective functioning of businessResource DevelopmentSound organization StructureManagement directs the organizationIntegrates various interestsStability

Importance of ManagementInnovationCo-ordination and team-spiritTackling problemsA tool for Personality Development

Henry Fayol (1841-1925)Was a french industrialistGiven :

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 workAuthority & responsibiltyDisciplineUnity of commandUnity of directionSubordinate of individual interest to group

interestRemuneration of personnelCentralizationScalar Chain

Principles of ManagementOrderEquityStability of tenure of personnelInitiativeEspirit De Corps

What Is Planning?Planning

Managerial function that involves: Defining the organization’s goals Establishing an overall strategy for achieving

those goals Developing a comprehensive set of plans to

integrate and coordinate organizational workTypes 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 Planning

Provides directionReduces uncertaintyMinimizes waste and redundancySets the standards for controlling

Planning and PerformanceThe Relationship Between Planning and

PerformanceFormal 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 Planning

Goals (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 Planning 1. Being Aware of Opportunities 2. Establishing Objectives or Goals3. Developing Premises 4: Determining Alternative Courses 5. Evaluating Alternative Courses 6. Selecting a Course 7. Formulating Derivative Plans8. Quantifying Plans by Budgeting

Types of Plans

Types of PlansBREADTH

Strategic PlansApply to the entire organizationEstablish the organization’s overall goalsSeek to position the organization in terms of its

environmentCover extended periods of time

Operational PlansSpecify the details of how the overall goals are to

be achievedCover short time period

Types of Plans (cont’d) TIME FRAME

Long-Term PlansTime frames extending beyond three years

Short-Term PlansTime frames of one year or less

SPECIFICITYSpecific Plans

Clearly defined and leave no room for interpretationDirectional Plans

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

Exhibit 3.4 Specific Vs. Directional Plans

Types of Plans (cont’d)FREQUENCY OF USE

Single-use PlanA one-time plan specifically designed to meet

the needs of a unique situationStanding Plans

Ongoing 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 long‑term 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 discretionPrograms 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 Plans

Contingency Factors in PlanningDegree of environmental uncertainty

Stable environment: specific plans Dynamic environment: specific but flexible

plansLength of future commitments

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

Approaches to Establishing Goals

Traditional Goal SettingBroad goals are set at the top of the

organizationGoals are then broken into subgoals

for each organizational levelGoals are intended to direct, guide,

and constrain from above

Approaches to Establishing Goals (cont’d)

Management By Objectives (MBO)Specific performance goals are jointly

determined by employees and managersProgress toward accomplishing goals is

periodically reviewedRewards are allocated on the basis of

progress toward the goalsKey elements of MBO:

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

Steps in a Typical MBO Program

Specific objectivescollaboratively set

with employees

Objectives allocated todivisional and

departmental units

Action plansimplemented

Give Rewards forAchieved Objectives

Jointly Set Objectives

Overall objectivesand strategies of

organization

Develop Action Plansto Achieve Objectives

Managers andemployees work on

action plans together

Review Objectives andProvide Feedback

Does MBO Work?Reason for MBO Success

Top management commitment and involvement

Potential Problems with MBO ProgramsNot as effective in dynamic environments

that require constant resetting of goalsOveremphasis on individual

accomplishment may create problems with teamwork

Benefits of Management by Objectives

Clear goals: Motivate Improve managing through results-

oriented 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 MBOWhat would you do to overcome the failures?

Criticisms of PlanningPlanning may create rigidityPlans cannot be developed for dynamic

environmentsFormal plans cannot replace intuition and

creativityPlanning focuses managers’ attention on

today’s competition, not tomorrow’s survivalFormal planning reinforces today’s success,

which may lead to tomorrow’s failure

Organizational StrategyStrategic Management

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

The Strategic Management Process

SWOT Analysis

Identify the

organization's

current mission, goals,

and strategies

Internal Analysis

• strengths

• weaknesses

External Analysis

• opportunities

• threats

Formulate

Strategies

Implement

Strategies

Evaluate

Results

Strategic Management ProcessStep 1: Identify the Organization’s Current

Mission, Objectives, and StrategiesMission: the firm’s reason for being

The scope of its products and servicesGoals: the foundation for further planning

Measurable performance targetsStep 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 (cont’d)

Step 3: Conduct an External AnalysisThe 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 (cont’d)

Step 4: Formulate StrategiesDevelop and evaluate strategic alternativesSelect 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 (cont’d)

Step 5: Implement StrategiesImplementation: effectively fitting organizational

structure and activities to the environmentThe 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

Research andDevelopment

Manufacturing Marketing HumanResources

Finance

StrategicBusiness Unit 1

StrategicBusiness Unit 2

StrategicBusiness Unit 3

MultibusinessCorporation

FunctionalLevel

BusinessLevel

CorporateLevel

Types of Organizational StrategiesCorporate-level Strategy

The company’s grand strategy for the entire organization and its strategic business units

Types of Grand StrategiesGrowth: expansion into new products and

marketsStability: maintenance of the status quoRetrenchment: addresses organizational

weaknesses that are leading to performance declines

Combination: simultaneous pursuit of two or more of the strategies above

Corporate-Level StrategiesGrowth Strategy

Seeking to increase the organization’s 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 no-growth conditions, or if the owners of the firm elect not to grow for personal reasons

Corporate-Level Strategies (cont’d)

Retrenchment StrategyReduces the company’s activities or

operationsRetrenchment strategies include:

Cost reductions Closing underperforming units Closing entire product lines or services

Corporate-Level Strategies (cont’d)

Combination StrategySimultaneous pursuit by the

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

Business-Level StrategyBusiness-Level Strategy

A strategy that seeks to determine how an organization should compete in each unit within the organization to create a competitive advantage

Competitive advantage An organization’s distinctive competitive edge that is

sourced and sustained in its core competencies

Forces in an Industry Analysis(Five Forces Model Given by: Porter

Substitutes

Buyers

BargainingPower ofBuyers

Threat ofSubstitutes

Suppliers

BargainingPower ofSuppliers

NewEntrants

Threat ofNew Entrants

Intensity ofRivalry Among

CurrentCompetitors

Five Competitive ForcesThreat of New Entrants

The ease or difficulty with which new competitors can enter an industry

Threat of SubstitutesThe extent to which switching costs and

brand loyalty affect the likelihood of customers adopting substitute products and services

Bargaining Power of BuyersThe degree to which buyers have the

market strength to hold sway over and influence competitors in an industry

Five Competitive Forces (cont’d)Bargaining Power of Suppliers

The relative number of buyers to suppliers and threats from substitutes and new entrants affect the buyer-supplier 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 don’t understand a company’s strategy

BenchmarkingThe search for the best practices among

competitors and noncompetitors that lead to their superior performance

By 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 problem2. Identification of decision criteria3. Allocation of weights to criteria4. Development of alternatives5. Analysis of alternatives6. Selection of an alternative7. Implementation of the alternative8. Evaluating decision effectiveness

Limited, or "Bounded," Rationality Limitations 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 Factor A 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

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

into series of three sequential steps:1. Intelligent activity2. Design activity3. 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:1. Experience, 2. Experimentation, and 3. Research and analysis.

Programmed And Nonprogrammed Decisions

Programmed decisions are used for structured or routine work

Nonprogrammed decisions are used for unstructured, novel, and ill‑defined situations of a nonrecurring nature

Creativity and Innovation Creativity 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:

1. Unconscious scanning 2. Intuition3. Insight 4. Logical formulation or verification

Rules for Brainstorming1. No ideas are criticized2. The more radical the ideas are, the

better3. The quantity of idea production is

stressed4. The improvement of ideas by others is

encouraged