2
The Business of Managing
Business
Essentials
6e
Ronald J. Ebert
Ricky W. Griffin
5
BUSINESS MANAGEMENT
© 2007 Prentice Hall, Inc.
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
1. Describe the nature of management and identify the
four basic functions that constitute the management
process.
2. Identify different types of managers likely to be found
in an organization by level and area.
3. Describe the basic skills required of managers.
4. Explain the importance of strategic management and
effective goal setting in organizational success.
© 2007 Prentice Hall, Inc. All rights reserved.
5–2
L E A R N I N G O B J E C T I V E S (cont’d)
After reading this chapter, you should be able to:
5. Discuss contingency planning and crisis management
in today’s business world.
6. Describe the development and explain the importance
of corporate culture.
© 2007 Prentice Hall, Inc. All rights reserved.
5–3
What’s in It for Me?
After reading this chapter, you’ll be better
positioned to:
 Carry out various management responsibilities
yourself
 More effectively assess and appreciate the quality
of management in various companies from the
perspective of a consumer or investor
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5–4
Who Are Managers?
Good Managers
 Are responsible for business performance
and effectiveness
Effective—do the right things; achieve goals
 Efficient—do things right; lower costs

 Are accountable to all key stakeholders
Develop strategic plans and tactical plans
 Analyze their competitive environments and plan,
organize, direct, and control day-to-day
operations

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5–5
The Management Process
Management
Traditional:
Planning
Setting Goals
Reviewing
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Execution
5–6
The Management Process
Management
Planning
Setting Goals
Controlling
Organizing
Monitoring Performance
Structuring
Directing
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5–7
The Management Process
Management
 The process of planning, organizing, leading, and
controlling a firm’s financial, physical, human, and
information resources to achieve its goals
Planning
Setting Goals
Controlling
Organizing
Monitoring Performance
Structuring
Leading
Guiding and Motivating
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5–8
Planning
The Planning Process
 Determining firm’s goals
 Developing strategy for achieving goals
 Designing tactical and operational plans for
implementing the strategy
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5–9
Organizing
The Organizing Process
 Arranging resources and activities in a coherent
structure

Prepare organizational charts to help everyone understand
roles and reporting relationships
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5–10
Leading
Leading
 Guiding and motivating employees to meet the
organization’s objectives

Uniting employees in a clear and targeted manner and
motivating them to work in the best interests of their
employer
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5–11
Controlling
The Controlling Process
 Monitoring a firm’s performance to make sure that
it is meeting its goals
Begins when management establishes standards, often
for financial performance
 Can serve as a basis for providing rewards or reducing
costs

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5–12
The Control Process
Establish Standards
Measure Performance
YES
Continue Current
Activities
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Does measured
performance match
standards?
NO
Adjust Performance
or Standards
5–13
Types of Managers
Levels of Management
 Top managers: Responsible for the overall
performance of the firm

President, vice president, treasurer, CEO, CFO
 Middle managers: Implement strategies and work
toward goals set by top managers

Plant manager, operations manager, division manager
 First-line managers: Work with and supervise
employees

Supervisor, office manager, project manager, group leader
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5–14
Areas of Management
Human
Resources
Operations
Marketing/
Sales
Information/
IT or IS
Financial/
Accounting
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Other
5–15
Basic Management Skills
Technical
Skills
Conceptual
Skills
Human
Relations
Skills
DecisionMaking
Skills
Time
Management
Skills
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5–16
Management Skills for the 21st Century
Global Management Skills
 Understand foreign markets, cultural differences,
and the motives and practices of foreign rivals
 Understand how to collaborate with others around
the world on a real-time basis
Management and Technology
Skills
 Needed to process increasing
amounts of information
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5–17
Strategic Management:
Setting Goals and Formulating Strategy
Strategic Management
 The process of helping an organization maintain an
effective alignment with its environment
Goals
 Starting point in effective strategic management
 Objectives that a business hopes and plans to
achieve
Strategy
 The broad set of action plans to achieve company
goal
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5–18
Setting Business Goals
Goals
 Performance targets that organizations and their
managers use to measure success or failure
Mission Statement
 A statement of how a business will achieve its
fundamental purpose
Effective organizations set goals at many
different levels:
 Long-term goals: five years or more
 Intermediate goals: one to five years
 Short-term goals: one year or less
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5–19
Purposes of Goal Setting
Goal Setting:
1. Provides direction and guidance for managers at
all levels
2. Helps firms allocate resources
3. Helps to define corporate culture
4. Helps managers assess performance
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5–20
Types of Strategy
Corporate Strategy
 Determines what business or businesses a
company will own and operate
 Growth
Related diversification
 Unrelated diversification

 Retrenchment

Downsizing and divestiture
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5–21
Types of Strategy (cont’d)
Business (or Competitive) Strategy
 Focuses on improving the company’s competitive
position at the level of the business unit or
product line
Functional Strategy
 Guides managers in specific areas such as
marketing, finance, and operations in deciding how
best to achieve corporate goals by performing their
functional activities most effectively
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5–22
FIGURE 5.2
Hierarchy of Strategy
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5–23
Formulating Strategy
Step 1: Setting Strategic Goals
 Strategic goals are derived from a firm’s mission
statement
Step 2: Analyzing the Organization and the Environment:
SWOT Analysis
 Assessing internal strengths and weaknesses and
external opportunities and threats

Environmental analysis

Organizational analysis
Step 3: Matching the Organization and Its Environment
 Matching environmental threats and opportunities
against corporate strengths and weaknesses
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5–24
FIGURE 5.3
Strategy Formulation
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5–25
A Hierarchy of Plans
Strategic Plans
 Reflect decisions about resource allocations,
company priorities, and the steps needed to meet
strategic goals
Tactical Plans
 Shorter-term plans for implementing specific
aspects of the company’s strategic plans
Operational Plans
 Mid-level and lower-level managers set short-term
targets for daily, weekly, or monthly performance
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5–26
Contingency Planning
and Crisis Management
Contingency Planning
 Planning for change
 Seeks to identify in advance important aspects of a
business or its market that might change and the
ways in which a company will respond to changes
Crisis Management
 Involves an organization’s methods for dealing with
a crisis—an unexpected emergency requiring
immediate response
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5–27
Management and the Corporate Culture
Corporate Culture
 Is the shared experiences, stories, beliefs, and
norms that characterize an organization
 Helps define the work and business climate that
exists in an organization
Communicating the Culture
 Managers must understand the culture
 Managers must transmit the culture to others in the
organization
 Managers can support the culture by rewarding and
promoting those who understand it and work toward
maintaining it
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5–28
Managing Change in the Culture
Stages in the Change Process
1. At the highest level, analysis of the company’s
environment highlights extensive change as the
most effective response to its problems.
2. Top management begins to formulate a vision of a
new company.
3. The firm sets up new systems for appraising and
compensating employees who enforce the firm’s
new values.
© 2007 Prentice Hall, Inc. All rights reserved.
5–29
KEY TERMS
business (or competitive)
strategy
conceptual skills
contingency planning
controlling
corporate culture
corporate strategy
crisis management
decision-making skills
leading
environmental analysis
first-line manager
functional strategy
goal
© 2007 Prentice Hall, Inc. All rights reserved.
human relations skills
intermediate goal
long-term goal
management
middle manager
mission statement
organizational analysis
organizing
operational plan
planning
short-term goal
strategic goal
strategic management
strategic plan
5–30
K E Y T E R M S (cont’d)
strategy
strategy formulation
SWOT analysis
tactical plan
technical skills
time management skills
top manager
© 2007 Prentice Hall, Inc. All rights reserved.
5–31