Ch 05 busi20 Fall 07

Chapter 5

Managing the

Business

Enterprise

PowerPoint Presentation by Charlie Cook

Copyright © 2005 Prentice Hall, Inc.

All rights reserved.

MPC’s Deep Offerings

• Business 40 Principles of Management

 The role of the manager

 Planning

 Organizing/Staffing

 Directing

 Controlling

• Business 44 Business ownership/management

 Focusing on small business

 Create a business model and prepare a plan for it

 Get funding

Copyright © 2005 Prentice Hall, Inc. All rights reserved. 5 –2

“Some men see things as they are and say why. I dream of things that never were and say why not.”

—John F. Kennedy

“I can’t do any long range planning because I have too many urgent problems to take care of.”

—Managers I’ve heard a million times


Key Topics

• The management process

• Setting goals and formulating strategies

• Types of managers by level and area

• The five basic management skills

• The development and importance of corporate culture


The Management Process

• Planning – What are we going to do?

• Organizing – How are we going to do it?

• Directing – Get it done!

• Controlling – How well did we do?

• Balance – Doing the right amount of each step


Management’s Real Responsibilities:

• Effectiveness and efficiency

• Accountable to all key stakeholders

• Drive the business forward, don’t just deal with today’s urgent issues

 This takes planning


Management: without planning

• Just do it!

• Do what?

• How do we do it?

• We have a problem, fix it. How?

• Customers aren’t happy, fix it. How?

• Profits are down, fix it. How?

Copyright © 2005 Prentice Hall, Inc. All rights reserved. with planning

 Set goals

 Develop strategies to achieve goals

 Communicate the plan.

 Do it.

 Check results against your goals.

 Celebrate!

5 –7

The most overarching goals:

Mission Statement

• Mission Statement: How a business will achieve its fundamental purpose

 Derive goals from it

 All activities should be traced to support the mission

 Unchanging over time

 The firm’s reason for being!

 More?


Brainstorm Your Mission:

The Vision Part:

• List 5-10 words or phrases that describe your business. Highlight the three most important.

• List 3-5 words or phrases that describe the company's ideal image from a customer's point-of-view.

• List 3-5 words or phrases that describe the company's ideal image from a management and employee point-of-view.

Temper with your customer and business reality:

• List the market opportunities and/or customer needs that your company intends to address (e.g., the business' value proposition).

• Who are your customers? List the company's primary and secondary target markets (target markets are discussed in the

Market Analysis lesson).

• With your customers in mind, list each service or product your business will provide.

• List 3-5 measures of your business' success.


Mission Statement:

A Professional Example

We create, market and distribute exciting bicycle products which blend innovative design and creative engineering for the discerning customer.

We will be the supplier of choice for the full service bicycle dealer.

Goals:

#1 likely to buy as measured by trade association consumer surveys

#1 supplier in total dollars to 25% of retail dealers

Earn at least 15% return on equity

Strategies:

• Effectively turn new concepts into marketable products

• Visibly differentiate products

• Pull-through consumer marketing programs

• Develop dealer market share measurement process

• Align support with dealer needs

• Create sales programs to increase share of dealer

• Increase higher margin products to 30 % of sales

• Improve sales forecast to minimize inventory overstock costs

• Succeed on the other two goals

5 –10

Goal setting: the Starting Point of

Effective Management & Planning

• Goal: Objective that business hopes and plans to achieve;

 Goals that work are: measurable, objective, attainable

• Goal-setting benefits:

 To provide direction for managers

 To communicate direction to workers

 To help allocate resources

 To define corporate culture

 To add objectivity to performance evaluation

 Benchmark, standard


SMART Goal Setting

– www.wikipedia.org

• Specific - Objective or goal can't be unclear; it should be precisely defined

• Measurable - Define a method of measuring the objective/goal

• Agreed-To/Achievable - All parties need to agree to the objective/goal, and it also must be achievable

• Realistic/Rewarding/Relevant - It must be a realistic objective/goal, and it must make sense to do it

• Time-related - to be completed within an agreed time scale


The smallest strategies should also align with most global strategies & goals.

• Strategy: The broad set of action plans to achieve company goals

 Corporate Strategy

 Business Strategy

 Functional Strategy


Mission Statement:

A Professional Example

We create, market and distribute exciting bicycle products which blend innovative design and creative engineering for the discerning customer.

We will be the supplier of choice for the full service bicycle dealer.

Goals:

#1 likely to buy as measured by trade association consumer surveys

#1 supplier in total dollars to 25% of retail dealers

Earn at least 15% return on equity

Strategies:

• Effectively turn new concepts into marketable products

• Visibly differentiate products

• Pull-through consumer marketing programs

• Develop dealer market share measurement process

• Align support with dealer needs

• Create sales programs to increase share of dealer

• Increase higher margin products to 30 % of sales

• Improve sales forecast to minimize inventory overstock costs

• Succeed on the other two goals

5 –14

Making Your Goals:

• Make three goals that if achieved will help you achieve your mission:

 Try to create one in each category

 Customer satisfaction

 Market share

 Financial performance

 Or something else if that is more important to you

 Make them SMART


Strategy Formulation

Copyright © 2005 Prentice Hall, Inc. All rights reserved.

Alignment

Check!

Figure 5 –2

5 –17

SWOT Analysis in Tactical Planning

Environmental Scan

(SWOT Analysis)

External Analysis

(Outside the company)

Internal Analysis

(inside the company)

Strengths & Weaknesses Opportunities & Threats

SWOT Matrix


Tactical Plan

5 –18

SWOT Internal Analysis

• S trengths: Resources and capabilities which can be used to form competitive advantage

 Brand, patents, customer relationships, distribution network, technical know-how, access to specific scarce resources

• W eaknesses: Shortfalls in resources and capabilities that hamper pursuit of competitive advantages

 High cost structure, old infrastructure, poor reputation, tarnished brand, limited access to specific scarce resources


SWOT External Analysis

• O pportunities: Ways the market (input or output) offer us to grow our profitability

 Unmet customer needs, retiring competitor, opening international markets, new technology

• T hreats: Market changes bringing the possibility of declining growth or decreased profitability

 Changing customer needs we can’t meet, laws limiting our product, concentration of competition, barriers to entry diminishing


SWOT Matrix: Tactical Planning

Opportunities

Threats

Strengths

Make really good

Genovese’s recipe opportunities

Weakness

Send valentines to build our new to allow us to relationships and pursue market build customer retention

Allow employees freedom to entertain and be real people to ward off corporate stagnation.

Tenth pizza gets you a free logo t-

Fix a problem to shirt. Wear it in alleviate an and get 10% off.


Strategy Tree

Company Name: __________________________________________________

Business Description:_______________________________________________

________________________________________________________________

________________________________________________________________

Mission Statement

Goal #1 Goal #2 Goal #3

Strategies from Goal #1 Strategies from Goal #1 Strategies from Goal #2


Get to work!

• Who has a business idea already?

 Pick a familiar enough business that you can execute this process here and now.

• The assignment:

 Select one of your group’s most familiar businesses

 Make a realistic mission statement

 Do your SWOT analysis

 Complete your SWOT matrix

 Write out your strategic planning tree


Strategy Tree

Company Name: __Pebble Beach Golf Club___

Business Description:__A really expensive global destination golfing paradise

________________________________________________________________

Mission Statement:

To provide the best recreational experience imaginable, involving a golfing destination.

Goal #1

100% Customer

Satisfaction

Goal #2 Goal #3

To be the #1 ranked To increase earnings golfing destination by

Conde Naste Travel

Magazine


By at least 10% every year.

5 –25

Planning Notes:

• Planning

 Strategic – High level company priorities

 Tactical – Shorter range, to implement Strategic plans

 Operational – Shortest range, implementing tactical plans (the transition from planning to doing)

 Contingency – What if?

 Crisis – Planning for and reacting to unexpected events

 Question: What kind of planning is your company in by default if it neglects the planning process?


The Management Process

• Planning – What are we going to do?

• Organizing – How are we going to do it?

 Personnel, structure, Resource allocation

 Chapter 6

• Directing/Leading – Get it done!

 Motivating, Rewarding, doing

 Chapters 8&9

• Controlling – How well did we do?


The Control Process uses the goals from planning

Establish Standards

Which do workers think you should do?

Which does your boss want you to do?

Measure Performance

YES Does measured performance match standards?

Continue (or upgrade) Current

Activities


NO

Adjust Performance or Standards

5 –28

5 - 28

The Control Process

Does measured performance match standards?

NO

Which do workers think you should do?

Which does your boss want you to do?

Adjust Performance or Standards

• Standards Adjustment



Benchmark competition

 Benchmark comparable industries

 Compare to historical performance



Evaluate processes


• Performance Adjustment

 Evaluate processes



Benchmark history or peers

 Communicate shortfalls

 Train?



Giving notice

5 –29

5 - 29

Traditional Levels of Management

Top

Managers

President, V.P.

Long Range

Middle

Managers

Middle

Managers

Division manager

Middle Range

First-Line

Managers

First-Line

Managers

First-Line

Managers

Line manager

Short Range


Chapter 5: Management Part 2

• Finish the management process

• Types of managers by level and area

• The five basic management skills



Areas of Management – Functional

• Traditional vertical career paths

• Departmentalization issues & options

Human

Resources Operations

Marketing

Information

Other Financial


Chapter 5: Management Part 2

• Finish the management process

• Types of managers by level and area

• The five basic management skills



Basic Management Skills your management job

Urgent vs.

Important:

Time

Management

Skills

Conceptual

Skills

Human

Relations

Skills

Relating with the team that gets it done

How you keep your management job

Decision-

Making

Skills

Technical

Skills


The Decision-Making Process


Figure 5 –4

5 –43

Management Skills for the 21 st Century

• Global Management

Skills

 Global opportunities

 Diversity management

• Information and

Technology Skills

 Old guard

 New guard

• Change and lots of it


Management Is Tightly Linked to

Corporate Culture

• Corporate Culture

 The shared experiences, stories, beliefs, and norms that characterize an organization

Communicating the Culture

Managing

Change


Chapter Review

• Explain the importance of setting goals and formulating strategies.

• Describe the management process.

• Identify types of managers by level and area.

• Describe the basic management skills.

• Explain the development and importance of corporate culture.


Ch 05 busi20 Fall 07

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