Ferrell Hirt Ferrell
M: Business
nd
2 Edition
FHF
The Nature of Management
FHF
McGraw-Hill/Irwin
Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
Management
• Planning, organizing, staffing, directing &
controlling
• Achieving objectives requires skilled managment
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7-3
Management Is...
[
A process designed to achieve an
organization’s objectives by using its
resources effectively & efficiently in a
changing environment
]
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7-4
What Mangers Do
• Make decisions – utilization of resources – achieve
objectives
• Planning
• Organizing
• Staffing
• Directing
• Controlling
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7-5
The Importance of Management
Crucial when starting a successful business
Confluence Energy
• Largest pellet plant w. of Mississippi
• Enough energy for 35,000 homes
• Manager and owner, Mathis, works with
policymakers
• Improve access to land
• Improve environmental policy dealing with bark beetles
• Uses trees killed by pine beetles to make pellets for
stoves
• Domestic, renewable energy source
• High efficiency
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7-6
The Importance of Management
• Resource acquisition and Coordination
• Resources:
• People
• Raw materials
• Equipment
• Money
• Information
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7-7
Management Functions
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7-8
Management Functions
Planning
• Process of determining the organization’s objectives
and deciding how to accomplish them.
Objectives
• Results desired by organization
Mission
• Organization’s purpose and philosophy
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7-9
Common Organizational Objectives
• Profit
• Competitive advantage
• Efficiency
• Growth
• Service
• Ethics
• Community responsibility
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7-10
Planning as a Function of Management
• Strategic
• Tactical
• Operational
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7-11
Strategic Plans
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
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7-12
Tactical Plans
Short-range
• Strategy implementation
• 1 year or less
• Environmental change
• Periodically reviewed & updated
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7-13
Operational Plans
Very short-term
• Actionable, specific
• Individuals, work groups, departments
• 1 month, 1 week, 1 day
• Achieve tactical plans
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7-14
Crisis Management Contingency Planning
Focus on potential disasters
• Product tampering
• Oil spills
• Fire, earthquake, terrorist attack
• Unethical/illegal employee activity
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7-15
Global Financial Crisis
Has reset how companies plan for and manage crises
• GE
• Struggled during the downturn; lost AAA
credit rating
• New focus on products that capture
government stimulus spending (clean energy,
new healthcare tech)
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7-16
Management Functions
Organizing
• Structuring of resources & activities to accomplish
objectives efficiently & effectively
• Importance:
• Creates synergy
• Establishes lines of authority
• Improves communication
• Improves competitiveness
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7-17
Management Functions (continued)
• Staffing
• Hiring people to carry out the work of the
organization
• Importance:
• Recruiting
• Determine skills
• Motivate & train
• Compensation levels
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7-18
Downsizing
Elimination of significant numbers of employees
• rightsizing
• trimming the fat
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7-19
Management Functions (continued)
Directing
•Motivating and leading employees to achieve
organizational objectives
Motivation
•Incentives (raise, promotion)
•Employee involvement (cost reduction, customer service,
new products)
•Recognition and appreciation
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7-20
Controlling
Process of evaluating and correcting activities to keep
organization on course
Five Activities of controlling
1. Measuring performance
2. Comparing performance against standards
3. Identifying deviations from standards
4. Investigating causes of deviations
5. Taking corrective action
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Levels of Management
• Top management
• Middle management
• First-line/supervisory management
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7-22
Top Managers
• President
• Chief Executive Officer (CEO)
• Chief financial Officer (CFO)
• Chief operations Officer (COO)
Source: “CEO Compensation, 2009,” Forbes, April 22, 2009
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7-23
Middle Management
• Responsible for tactical planning
• Implement general guidelines established by top
management
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7-24
First Line Management
• Supervise workers
• Oversee daily operations
• Directing and controlling primary functions
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7-25
Areas of Management
• Finance
• Production
• Operations
• Human Resources
• Marketing
• Administration
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7-26
Financial Management
[
Focus on obtaining money necessary
for the successful operations and
using funds to further
organizational goals
]
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7-27
Production & Operations Mangement
[
Develop & administer activities to
transform resources into goods,
services, and ideas for the
marketplace.
]
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7-28
Human Resources Management
[
Handle staffing function and
deal with employees in a
formalized manner
]
7-29
Managing Talent
Responses of Managers when asked if they are worried about
their high-potential talent being recruited by competitors
Source: “USA Today Snapshot,” USA Today, April 14, 2009, A1
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Marketing Management
[
Responsible for planning, pricing,
and promoting products and
making them available to
customers
]
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7-31
Information Technology (IT) Management
[
Responsible for implementing,
maintaining, and controlling
technology applications in business
(computer networks)
]
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7-32
Administrative Managers
• Manage an entire business or major segment
of the business
• Coordinate activities of specialized managers
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7-33
Skills Needed by Managers
• Leadership
• Technical expertise
• Conceptual skills
• Analytical skills
• Human relations skills
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7-34
FHF
7 Tips for Successful Leadership
7-35
Types of Leaders
Autocratic Leaders
• Decision makers, “tell” employees
Democratic Leaders
• Involve employees in decisions
Free-Rein leaders
• Employees work without interference
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7-36
Where Do Managers Come From?
Good managers are not born; they are made
• Internal promotion
• Know the company
• But may limit innovation
• Hiring from other organizations
• Better for innovation
• Do not know the company as well
• Hiring straight from colleges
• Lack of experience
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Decision Making
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7-38
Going Green
Utilities managers are struggling to truly go green
• Largest contributors to greenhouse gas emissions
• 40% of all CO2 emissions in the U.S.
• Expected to clean up production
• 83% reduction by 2050
• Clash between goal of providing cheap energy and fighting climate
change
• Forward-thinking leaders
• Profit in the long-term by anticipating expensive changes
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7-39
Management Functions
• Not a cut-and-dried process
• Involves figuring out what to do despite uncertainty,
diversity, and a great deal of potentially relevant
information.
• Good managers get things done through a large and
diverse set of people despite having little direct control
over them
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7-40
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