Unit
4
Organizational Management
What is Management?
Management is the process of achieving organizational
objectives through people and other resources.
Functions of Management
Planning
management process of determining what an organization needs to
do and how best to get it done
Organizing
management process of determining how best to arrange an
organization’s resources and activities into a coherent structure
What is Management?
Functions of Management
Leading
management process of guiding and motivating employees to meet
an organization’s objectives
Controlling
management process of monitoring an organization’s performance
to ensure that it is meeting its goals
The Control Process
Levels of Management
Top Management
Develop long-range
strategic plans for
the organization.
Inspire executives
and employees to
achieve their vision
for the company’s
future.
Middle Management
Focus on specific
operations, products,
or customer groups
within an organization.
Responsible for
developing detailed
plans and procedures
to implement the firm’s
strategic plans.
Supervisory Management
Implement the plans
developed by middle
managers.
Responsible for nonmanager employees.
Motivate workers to
accomplish daily,
weekly, and monthly
goals.
The Three Levels of Management
Areas of Management
Human Resource Managers
hire and train employees, evaluate performance, and
determine compensation
Operations Managers
responsible for production, inventory, and quality control
Marketing Managers
responsible for getting products from producers to
consumers.
Areas of Management
Information Managers
design and implement systems to gather, organize, and
distribute information
Financial Managers
plan and oversee accounting functions and financial
resources
Skills Needed for Management
Success
Technical skills
Manager’s ability to understand and use the
techniques, knowledge, and tools and equipment of a
specific discipline or department.
Human skills
Interpersonal skills that enable a manager to work
effectively with and through people.
Conceptual skills
Ability to see the organization as a unified whole and
to understand how each part of the overall
organization interacts with other parts.
Setting a Vision and Ethical
Standards
Vision is the perception of marketplace needs
and the methods an organization can use to
satisfy them.
Must be focused yet adaptable to changes
in the business environment.
Long-term success is also tied to the ethical
standards that the top management team sets.
High ethical standard can also encourage, motivate,
and inspire employees to achieve goals.
Importance of Planning
There are different types and levels of plans.
Organizations should have a comprehensive
planning framework.
From mission statement to objectives and goals
Narrow functional plans
Plans outline the steps the company will take
to meet outlined goals and objectives.
Planning at Different
Organizational Levels
Types of Strategy
Corporate Strategy (Strategic)
strategy for determining the firm’s overall attitude
toward growth and the way it will manage its
businesses or product lines
Business (or Competitive) Strategy (Tactical)
strategy, at the business-unit or product-line level,
focusing on improving a firm’s competitive
position
Types of Strategy
Functional Strategy (Operational)
strategy by which managers in specific areas
decide how best to achieve corporate goals
through productivity
Hierarchy of Strategy
Strategic
Tactical
Operational
The Strategic Planning Process
Mission Statement
Organization’s statement of how it will
achieve its purpose in the environment in
which it conducts its business
Further Steps in Strategic Planning
Monitor and adapt strategic plans using SWOT
analysis and forecasting
SWOT Analysis
Organizational Structures
Organization: structured grouping of people
working together to achieve common goals.
Three key elements:
Human interaction
Goal-directed activities
Structure
Organizational Chart
Departmentalization
Process of dividing work activities into units within the organization.
Product departmentalization: organized based on the
goods and services a company offers.
Geographical departmentalization: organized by
geographical regions within a country or, for a multinational
firm, by region throughout the world.
Customer departmentalization: organized by the different
types of customers the organization serves.
Functional departmentalization: organized by business
functions such as finance, marketing, human resources, and
production.
Process departmentalization: organized by work processes
necessary to complete production of goods or services.
Different Forms of
Departmentalization
Different Forms of
Departmentalization
Delegating Work Assignments
Delegation is the act of assigning work activities to
subordinates.
Providing employees with the responsibility and the necessary
authority for completing tasks.
Employees have accountability, or responsibility for the results of
the way they perform their assignments.
Authority and responsibility move down; accountability moves up.
Span of management is the number of subordinates, or
direct reports, a supervisor manages.
Centralization: decision making is retained at the top of
the management hierarchy.
Decentralization: decision making is located at the lower
levels. Many firms believe it enhances their flexibility and
responsiveness to customer needs.
Delegating Work Assignments
Flat Organizational Structure
characteristic of decentralized companies with relatively few layers
of management
Delegating Work Assignments
Tall Organizational
Structure
characteristic of
centralized companies
with multiple layers of
management
Types of Organizational Structures
Line Organizations
Oldest and simplest form; direct flow of authority from
CEO to subordinates.
Chain of command indicates who directs which
activities and who reports to whom.
Line-and-Staff Organizations
Combines line departments and staff departments.
Line departments participate directly in decisions that
affect the core operations of the organization.
Staff departments lend specialized technical support.
Line and Staff Organizations
Line and Staff Organizations
Basic Forms of Organizational
Structure
Functional Structure
organization structure in which authority is
determined by the relationships between
group functions and activities
Basic Forms of Organizational
Structure
Basic Forms of Organizational
Structure
Divisional Structure
organizational structure in which corporate
divisions operate as autonomous
businesses under the larger corporate
umbrella
Basic Forms of Organizational
Structure
Matrix Organizations
Project management structure that links employees
from different parts of the organization to work
together on specific projects.
Employees report to a line manager and a project
manager.
Advantages:
Flexibility in adapting to
changes.
Focus on major problems
or products.
Outlet for employees’
creativity and initiative.
Disadvantages:
Integrating skills of many
specialists into a coordinated
team.
Team members’ permanent
functional managers must
adjust the employees’
regular workloads.
The Matrix Organization
The Matrix Organization
Production & Operations
Management
Production: Use of resources, such as workers and
machinery, to convert materials into finished goods and
services.
Production and Operations Management: Oversee the
production process by managing people and machinery in
converting materials and resources into finished goods and
services.
Production Systems
The Job of Production Managers
Oversee the work of people and machinery to
convert inputs (materials and resources) into
finished goods and services.
Process Layout
Process layout groups
machinery and
equipment according to
their functions.
Facilitates production of
a variety of
nonstandard items in
relatively small batches.
Product Layout
Product layout sets up production equipment along
a product-flow line, and the work in process moves
along this line past workstations.
Efficiently produces large numbers of similar items.
Fixed-Position Layout
A fixed-position layout places the product in one spot,
and workers, materials, and equipment come to it.
Customer-Oriented Layout
Customer-oriented layout arranges facilities to
enhance the interactions between customers and a
service.
Gantt Chart
PERT Diagram
Importance of Quality
A good or service free of deficiencies.
Poor quality can account for 20% loss in revenue.
Benchmarking is the process of analyzing other
firms’ best practices.
Quality control is measuring goods and services
against established quality standards.
Many companies evaluate quality using the Six
Sigma concept.
A company tries to make error-free products 99.9997%
of the time, a tiny 3.4 errors per million opportunities.