Chapter 1 5e Management and Entrepreneurship Part I: The Global Management Environment Copyright © 2011 South-Western/Cengage Learning. All rights reserved. PowerPoint Presentation by Charlie Cook The University of West Alabama Learning Outcomes After studying this chapter, you should be able to: 1. Describe a manager’s responsibility. 2. List and explain the three management skills. 3. List and explain the four management functions. 4. Identify the three management role categories. 5. List the hierarchy of management levels. 6. Describe the three different types of managers. 7. Describe the differences among management levels in terms of skills needed and functions performed. 8. Explain the difference between an entrepreneur and an intrapreneur. 9. Define the key terms listed at the end of the chapter. Copyright © 2011 South-Western/Cengage Learning. All rights reserved. 1–2 IDEAS ON MANAGEMENT at Gap Inc. 1. What resources does Gap Inc. use to sell its merchandise? 2. What management functions are performed at Gap stores? 3. What levels and types of managers have careers at Gap Inc.? 4. Is Gap Inc. entrepreneurial and/or intrapreneurial? Copyright © 2011 Cengage Learning. All rights reserved. 1–3 Why Study Management? • The better you can work with people, the more successful you will be in your personal and your professional lives. Employers want to hire employees who can participate in managing the firm. Even nonmanagers are being trained to perform management functions. Copyright © 2011 Cengage Learning. All rights reserved. 1–4 Why Study Management? (cont’d) • The study of management builds the skills needed in today’s workplace to succeed in: Becoming a partner in managing your organization through participative management. Working in a team and sharing in decision making and other management tasks. • The study of management also applies directly to your personal life in helping you to: Communicate with, and interact with, people daily. Make personal plans and decisions, set goals, prioritize what you will do, and get others to do things for you. Copyright © 2011 Cengage Learning. All rights reserved. 1–5 What Is a Manager’s Responsibility? • Manager The individual responsible for achieving organizational objectives through efficient and effective utilization of resources. • The Manager’s Resources Human, financial, physical, and informational • Performance Means of evaluating how effectively and efficiently managers use resources to achieve objectives. Copyright © 2011 Cengage Learning. All rights reserved. 1–6 Exhibit 1–1 ● A Day in the Life of a Manager 8:00 A.M. • Enter the store and walk the sales floor to ensure a proper closing took place the night before. • Project the payroll cost for the week as a percentage of my forecasted sales, and call it in. • Perform opening procedures on the controller (computer that records sales transactions and inventory count for all cash registers in the store). 8:30 A.M. • Walk the sales floor with staff and assign projects for them to create new displays for merchandise during the day (create a “to do” list for employees and myself). 9:00 A.M. • Before the store opens, call voice mail and check e-mail for messages left by other store managers or my boss, the district manager. • Make business telephone calls for the day. 9:30 AM. • Assign sales associates to store zones. • Put money in computer cash register drawers. 10:00 A.M. • Open the store. • Make sure sales associates are in their zones on the floor for proper floor coverage. • Make sure everyone who enters the store is greeted and has his or her needs determined. • Provide floor coverage. (Help out as needed—greet customers, assist customers with sales, stock shelves, assist at the changing room, etc.) 12:00 P.M. • Do business analysis for previous month from operating statement and gross margin reports. Copyright © 2011 Cengage Learning. All rights reserved. 1–7 Exhibit 1–1 ● A Day in the Life of a Manager (cont’d) 12:30 P.M. • Provide floor coverage as needed for staggered employee breaks. 1:30–2:30 P.M. My break, then: • Prepare customer request transfers (merchandise our store has but other stores do not have) to be delivered. Enter transfers into computer and get merchandise. 3:00 PM. • Leave for district meeting. 3:15 P.M. • Drop off transfers and pick up another store manager; continue on to district meeting. 4:00 P.M. • Meeting is conducted by district manager with the seven general and store managers. Meeting begins with discussion of the following topics: Previous week’s sales, previous week’s payroll, payroll projections for next month (cost as a percentage of sales), cleanliness, and standards of the stores. New information items, mail, general discussion, questions, etc. • Meeting ends with a walk-through of the store at which the meeting is held. During a walk-through, the host store manager discusses new display ideas that the other store managers may want to use. In addition, the other store managers give the host manager ideas for improving the store visually. In other words, this is a time to share ideas that will help all team members in the Gap district. 6:00 P.M. • Call my store to see how sales are going for the day, then leave for home. Copyright © 2011 Cengage Learning. All rights reserved. 1–8 What Does It Take to Be a Successful Manager? • Management Qualities Integrity, industriousness, and the ability to get along with people • Management Skills Technical, interpersonal, and decision-making skills • AACSB Competencies Self-management; global, multicultural, diversity, and ethics environment; planning and administration; strategic action; communication; and teamwork • The Ghiselli Study of Supervisory Traits Initiative, self-assurance, decisiveness, intelligence, need for occupational achievement, and supervisory ability Copyright © 2011 Cengage Learning. All rights reserved. 1–9 Exhibit 1–2 ● Management Skills • Conceptual skills • Diagnostic, analytical, and critical-thinking skills • Quantitative reasoning skills • Time management skills • Communication skills • Team skills • Diversity skills • Power, political, negotiation, and networking skills • Motivation skills • Conflict management skills • Ethics skills Copyright © 2011 Cengage Learning. All rights reserved. • Familiarity and competence in the use of business skills required for success on the job. 1–10 Copyright © 2011 Cengage Learning. All rights reserved. 1–11 What Do Managers Do? Planning Controlling Management Functions Organizing Leading Copyright © 2011 Cengage Learning. All rights reserved. 1–12 What Do Managers Do? • Management Functions: Planning Setting objectives and determining in advance exactly how the objectives will be met. Organizing Delegating and coordinating tasks and allocating resources to achieve objectives. Leading Influencing employees to work toward achieving objectives. Controlling Establishing and implementing mechanisms to ensure that objectives are achieved. Copyright © 2011 Cengage Learning. All rights reserved. 1–13 Copyright © 2011 Cengage Learning. All rights reserved. 1–14 Exhibit 1–3 ● Ten Roles Managers Play Copyright © 2011 Cengage Learning. All rights reserved. 1–15 Copyright © 2011 Cengage Learning. All rights reserved. 1–16 Exhibit 1–4 ● Management Skills, Functions, and Roles Copyright © 2011 Cengage Learning. All rights reserved. 1–17 Management Roles • Role A set of expectations of how one will behave in a given situation • Management Role Categories (Mintzberg) Interpersonal Figurehead, leader, and liaison Informational Monitor, disseminator, and spokesperson Decisional Entrepreneur, disturbance handler, resource allocator, and negotiator Copyright © 2011 Cengage Learning. All rights reserved. 1–18 Differences Among Managers • The Three Levels of Management Top managers CEO, president, or vice president Middle managers Sales manager, branch manager, or department head First-line managers Crew leader, supervisor, head nurse, or office manager Nonmanagement operative employees Workers in the organization who are supervised by first-line managers Copyright © 2011 Cengage Learning. All rights reserved. 1–19 Exhibit 1–5 ● Management Levels and Functional Areas Copyright © 2011 Cengage Learning. All rights reserved. 1–20 Join the Discussion Ethics & Social Responsibility • Executive Compensation 1. Do executives deserve to make 200 times more than the average worker? 2. Is it ethical for managers to take large pay increases when laying off employees? 3. Is it ethical for managers to get pay raises when their companies lose money? 4. Are companies being socially responsible when paying executives premium compensation? Copyright © 2011 Cengage Learning. All rights reserved. 1–21 Types of Managers • General Managers Supervise the activities of several departments. • Functional Managers Supervise the completion of related tasks. Common functional areas: Marketing Operations/production Finance/accounting Human resources/personnel management • Project Managers Coordinate employees across several functional departments to accomplish a specific task. Copyright © 2011 Cengage Learning. All rights reserved. 1–22 Exhibit 1–6 ● Skills Needed and Functions Performed at Different Management Levels Copyright © 2011 Cengage Learning. All rights reserved. 1–23 Copyright © 2011 Cengage Learning. All rights reserved. 1–24 Exhibit 1–7 ● Differences between Large and Small Businesses Copyright © 2011 Cengage Learning. All rights reserved. 1–25 Exhibit 1–8 ● Differences among For-Profit and Not-for-Profit Organizations Copyright © 2011 Cengage Learning. All rights reserved. 1–26 Managing the Old versus New Workplace • Old Workplace • New Workplace Autocratic leadership Participative leadership Domestic view Global view Specialized jobs Flexible jobs performed by individuals Homogeneous employees performed by teams Diverse employees Rapid change Slow change Copyright © 2011 Cengage Learning. All rights reserved. 1–27 Managing the New Workplace • Knowledge Management in Learning Organizations A team-based organization structure with participative management focused on identifying and solving problems, enabling change, and continuous improvement of products and processes through the sharing of knowledge and information. Knowledge management is the firm’s core capability and is important to sustained ability to compete. • Evidence Based Management (EBM) The systematic use of the best available evidence to improve management practice. Copyright © 2011 Cengage Learning. All rights reserved. 1–28 Entrepreneurship • Entrepreneurship Activities Creating new products or processes Entering new markets Creating new business ventures • Reasons for Becoming an Entrepreneur To be in control To pursue your own purpose and mission To earn a higher income • Key Entrepreneurial Trait The ability to recognize and act on an opportunity Copyright © 2011 Cengage Learning. All rights reserved. 1–29 New Venture Entrepreneurs and Intrapreneurs • New Venture A new business or a new line of business • Entrepreneur One who starts a new small business venture • Intrapreneur One who starts a new line of business within a large organization Copyright © 2011 Cengage Learning. All rights reserved. 1–30 New Venture Entrepreneurs and Intrapreneurs (cont’d) • Small Business Defined Is independently owned and operated Has a small number of employees (less than 500) Has a relatively low volume of sales (less than $7 million in annual receipts) Fact: In 2008, there were approximately 29.6 million small businesses in the U.S. Copyright © 2011 Cengage Learning. All rights reserved. 1–31 Join the Discussion Ethics & Social Responsibility • Virtual Internships 1. What are the benefits of virtual internships to employers and to interns? 2. Should a student be given college credit for a virtual internship, or should he or she receive only pay without credit—a part-time job? 3. Is it ethical and socially responsible to use interns instead of regular employees? 4. Will the use of virtual interns become the norm, or will the practice fade? Copyright © 2011 Cengage Learning. All rights reserved. 1–32 Contributions of Entrepreneurs Innovation Support of Large Businesses Society Job Creation Economic Growth Copyright © 2011 Cengage Learning. All rights reserved. 1–33 Selecting the New Venture • Factors in Selecting a New Venture Good growth potential and profit opportunities Previous work experience Observing others’ mistakes and successes Finding an overlooked market segment or niche Systematic search or hobby • Competitive Advantage Specifies how the organization offers unique customer value. First-mover advantage involves offering a unique customer value before competitors do so. Copyright © 2011 Cengage Learning. All rights reserved. 1–34 Selecting the New Venture (cont’d) • Five Most Commonly Used Entrepreneurial Strategies: Creating a competitive advantage Maintaining innovation Lowering the cost of developing and/or maintaining one’s venture Defending an existing product/service Creating a first-mover advantage Copyright © 2011 Cengage Learning. All rights reserved. 1–35 The Business Plan • The well-prepared business plan answers the following questions: 1. What is the purpose and mission of this business? 2. What products (goods and/or services) will the business 3. 4. 5. 6. 7. 8. 9. provide? Who is in the target market? Who are my competitors? What is my competitive advantage? How will my business be successful? How much money do I need to get started? Where do I secure the money to finance the new venture? What are the potential revenues, expenses, and profits? How do I control the business? What are possible expansion plans? Copyright © 2011 Cengage Learning. All rights reserved. 1–36 Elements of a Business Plan • Executive Summary • Introduction • Location and Layout • Operations • Marketing • Human Resources • Accounting • Controls • Financing Copyright © 2011 Cengage Learning. All rights reserved. 1–37 Exhibit 1–9 ● Information Commonly Included in a Business Plan • Executive Summary. Although presented first, this section is written after the rest of the business plan has been completed. • Introduction. This section describes the business, answering these questions: What is the business? What goods or services does the business provide? Who are the business’s competitors? What is the business’s competitive advantage? It also introduces key managers and describes the legal form of the business (sole proprietorship, partnership, or corporation) and the type of business (an existing business, a new startup, a franchise, or a new line). • Location and Layout. Where will business be conducted, and how will the facilities be organized? • Operations. This section describes the systems process for transforming inputs into outputs. • Marketing. This section describes the marketing mix of the four Ps for the business: (1) products to be sold, (2) place products will be sold, (3) price of products, and (4) promotion to let target customers know about your products. • Human Resources. How many employees will the business need, and how will it recruit and hire them? • Accounting. How will the business keep records? The business plan should include a three-year projection (pro forma) for three important financial reports: balance sheet, income statement, and cash flow. The accounting plan indicates the company’s potential revenues, expenses, and profits. Potential creditors (people who will lend you money, assets, and inventory) and investors (co-owners with you) generally require projected financial statements. • Controls. This section describes the mechanisms to ensure that objectives are achieved. • Financing. The financial plan specifies how much money and other assets will be required to start and operate the new venture and where the financing will come from. (As a general rule, you should not start a new venture unless you can operate the business for one year without drawing money from the business for personal expenses. In other words, you need to live for a year without a salary. Paying rent, car payments, and so on with business profits during first years is rarely possible, and doing so can cause your business to run out of funds and close.) Copyright © 2011 Cengage Learning. All rights reserved. 1–38 Sources of Assistance in Planning, Starting, and Opening the New Venture • Palo Alto Software http://www.bplans.com • Small Business Administration (SBA) http://www.sba.gov/smallbusinessplanner Service Corps of Retired Executives (SCORE) Women’s Business Centers (WBCs) Small Business Development Centers (SBDCs) • Minority Business Development Agency (MBDA) http://www.mbda.gov Copyright © 2011 Cengage Learning. All rights reserved. 1–39 Objectives of the Book A “How-To” Approach to Management To teach you the important concepts of management Copyright © 2011 Cengage Learning. All rights reserved. To develop your ability to apply the management concepts through critical thinking To develop your management skills in your personal and professional lives 1–40 Exhibit 1–10 ● Features of This Book’s Three-Pronged Approach and Table of Contents Copyright © 2011 Cengage Learning. All rights reserved. 1–41 KEY TERMS • • • • • • • • • • • • business plan competitive advantage controlling decision-making skills entrepreneurs first-mover advantage interpersonal skills intrapreneurs knowledge management leading levels of management management functions Copyright © 2011 Cengage Learning. All rights reserved. • • • • • • • • • • • management role categories management skills manager manager’s resources new venture organizing performance planning small business technical skills types of managers 1–42