Management Fundamentals 5e

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?
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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.
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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.
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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.
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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.
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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
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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
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1–11
What Do Managers Do?
Planning
Controlling
Management
Functions
Organizing
Leading
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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.
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1–13
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1–14
Exhibit 1–3 ● Ten Roles Managers Play
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1–15
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1–16
Exhibit 1–4 ● Management Skills, Functions, and Roles
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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
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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
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1–19
Exhibit 1–5 ● Management Levels and Functional Areas
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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?
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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.
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1–22
Exhibit 1–6 ● Skills Needed and Functions Performed at Different
Management Levels
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1–23
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1–24
Exhibit 1–7 ● Differences between Large and Small Businesses
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1–25
Exhibit 1–8 ● Differences among For-Profit and Not-for-Profit Organizations
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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
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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.
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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
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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
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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.
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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?
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1–32
Contributions of Entrepreneurs
Innovation
Support of Large
Businesses
Society
Job
Creation
Economic
Growth
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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.
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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
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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?
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1–36
Elements of a Business Plan
• Executive Summary
• Introduction
• Location and Layout
• Operations
• Marketing
• Human Resources
• Accounting
• Controls
• Financing
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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.)
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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
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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
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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