Chapter 7. Management, Leadership, and the Internal Organization

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1 Chapter 7 Management, Leadership, and the Internal Organization

2 Learning Objectives 1 Define management and the three types of skills necessary for managerial success. 5 Contrast the types of business decisions and list the steps in the decision-making process. 2 Explain the role of vision and ethical standards in business success. 6 Define leadership and compare different styles of leadership. 3 4 Summarize the benefits of planning and distinguish strategic, tactical, and operational planning. Describe the strategic planning process. 7 8 Discuss the meaning and importance of corporate culture. Identify the five major forms of departmentalization and four main types of organization structures.

3 What is Management? Management is the process of achieving organizational objectives through people and other resources.

4 Top Management Develop long-range strategic plans for the organization. Inspire executives and employees to achieve their vision for the company s future.

5 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.

6 Supervisory Management Implement the plans developed by middle managers. Responsible for nonmanager employees. Motivate workers to accomplish daily, weekly, and monthly goals.

7 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.

8 Managerial Functions Planning Process of anticipating future events and conditions and determining courses of action for achieving organizational objectives. Organizing Blending human and material resources through a formal structure of authority. Directing Guiding and motivating employees to accomplish organizational objectives. Controlling Evaluating an organization s performance to determine whether it is accomplishing its objectives. 1. Establish performance standards. 2. Monitor actual performance. 3. Compare actual performance with established standards. 4. Take corrective action if required.

9 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. Ethical company list

10 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.

11 Planning at Different Organizational Levels

12 The Strategic Planning Process

13 SWOT Analysis

14 Further Steps in Strategic Planning Objectives set guideposts by which managers define the organization s desired performance in such areas as new-product development, sales, customer service, growth, environmental and social responsibility, and employee satisfaction. Competitive differentiation: Considers how a company s abilities and resources set them apart from competitors Company then implements strategy Monitor and adapt strategic plans using SWOT analysis and forecasting

15 Managers as Decision Makers Decision making is the process of recognizing a problem or opportunity, evaluating alternative solutions, selecting and implementing an alternative, and assessing the results. Programmed decision involves simple, common problems with predetermined solutions. Nonprogrammed decision involves a complex, unique problem or opportunity with important consequences for the organization.

16 How Managers Make Decisions

17 Managers as Leaders Leadership is the ability to direct or inspire people to attain certain goals. Involves the use of influence or power. Three traits are common among many leaders: Empathy Self-awareness Objectivity in dealing with others

18 Leadership Styles Autocratic Leadership Make decisions on own without consulting employees. Democratic Leadership Involve employees in decisions, delegate assignments, and ask employees for suggestions. Free-Rein Leadership Leave most decisions to employees.

19 Corporate Culture Corporate Culture: Organization s system of principles, beliefs, and values. Managers use symbols, rituals, ceremonies, and stories to reinforce corporate culture.

20 Organizational Structures Organization: structured grouping of people working together to achieve common goals. Three key elements: Human interaction Goal-directed activities Structure

21 Organizational Chart

22 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.

23 Different Forms of Departmentalization

24 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.

25 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.

26 Line and Staff Organizations

27 Committee Organizations Authority and responsibility are in the hands of a group of individuals. Often part of a line-and-staff structure. Often develop new products. Tend to act slowly and conservatively. Often make decisions by compromising conflicting interests rather than choosing best alternative.

28 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.

29 The Matrix Organization

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