Part 3 Managing for Quality and Competitiveness
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1 Part 3 Managing for Quality and Competitiveness 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
2 6-2 CHAPTER 6 The Nature of Management CHAPTER 7 Organization, Teamwork, and Communication CHAPTER 8 Managing Service and Manufacturing Operations
3 6-3 Learning Objectives LO 6-1 LO 6-2 LO 6-3 LO 6-4 LO 6-5 LO 6-6 Define management and explain its role in the achievement of organizational objectives. Describe the major functions of management. Distinguish among three levels of management and the concerns of managers at each level. Specify the skills managers need in order to be successful. Summarize the systematic approach to decision making used by many business managers. Recommend a new strategy to revive a struggling business.
4 6-4 Management and Managers Management A process designed to achieve an organization s objectives by using its resources effectively and efficiently in a changing environment Managers Those individuals in organizations who make decisions about the use of resources and who are concerned with planning, organizing, staffing, directing and controlling the organization s activities to reach its objectives Effectively means having the intended result Efficiently means accomplishing the objectives with a minimum of resources
5 6-5 The Importance of Management Every organization must acquire resources to effectively pursue its objectives and coordinate their use to turn out final goods and services Employees Important in helping a firm attain its objectives Recruit, train, compensate, and provide benefits to foster loyalty Acquiring Supplies Ensuring that products are made available to customers In global markets firms enlist hundreds of diverse suppliers Financial Resources To pay for essential activities Primary funding comes from owners, shareholders, banks, and other financial institutions
6 6-6 Management Functions Although we discuss each of the five functions separately, they are interrelated; managers may perform two or more of them at the same time
7 6-7 Planning Planning is the process of determining the organization s objectives and deciding how to accomplish them; the first function of management Mission is the statement of an organization s fundamental purpose and basic philosophy Planning Goals are the results the company wants to achieve (almost always has multiple goals illustrating the complex nature of business) Objectives are measurable statements on common issues such as profit, competitive advantage, efficiency and growth Plans specify what should be done, by whom, where, when and how
8 6-8 Strategic Plans Strategic Plans Those plans that establish long-range objectives and overall strategy or course of action by which a firm fulfills its mission Generally cover periods ranging from one year or longer Include: Plans to add products Purchase companies Sell unprofitable segments of the business Issue stock Move into international markets Apollo Global Management and Metropoulos made the strategic plan to purchase the Hostess snack business after the firm declared bankruptcy
9 6-9 Tactical and Operational Plans Tactical Plans Short-range plans designed to implement the activities and objectives specified in the strategic plan Usually cover 1 year or less Help keep the firm on the course established in the strategic plan An ever-changing market requires firms to develop shortrun or tactical plan to deal with the changing environment Operational Plans Very short-term plans that specify what actions individuals, work groups, or departments need to accomplish in order to achieve the tactical plan and ultimately the strategic plan Apply to details in executing activities in 1 month, week, or even day
10 6-10 Retail Store Example A retailing store with a five-year strategic plan to invest $5 billion in 500 new retail stores may develop 5 tactical plans (each covering 1 year) specifying: How much to spend to set up each new store Where to locate When to open each new store Tactical plans are designed to execute the overall strategic plan They are easier to adjust or abandon if changes in the environment or the company s performance so warrant Operational plans may specify the schedule for: opening 1 new store Hiring and training new employees Obtaining merchandise Opening for actual business
11 6-11 Crisis Management or Contingency Planning Crisis Management or Contingency Planning An element in planning that deals with potential disasters such as product tampering, oil spills, fire, earthquake, computer virus, or airplane crash ~51% of companies have outdated disaster recovery and business continuity plans Herbalife does businesses in 90 countries, and contingency plans must often be made for fluctuating exchange rates
12 6-12 Organizing Organizing The structuring of resources and activities to accomplish objectives in an efficient and effective manner Organizing is important for several reasons: Helps create synergy Establishes lines of authority Improves communication Helps avoid duplication of resources Can improve competitiveness by speeding up decision making
13 6-13 Staffing Staffing The hiring of people to carry out the work of the organization o o o o o Recruiting Manager s duties include: Determining what skills are needed for specific jobs Motivating and training employees Determining pay and benefits Preparing employees for higher-level jobs
14 6-14 Monster.com and Staffing» Some companies choose to recruit people to hire through online job websites such as Monster.com» Monster.com is one of the world s largest employment websites» Using websites like Monster.com falls under the staffing function of management
15 6-15 Downsizing Downsizing The elimination of a significant number of employees from an organization o o o Production, sales and technical positions can be outsourced to countries with lower labor costs Downsizing has helped companies reduce costs quickly However, this involves loss of jobs and lowered morale for remaining employees An effective manager will promote optimism and positive thinking while minimizing criticism and fault-finding
16 6-16 Directing Directing Motivating and leading employees to achieve organizational objectives Telling employees what to do and when to do it using deadlines, then encourage them to do their work Also involves determining and administering appropriate rewards and recognition May motivate by providing incentives but recognition and appreciation are often the best motivators Ask workers to contribute ideas for reducing costs, making equipment more efficient, improving customer service, or even developing new products
17 6-17 Controlling Controlling The process of evaluating and correcting activities to keep the organization on course Control involves five activities: Measuring performance Comparing performance with standards or objectives Identifying deviations from the standards Investigating the causes of deviations Taking corrective action when necessary The control function helps managers assess the success of their plans
18 6-18 Levels of Management As the pyramid shape implies, there are generally more middle managers than top managers, and still more first-line managers
19 6-19 Time Spent on Management Functions Importance of Management Functions to Managers in Each Level
20 6-20 Top Management Top Managers The president and other top executives of a business, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operations officer (COO), who have overall responsibility for the organization In publically owned corporations, the CEO s boss is the board of directors Compensation committees work with boards of directors and CEOs to try and keep pay in line with performance Workforce diversity is good for workers and for the bottom line DID YOU KNOW? Only 4.6 percent of Fortune 500 CEOs are women
21 6-21 Facebook s Top Management Mark Zuckerberg, CEO and founder of Facebook, manages the overall strategic direction of the company Plays a key role in representing the company to stakeholders Sheryl Sandberg, Facebook s chief operating officer, is responsible for the daily operation of the company COO reports to CEO and is often considered to be number two in command In public corporations, even chief executive officers have a boss the firm s board of directors In 2012 Mark Zuckerberg announced he would go from a salary of $600,000 to an annual salary of just $1
22 6-22 The Highest Paid CEOs The compensation packages of different CEOs $ Top managers generally have many years of varied experience and command top salaries $ Compensation packages typically include bonuses, long-term incentive awards, stock, and stock options
23 6-23 Five Rules of Successful Diversity Recruiting Managers from companies devoted to workforce diversity devised five rules that make diversity recruiting work A diverse workforce is better at making decisions regarding issues related to consumer diversity
24 6-24 Middle Managers Middle Managers Those members of an organization responsible for the tactical planning that implements the general guidelines established by top management Middle managers have more focused responsibilities and spend more time organizing than other managers In business, plant managers, division mangers and department mangers make up middle management The ranks of middle managers have been shrinking as more companies downsize to be more productive
25 6-25 First-Line Managers First-Line Managers Those who supervise both workers and the daily operations of an organization Responsible for implementing plans established by middle management and directing workers daily performance Spend most of their time directing and controlling Commonly called foreman, supervisor and office service manager
26 6-26 Areas of Management At each level, managers specialize in: finance, production and operations, human resources, marketing and administration While larger firms will most likely have all of these managers, in smaller firms these important tasks may fall onto the owner
27 6-27 Managing Automation and Robots in the Workplace As digital technology and automation came to the forefront in business operations, many thought the managerial function would no longer be necessary however, the opposite has proven to be true Technical and leadership skills are valued more highly among today s managers as their former roles of overseeing employees on a production line have declined These duties are now delegated to the employees who oversee the operations of the machines on the production lines
28 6-28 Managerial Roles
29 6-29 Technical Expertise and Conceptual Skills Technical Expertise The specialized knowledge and training needed to perform jobs that are related to particular areas of management Needed most by first-line managers and least critical to top-level managers Conceptual Skills The ability to think in abstract terms and to see how parts fit together to form the whole Needed most by top level managers Evaluate continually where the company will be in the future
30 6-30 Financial Manager o This financial manager of a city hedge fund analyzes data from financial charts o Financial managers are responsible for obtaining the necessary funding for organizations to succeed, both in the short term and in the long term
31 6-31 Analytical Skills and Human Relations Skills Analytical Skills The ability to identify relevant issues, recognize their importance, understand the relationships between them and perceive the underlying causes of a situation Most important to the success of top level managers Resolving ethical issues often require analytical skills Human Relation Skills The ability to deal with people, both inside and outside the organization Those who can relate, communicate well, understand the needs, and show a true appreciation for others are more successful Important in organizations that provide services, such as hospitals, airlines and banks
32 6-32 Seven Tips for Successful Leadership Leadership The ability to influence employees to work toward organizational goals
33 6-33 Leadership Styles Autocratic leaders make all the decisions then tell employees what must be done and how to do it Martha Stewart is an example of an autocratic leader Democratic leaders involve their employees in decisions Herb Kelleher, co-founder of Southwest Airlines, had a democratic leadership style Free-rein leaders let their employees work without much interference; setting performance standards and letting employees find their own way to meet them Warren Buffett, CEO of Berkshire Hathaway exhibits free-rein leaders
34 6-34 Authentic Leadership Authentic Leadership A bit different from the other three leadership styles because it is not exclusive Both democratic and free-rein leaders could qualify as authentic leaders Passionate about the goals and mission of the company, display corporate values in the workplace, and form long-term relationships with stakeholders Kim Jordan of New Belgium Brewing is an authentic leader
35 6-35 Howard Schultz s Leadership o Howard Schultz, CEO of Starbucks, has great human relations skills and leadership abilities, as demonstrated by his ability to relate to others o Under his leadership, Starbucks decided to offer health insurance to its part-time workers
36 6-36 Employee Empowerment Employee Empowerment Occurs when employees are provided with the ability to take on responsibilities and make decisions about their jobs Participative corporate culture has been found to be beneficial because employees feel like they are taking an active role in the firm s success Leaders must adopt systems that support an employee s ability to provide input and feedback on company decisions Manager should be trained in ways to empower employees to make decisions even in challenging situations in which the right decision may not be so clear
37 6-37 Leadership in Teams In today s business world, decisions made by teams are becoming the norm An effective way for encouraging employee empowerment Decision making in teams is collective Most effective teams are when all employees are encouraged to contribute their ideas and recommendations Common for more outspoken employees to dominate the team and engage in groupthink, in which team members go with the majority rather than what they think is the right decision Training employees how to listen to one another and provide relevant feedback can help to prevent these challenges
38 6-38 Steps in the Decision Making Process Steps in the Decision Making Process
39 6-39 Recognizing and Defining the Decision Situation The first step in decision making is recognizing and defining the situation Situations may be positive or negative Situations calling for small-scale decisions occur without warning Large-scale decisions generally occur after some warning signs Managers must pay attention to such signals Once a situation is recognized, management must define it
40 6-40 Developing Options and Analyzing Options Developing options is the second step in the decision making process A list of possible courses of action should include both standard and creative plans Analyzing options is the third step Management must look at the practicality and appropriateness of each option Decision maker should consider whether the proposed option adequately addresses the situation Technology can help managers maintain an agenda, analyze option, and make decisions
41 6-41 Selecting the Best Option, Implementing the Decision, and Monitoring the Consequences Step four is Selecting the best option Often a subjective procedure Step five is Implementing the Decision This step can be fairly simple, or very complex, depending on the nature of the decision Prepare for unexpected consequences Monitoring the Consequences is the final step Has the implementation of the decision accomplished the desired result? Is yes, then the decision was sound If no, then more analysis is warranted
42 6-42 Factors that Affect Decision Making The use of intuition is usually a result of years of experience in a specific situation or environment The manager will recognize patterns or similarities between the current situation and previous ones and use that information to make decisions Stress and emotion can also influence decisions negatively Defensiveness, overreaction, and obsession are indicators that stress and emotion are being factored into the decision making process How the problem or situation is framed will determine the final decision, whether it is negative or positive Managers need to ensure that they are seeing the situation objectively Finally, confidence and risk propensity are delicate factors in decision making Both attributes must be kept in balance if decisions are to be reasonable and effective
43 6-43 Management in Practice Management is not a cut-and-dried process; there is no mathematical formula for managing a firm and achieving goals Management expert, John P. Kotter says manager s functions can be boiled down to 2 basic activities Figuring out what to do despite uncertainty, great diversity, and an enormous amount of potentially relevant information Getting things done through a large and diverse set of people despite having little direct control over most of them
44 6-44 Agendas and Networking Agenda A calendar, containing both specific and vague items that covers short-term goals and long-term objectives Agenda helps the manager figure out what must be done and how to get it done to meet the objectives set by the organization Technology tools such as smartphones can help manage agendas, contacts communications, and time Networking The building of relationships and sharing of information with colleagues who can help managers achieve the items on their agendas Provide information and advice on diverse topics Social media sites have increased the ability to network
45 6-45 Challenges of the Business World Managers spend a great deal of time confronting the complex and difficult challenges of the business world today Rapid changing technology Increased scrutiny of individual and corporate ethics and social responsibility Impact of social media Changing nature of workforce New laws and regulations Increased global competition Declining education standards Making the best use of time
46 6-46 LinkedIn Websites like LinkedIn are helping managers and employees network with one another to achieve their professional goals
47 Solve the Dilemma Making Infinity Computers Competitive Infinity Computers Inc. produces notebook computers, which sell through direct mail catalog companies under the Infinity name and in some retail computer stores under their private brand name Products are not significantly different from competitors Do not have extra product-enhancing features Very price competitive Strength from the company s CEO/president George Anderson and the highly motivated, loyal staff Weakness from having too many employees and too great a reliance on 1 product 6-47
48 6-48 Solve the Dilemma Making Infinity Computers Competitive (cont.) Shelly has several options: Maintain current production levels and raises prices Expand the facility and staff while maintaining the current price Contract the production of the pies to a national chain, giving Shelly a percentage of profits with minimal involvement Discussion Questions Evaluate Infinity s current situation and analyze its strengths and weaknesses. Evaluate the opportunities for Infinity, including using its current strategy, and propose alternative strategies. Suggest a plan for infinity to complete successfully over the next 10 years.
49 6-49 Discussion? Name the five functions of management and briefly describe each function.? What skills do managers need? Give examples of how managers use these skills to do their jobs.? Identify the three levels of management. What is the focus of managers at each level?? Explain the steps in the decision-making process.
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