Understanding The Business of Managing

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Copyright 2004 Prentice Hall, Inc. 1
PART 2
UNDERSTANDING THE
BUSINESS OF
MANAGING
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CHAPTER 6
Managing the
Business Enterprise

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Chapter Outline
Who Are Managers?
Setting Goals and Formulating Strategy
The Management Process
Types of Managers
Basic Management Skills
Management and the Corporate Culture

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Who Are Managers?
All corporations depend on
effective management.
The principles of
management apply to all
kinds of organizations.
Managers are among an
organizations most
important resources.

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What Are Goals?
Objectives that a
business hopes and
plans to achieve
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What Is Strategy?
Broad set of organizational
plans for implementing the
decisions made for
achieving organizational
goals

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Types of Strategy
Corporate strategy determines the firms
overall attitude toward growth and the way it
will manage its businesses or product lines
Business (or Competitive) strategy takes
place at the business-unit or product-line level
and focuses on a firms competitive position
Functional strategy involves managers in
specific areas who decide how best
to achieve corporate goals
through productivity

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Hierarchy of Strategy

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Purposes of Goal Setting
1. Goal setting provides direction and
guidance for managers at all levels.
2. Goal setting helps firms allocate
resources.
3. Goal setting helps to define corporate
culture.
4. Goal setting helps managers assess
performance.
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What Is a Mission Statement?
Organizations
statement of how
it will achieve its
purpose in the
environment in
which it conducts
its business

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Kinds of Goals
Long-term goals are set for an
extended time, typically five years
or more
Intermediate goals are set for a period
of one to five years
Short-term goals are set for the very
near future, typically less than one year
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What Is Strategy Formulation?
Creation of a broad
program for defining
and meeting an
organizations goals

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Strategy Formulation

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Setting Strategic Goals
Strategic goals are long-term goals
derived directly from a firms mission
statement
SWOT analysis is a process involving
the assessment of organizational
strengths and weaknesses (the S and
W) and environmental opportunities
and threats (the O and T)

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Analyzing the Organization and
Its Environment
Environmental analysis is the process
of scanning the business environment
for threats and opportunities
Organizational analysis is the process
of analyzing a firms strengths and
weaknesses

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Matching the Organization and
Its Environment
The matching process is the heart of
strategy formulation.
The matching process may determine
whether a firm typically takes risks or
behaves more conservatively.

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A Hierarchy of Plans
Strategic plans reflect decisions about
resource allocations, company priorities
and steps needed to meet strategic goals
Tactical plans are shorter-range plans for
implementing specific aspects of the
companys strategic plans
Operational plans set short-term targets
for daily, weekly or monthly performance

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Contingency Planning and
Crisis Management
Contingency planning identifies
aspects of a business or its environment
that might entail changes in strategy
Crisis management involves an
organizations methods for dealing with
emergencies
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What Is Management?
Process of planning,
organizing, directing
and controlling an
organizations
resources to achieve
its goals

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The Management Process
Planning determines what an organization
needs to do and how best to get it done
Organizing determines how best to arrange an
organizations resources and activities into a
coherent structure
Directing involves guiding and motivating
employees to meet an organizations objectives
Controlling monitors an organizations
performance to make sure that the firm is
meeting its goals

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The Control Process

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Types of Managers
Top managers are responsible to the
board of directors and stockholders for a
firms overall performance and
effectiveness
Middle managers are responsible for
implementing the strategies, policies and
decisions made by top managers
First-line managers are responsible for
supervising the work of employees

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Areas of Management
Human Resource Managers
Operations Managers
Marketing Managers
Information Managers
Financial Managers
Other Managers

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Basic Management Skills
Technical skills are needed to perform
specialized tasks
Human relations skills are required in
understanding and getting along with other people
Conceptual skills are abilities to think in the
abstract, diagnose and analyze different situations
and to see beyond the present situation
Decision-making skills include the ability to
define problems and select the best course of
action
Time management skills are associated with the
productive use of time

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The Decision-Making Process

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Management Skills for the
21
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Century
Global management skills include the
need to understand foreign markets,
cultural differences and the motives and
practices of foreign rivals
Management and technology skills
refer to the ability to process, organize
and interpret a wealth of data and
information
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What Is Corporate Culture?
The shared experiences,
stories, beliefs and
norms that characterize
an organization

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Communicating the Culture
Managers must:
Understand the culture.
Transmit the culture to others
in the organization.
Maintain the culture by rewarding and
promoting those who understand it and
work toward maintaining it.

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Managing Change
Three-stage process:
Analysis of the companys environment
highlights extensive change as the most
effective response to its problems.
Top management begins to formulate a vision
of a new company.
The firm sets up new systems for appraising
and compensating employees who enforce
the firms new values.

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