Fast-Track Management & Organizational Behavior

Chapter 1: The Changing Environment for

Management

This chapter will discuss:Understanding the concept of

management Appreciating what managers do & why

it is importantConsidering the role of management in

a global environment Being aware of the basic management

functions of planning, decision-making, organizing, leadership & controlling

The Critical Nature of ManagementWhy is General Motors an example of poor

management?By 1985, out of touch with the motor vehicle

industry Evolving customer demands Modern theories of business practice Change to a mixed demographic of customers &

workers Managers all white, middle-aged men Most new ideas rejected

GM sold 54% of the vehicles sold in the U.S. in ‘54; by 2010, that market share had fallen to 17½%. In 2007 alone, GM lost nearly $40 billion!

Many clues disregarded --

GM Lessons: What Management IgnoredCustomer complaints about qualityMileage concerns as gasoline prices rose

steadily higher beginning in the ‘70sTechnological innovationSize, particularly for urban driving &

parkingSafetyPriceWomen as an increasingly important

customer

What is Management?Coordinates & directs the activities of employees &

members of other constituent groups to accomplish the organization’s goals efficiently & effectivelyEfficiency means deriving the highest degree of

output of goods & services from the fewest units of input Various tools & techniques

Effectiveness is concerned with the accomplishment of an organization’s goals

Mission statement: announcement to the stakeholders (those groups affected by the organization) of the broad purpose & intentions

 Let’s look at some mission statements --

Mission StatementsGM is a multinational corporation engaged in

socially responsible operations, worldwide. It is dedicated to provide products & services of such quality that our customers will receive superior value while our employees & business partners will share in our success & our stockholders will receive a sustained superior return on their investmentWhat does this tell us about the mission of

GM?Vague – could apply to any business!

Contrast with McDonald’s, Google, Walt Disney

Thoughtful Mission StatementsMcDonald's vision is to be the world's best quick

service restaurant experienceBeing the best means providing outstanding quality,

service, cleanliness, & value, so that we make every customer in every restaurant smile

Google's mission is to organize the world's information & make it universally accessible and useful

Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services & consumer products

Goals & ObjectivesManagement works from this “mission” to

develop goals -- specific statements on how the mission will be accomplished: profitability, sales, new product development, maintaining the company’s credit rating, energy conservation, diversity actions, world-class manufacturing

Objectives are specific expectations for a company or a significant business segmentRequires measurement using specific

quantities; e.g., “increase sales by 15,000 units or 20%”

A stretch or an expansion from normal results

Management-by-Objectives (MBOs) ISpecific units of a company are assigned

their share of the company’s objectivesThen translated into specific assignments for

each senior manager & onto their subordinatesProblems in the Use of MBOs

Relevance of the goals, objectives & MBOs: can become an end in themselves without regard to changing business conditions

Quantity not quality: MBOs measure quantity but do not measure the quality of performance

Validity of objectives: who knows if a set of MBOs is the right set of objectives?

M Management-by-Objectives (MBOs) IIChange in Goals/Objectives/MBOs: during the

course of a year, downsizing, reassignments & new business initiatives may change management's allocation of resources

Irrelevance of Aggregated MBO Results: MBOs only work in situations when an employee has fairly close control over his or her accomplishments or failures

Soft MBO Targets: an employee may soften his or her objectives to assure success in meeting or exceeding the MBO expectations

The Functions of ManagementPlanning: setting goals, developing

strategies to achieve goals that have been accepted by the companycoordinating & integrating the use of resources

Decision-making: uses knowledge & analysis to select a course of action among various alternatives

Organizing: managers structure work so that the company’s goals can be accomplished

Directing (or leading): accomplishing work through the managers & employees of a company

Controlling: determines if a business is producing results consistent with plans

The Five Management Functions

PlanningDecision-Making

Organ-izing Directing

Controll-ing

RESULT IN

Set goals, establish strategies, develop plans

Determine critical factor in problem, analyze alter-natives, make decision

Resolve needs to achieve goals, how strategies will be done, who will do these tasks

Motivate, lead and act to complete tasks through employees

Monitor activities to determine that plans are accom-plished, and make necessary adjust-ments

ACCOMP-LISHING THE ORGANI-ZATION’S MISSION AND GOALS

Figure 1-2

Skill Requirements of ManagersFirst-line (supervisory) managers typically are

responsible for employees who have an objective essential to accomplish the organization’s goalsRequire technical skills (job-specific techniques);

some human relations skills Mid-level (middle) managers have

responsibility for several first-line managersRequire technical skills (job-specific techniques)

& human relations skills (directing workers)Senior managers are the organization’s leaders

Need fewer technical & significantly greater conceptual skills (thinking through difficult, often new situations) than mid-level managers

Primary Skills

ConceptualHuman

Resources

Technical

Secondary Skills

Analytical Technical

Human Resourc

esPlannin

gDecision-Making

Organizing

Directing

Controll-ing

1st-Level Mid-Level

Senior Level

Figure 1-3

Manager Skills Sets (by primary and secondary skills required)

Other Concerns of Senior Managers I

Technology. How do we deal with robotization & automation, mass customization, information technologies including mobile computing, contacts from & demands by customers for immediate responses including pricing, etc.?

Ethics & Law. World governments have passed laws & regulations that seriously constrain the freedom of companies to utilize their resources

Global Competition. The development of the industrial age may have started in the West, but competitors now exist in nearly part of the globe

Other Concerns of Senior Managers II

Security Threats. There are various security threats that can attack an organization to destroy, steal & eavesdrop on confidential information

 Sustainability & Stakeholder ExpectationsSustainability is the ability of a business to

accomplish its mission & goals while being socially, environmentally & socially responsible

Stakeholders of a company include all of the constituencies that may be affected by corporate decisions, including employees, investors, vendors, vendors, customers, the public & government

Discussion & Review Questions

How do managers contribute value to their organizations?Could organizations effectively & efficiently function without

managers to provide the various activities associated with management?

What is efficiency? What is effectiveness?Why do organizations publish mission statements, & how do

they assist in managing?What is a management goal? An objective? What does it

mean to “manage by objectives” (MBOs)?Are there any problems in using MBOs? If there are

problems, why are MBOs used?What are the specific functions of management & how do

they differ?How do the responsibilities of first-line, middle & senior

managers vary?