BusinessEssentialsTwelfthEditionChapter5ManagingtheBusinessCopyright?2019,2016,2013PearsonEducation,Inc.AllRightsReserved.IntroductionInthischapterweexploretheimportanceofstrategicmanagementandeffectivegoalsettingtoorganizationalsuccessexaminethefunctionsthatconstitutethemanagementprocessandidentifydifferenttypesofmanagerslikelytobefoundinanorganizationbylevelandarealookatbasicmanagementskillsandrolesandexplaintheimportanceofcorporatecultureLearningObjectives(1of2)Describethenatureofmanagementandidentifythefourbasicfunctionsthatconstitutethemanagementprocess.Identifydifferenttypesofmanagerslikelytobefoundinanorganizationbylevelandarea.Describethebasicrolesandskillsrequiredofmanagers.Explaintheimportanceofstrategicmanagementandeffectivegoalsettinginorganizationalsuccess.LearningObjectives(2of2)Discusscontingencyplanningandcrisismanagementintoday’sbusinessworld.Describethedevelopmentandexplaintheimportanceofcorporateculture.TheManagementProcess(1of2)Managementprocessofplanning,organizing,leading,andcontrollinganorganization’sresourcestoachieveitsgoalsBasicManagementFunctions(1of2)PlanningmanagementprocessofdeterminingwhatanorganizationneedstodoandhowbesttogetitdoneOrganizingmanagementprocessofdetermininghowbesttoarrangeanorganization’sresourcesandactivitiesintoacoherentstructureBasicManagementFunctions(2of2)Leadingmanagementprocessofguidingandmotivatingemployeestomeetanorganization’sobjectivesControllingmanagementprocessofmonitoringanorganization’sperformancetoensurethatitismeetingitsgoalsTheManagementProcess(2of2)TheControlProcessTypesofManagersTopManagermanagerresponsibleforafirm’soverallperformanceandeffectivenessMiddleManagermanagerresponsibleforimplementingthestrategiesandworkingtowardthegoalssetbytopmanagersFirst-LineManagermanagerresponsibleforsupervisingtheworkofemployeesTheThreeLevelsofManagementTable5.1TheThreeLevelsofManagementLevelExamplesResponsibilitiesTopmanagersPresident,vicepresident,treasurer,CEO,chieffinancialofficer(CFO)ResponsiblefortheoverallperformanceandeffectivenessofthefirmSetgeneralpolicies,formulatestrategies,andapproveallsignificantdecisionsRepresentthecompanyindealingswithotherfirmsandwithgovernmentbodiesMiddlemanagersPlantmanager,operationsmanager,divisionmanager,regionalsalesmanagerResponsibleforimplementingthestrategiesandworkingtowardthegoalssetbytopmanagersFirst-linemanagersSupervisor,officemanager,projectmanager,groupleader,salesmanagerResponsibleforsupervisingtheworkofemployeeswhoreporttothemEnsureemployeesunderstandandareproperlytrainedincompanypoliciesandproceduresAreasofManagement(1of2)HumanResourceManagershireandtrainemployees,evaluateperformance,anddeterminecompensationOperationsManagersresponsibleforproduction,inventory,andqualitycontrolMarketingManagersresponsibleforgettingproductsfromproducerstoconsumersAreasofManagement(2of2)InformationManagersdesignandimplementsystemstogather,organize,anddistributeinformationFinancialManagersplanandoverseeaccountingfunctionsandfinancialresourcesManagementRolesandSkillsInterpersonalRolesacategoryofmanagerialrolesincludingfigurehead,leader,andliaisonInformationalRolesacategoryofmanagerialrolesincludingmonitor,disseminator,andspokespersonDecisionalRolesacategoryofmanagerialrolesincludingentrepreneur,disturbancehandler,resourceallocator,andnegotiatorBasicManagerialRolesTable5.2BasicManagerialRolesCategoryRoleSampleActivitiesInterpersonalFigureheadLeaderLiaisonAttendingribbon-cuttingceremonyfornewplantEncouragingemployeestoimproveproductivityCoordinatingactivitiesoftwoprojectgroupsInformationalMonitorDisseminatorSpokespersonScanningindustryreportstostayabreastofdevelopmentsSendingmemosoutliningneworganizationalinitiativesMakingaspeechtodiscussgrowthplansDecisionalEntrepreneurDisturbancehandlerResourceallocatorNegotiatorDevelopingnewideasandfosteringinnovationResolvingconflictbetweentwosubordinatesReviewingandrevisingbudgetrequestsReachingagreementwithakeysupplierorlaborunionBasicManagementSkills(1of2)TechnicalSkillsskillsneededtoperformspecializedtasksHumanRelationsSkillsskillsinunderstandingandgettingalongwithpeopleConceptualSkillsabilitiestothinkintheabstract,diagnoseandanalyzedifferentsituations,andseebeyondthepresentsituationBasicManagementSkills(2of2)Decision-MakingSkillsskillsindefiningproblemsandselectingthebestcoursesofactionTimeManagementSkillsskillsassociatedwiththeproductiveuseoftimeLeadingCausesofWastedTimePaperworkTelephonecallsMeetingsE-mailManagementSkillsfortheTwenty-FirstCentury(1of2)GlobalManagementSkillsManagerswillneedtounderstandforeignmarkets,culturaldifferences,andthemotivesandpracticesofforeignrivals.Managerswillalsoneedtounderstandhowtocollaboratewithothersaroundtheworldonareal-timebasis.ManagementSkillsfortheTwenty-FirstCentury(2of2)ManagementandTechnologySkillsNewformsoftechnologyhaveaddedtoamanager’sabilitytoprocessinformationwhilesimultaneouslymakingitevenmoreimportanttoorganizeandinterpretanever-increasingwealthofinput.StrategicManagement:SettingGoalsandFormulatingStrategyStrategicManagementprocessofhelpinganorganizationmaintainaneffectivealignmentwithitsenvironmentStrategybroadsetoforganizationalplansforimplementingthedecisionsmadeforachievingorganizationalgoalsSettingBusinessGoalsGoalsthemeansbywhichorganizationsandtheirmanagersmeasuresuccessorfailureateverylevelobjectivethatabusinesshopesandplanstoachievePurposesofGoalSettingProvidesdirectionandguidanceformanagersatalllevelsHelpsfirmsallocateresourcesHelpstodefinecorporatecultureHelpsmanagersassessperformanceKindsofGoals(1of2)MissionStatementorganization’sstatementofhowitwillachieveitspurposeintheenvironmentinwhichitconductsitsbusinessKindsofGoals(2of2)Long-TermGoalgoalsetforanextendedtime,typicallyfiveyearsormoreintothefutureIntermediateGoalgoalsetforaperiodofonetofiveyearsintothefutureShort-TermGoalgoalsetfortheverynearfutureTypesofStrategy(1of2)CorporateStrategystrategyfordeterminingthefirm’soverallattitudetowardgrowthandthewayitwillmanageitsbusinessesorproductlinesBusiness(orCompetitive)Strategystrategy,atthebusiness-unitorproduct-linelevel,focusingonimprovingafirm’scompetitivepositionTypesofStrategy(2of2)FunctionalStrategystrategybywhichmanagersinspecificareasdecidehowbesttoachievecorporategoalsthroughproductivityHierarchyofStrategyFormulatingStrategy(1of3)Step1:SettingStrategicGoalsStep2:AnalyzingtheOrganizationandtheEnvironment:SWOTAnalysisStep3:MatchingtheOrganizationandItsEnvironmentStrategyFormulationFormulatingStrategy(2of3)SWOTAnalysisidentificationandanalysisoforganizationalstrengthsandweaknessesandenvironmentalopportunitiesandthreatsaspartofstrategyformulationFormulatingStrategy(3of3)EnvironmentalAnalysisprocessofscanningthebusinessenvironmentforthreatsandopportunitiesOrganizationalAnalysisprocessofanalyzingafirm’sstrengthsandweaknessesAHierarchyofPlansStrategicPlanplanreflectingdecisionsaboutresourceallocations,companypriorities,andstepsneededtomeetstrategicgoalsTacticalPlangenerallyshort-termplanconcernedwithimplementingspecificaspectsofacompany’sstrategicplansOperationalPlanplansettingshort-termtargetsfordaily,weekly,ormonthlyperformanceContingencyPlanningandCrisisManagementContingencyPlanningidentifyingaspectsofabusinessoritsenvironmentthatmightentailchangesinstrategyCrisisManagementorganization’smethodsfordealingwithemergenciesTheHierarchyofPlansManagementandtheCorporateCultureCorporateculturethesharedexperiences,stories,beliefs,andnormsthatcharacterizeanorganizationhelpsdefinetheworkandbusinessclimatethatexistsinanorganizationCommunicatingtheCultureandManagingChangeManagersthemselvesmusthaveaclearunderstandingofthecultureMusttransmittheculturetoothersintheorganizationShouldmaintaintheculturebyrewardingandpromotingthosewhounderstanditandworktowardmaintainingitManagingChange–ThreeStagesAtthehighestlevel,analysisofthecompany’senvironmenthighlightsextensivechangeasthemosteffectiveresponsetoitsproblems.Topmanagementbeginstoformulateavisionofanewcompany.Thefirmsetsupnewsystemsforappraisingandcompensatingemployeeswhoenforcethefirm’snewvalues.ApplyingWhatYou’veLearned(1of2)Describethenatureofmanagementandidentifythefourbasicfunctionsthatconstitutethemanagementprocess.Identifydifferenttypesofmanagerslikelytobefoundinanorganizationbylevelandarea.Describethebasicrolesandskillsrequiredofmanagers.Explaintheimportanceofstrategicmanagementandeffectivegoalsettinginorganizationalsuccess.ApplyingWhatYou’veLearned(2of2)Discusscontingencyplanningandcrisismanagementintoday’sbusinessworld.Describethedevelopmentandexplaintheimportanceofcorporateculture.CopyrightBusinessEssentialsTwelfthEditionChapter6OrganizingtheBusinessCopyright?2019,2016,2013PearsonEducation,Inc.AllRightsReserved.IntroductionInthischapterweexaminefactorsthatinfluenceafirm’sorganizationalstructurediscussthebuildingblocksoforganizationalstructureaswellasthedifferencesbetweendecisionmakingindifferenttypesoforganizationslookatavarietyoforganizationalstructuresdescribethemostpopularnewformsoforganizationaldesignLearningObjectives(1of2)Discussthefactorsthatinfluenceafirm’sorganizationalstructure.Explainspecializationanddepartmentalizationastwoofthebuildingblocksoforganizationalstructure.Describecentralizationanddecentralization,delegation,andauthorityasthekeyingredientsinestablishingthedecision-makinghierarchy.LearningObjectives(2of2)Explainthedifferencesamongfunctional,divisional,matrix,andinternationalorganizationalstructuresanddescribethemostpopularnewformsoforganizationaldesign.Describetheinformalorganizationanddiscussintrapreneuring.WhatIsOrganizationalStructure?OrganizationalStructurespecificationofthejobstobedonewithinanorganizationandthewaysinwhichtheyrelatetooneanotherOrganizationChartsOrganizationChartdiagramdepictingacompany’sstructureandshowingemployeeswheretheyfitintoitsoperationsChainofCommandreportingrelationshipswithinacompanyTheOrganizationChartDeterminantsofOrganizationalStructureMissionStrategySizeInternalenvironmentExternalenvironmentTheBuildingBlocksofOrganizationalStructureSpecializationdeterminingwhowilldowhatDepartmentalizationdetermininghowpeopleperformingcertaintaskscanbestbegroupedtogetherSpecializationJobSpecializationtheprocessofidentifyingthespecificjobsthatneedtobedoneanddesignatingthepeoplewhowillperformthemDepartmentalization(1of3)Departmentalizationprocessofgroupingjobsintologicalunitsproduct,process,functional,customer,geographicProfitCenterseparatecompanyunitresponsibleforitsowncostsandprofitsDepartmentalization(2of3)FunctionalDepartmentalizationdividinganorganizationaccordingtogroups’functionsoractivitiesProductDepartmentalizationdividinganorganizationaccordingtospecificproductsorservicesbeingcreatedProcessDepartmentalizationdividinganorganizationaccordingtoproductionprocessesusedtocreateagoodorserviceDepartmentalization(3of3)CustomerDepartmentalizationdividinganorganizationtoofferproductsandmeetneedsforidentifiablecustomergroupsGeographicDepartmentalizationdividinganorganizationaccordingtotheareasofthecountryortheworldservedbyabusinessMultipleFormsofDepartmentalizationDistributingAuthority:CentralizationandDecentralizationEstablishmentofaDecision-MakingHierarchydecidingwhowillbeempoweredtomakewhichdecisionsandwhowillhaveauthorityoverothersCentralizedOrganizationorganizationinwhichmostdecision-makingauthorityisheldbyupper-levelmanagementDecentralizedOrganizationorganizationinwhichagreatdealofdecision-makingauthorityisdelegatedtolevelsofmanagementatpointsbelowthetopFlatandTallOrganizations(1of3)FlatOrganizationalStructurecharacteristicofdecentralizedcompanieswithrelativelyfewlayersofmanagementTallOrganizationalStructurecharacteristicofcentralizedcompanieswithmultiplelayersofmanagementFlatandTallOrganizations(2of3)FlatandTallOrganizations(3of3)SpanofControlThedistributionofauthorityinanorganizationalsoaffectsthenumberofpeoplewhoworkforanyindividualmanager.SpanofControlnumberofpeoplesupervisedbyonemanagerTheDelegationProcessDelegationprocessthroughwhichamanagerallocatesworktosubordinatesAssigningresponsibility-thedutytoperformanassignedtaskGrantingauthority-thepowertomakethedecisionsnecessarytocompletethetaskCreatingaccountability-theobligationemployeeshaveforthesuccessfulcompletionofthetaskLearningtoDelegateEffectivelyTable6.1LearningtoDelegateEffectivelyI’mafraidtodelegatebecause...SolutionMyteamdoesn’tknowhowtogetthejobdone.Ifmembersofyourteamareexhibitingopportunitiesforimprovedperformance,offerthemthetrainingnecessaryforthemtobecomemoreeffectiveattheirjobs.Ilikecontrollingasmanythingsaspossible.Recognizethattryingtoaccomplisheverythingyourselfwhileyourteamdoesnothingonlysetsyouupforburnoutandfailure.Asyoubegintorelinquishcontrol,youwillcometotrustyourteammoreasyouwatchyourteammemberssucceed.Idon’twantanyoneonmyteamoutperformingme.High-performingteammembersareareflectionofyoursuccessasamanager.Encouragethemtoexcel,praisethemforit,andsharethesuccessofyourteamwiththerestoftheorganization.Idon’tknowhowtodelegatetaskseffectively.Considertakingamanagementtrainingcourseorreadingsomebooksonthetopicofdelegatingeffectively.FormsofAuthority(1of2)LineAuthorityorganizationalstructureinwhichauthorityflowsinadirectchainofcommandfromthetopofthecompanytothebottomStaffAuthorityauthoritybasedonexpertisethatusuallyinvolvescounselingandadvisinglinemanagersStaffMembersadvisersandcounselorswhohelplinedepartmentsinmakingdecisionsbutwhodonothavetheauthoritytomakefinaldecisionsFormsofAuthority(2of2)CommitteeandTeamAuthorityauthoritygrantedtocommitteesorteamsinvolvedinafirm’sdailyoperationsWorkTeamgroupofoperatingemployeeswhoareempoweredtoplanandorganizetheirownworkandtoperformthatworkwithaminimumofsupervisionLineandStaffOrganizationBasicFormsofOrganizationalStructure(1of4)FunctionalStructureorganizationstructureinwhichauthorityisdeterminedbytherelationshipsbetweengroupfunctionsandactivitiesFunctionalStructureBasicFormsofOrganizationalStructure(2of4)DivisionalStructureorganizationalstructureinwhichcorporatedivisionsoperateasautonomousbusinessesunderthelargercorporateumbrellaDivisionalStructureBasicFormsofOrganizationalStructure(3of4)MatrixStructureorganizationalstructurecreatedbysuperimposingoneformofstructureontoanotherInsomecompanies,thematrixorganizationisatemporarymeasureinstalledtocompleteaspecificprojectandaffectingonlyonepartofthefirmMatrixStructureBasicFormsofOrganizationalStructure(4of4)InternationalOrganizationalStructuresapproachestoorganizationalstructuredevelopedinresponsetotheneedtomanufacture,purchase,andsellinglobalmarketsInternationalOrganizationalStructureOrganizationalDesignfortheTwenty-FirstCentur