1

BUSİNESS

Chapter 5:Management Functions and Decision Making

What Is Management Every organization requires effective management

to succeed. Management is the process of achieving the organization’s aims through the activities of planning, organizing, staffing, directing, and controlling. In short, management involves getting things done through other people.

2

The Management Pyramid The management pyramid illustrates the levels of

management in an organization (upper, middle, and lower) and reflects the fact that there are fewer managers at each successively higher level in an organization. In most firms, the distrubition of upper-middle-lower level is shaped much like a pyramid.

3

Top

Middle

Lower

4

Different levels of managers have much in common. They all get involved in planning for others, organizing the work of others, recruiting, motivating, and controlling. But there are some important differences. First, executives and middle managers both have managers as subordinates. First line management (supervisors) have workers as subordinates. Managers who are higher in the organization spend more time planning, organizing, and staffing. Lower-level managers spend more time directing and controlling the work.

5

Top management: The top managers of an organization are responsible for setting the company’s overall direction. Their challenge is to filter information from the environment, determine how it affects the company, and use it to plot a strategy designed for success. Top managers spend more time than lower-level managers developing plans for the business. To make these plans,top management needs information about the environment (competitors, the economy, suppliers, customers, stockholders and other stakeholders in the company). 6

Middle Managers: The term middle management covers a wide range of managerial jobs. These fall roughly between the vice-presidents on the top management level and supervisors on the bottom level of the management pyramid. Production managers, sales managers, purchasing managers, personnel managers, marketing research managers, advertising managers are just some of the titles of people in middle management.

7

First-Line Supervisors: First-line supervisors manage nonmanagerial, often hourly employees; they are on the firing line every day.

8

Basic Managerial Skills In every occupation, certain skills are needed for

success. A surgeon must be decisive and have the technical skills to perform intricate operations. It should come as no suprise that managers also need certain skills. The basic managerial skills are:

Technical skills Human skills Conceptual skills

9

Technical Skills: Technical skills involve a manager’s ability to understand and use techniques, methods, equipment and procedurs how things operate. These skills are most important at the lower management level. As a manager moves up the management hierarchy, technical skills become less important than conceptual and interpersonal skills.

10

Human Skills: Managers get their work done through other people. Therefore, the ability to influence, supervise, lead and control people at all levels is a skill managers must have.

Human skills include communication, motivation, and leadership. They are perhaps the most important managerial skills at any level in the organization.

11

Conceptual Skills: A manager with conceptual skills can see the organization as a whole- as a complex of parts that interact with and depend on each other. The manager also sees how the organization relates to its environment, including customers and competitors.

12

The Management Process The management process consists of the basic

functions of planning, organizing, staffing, directing and controlling.

13

Planning: Planning is the process of setting goals and deciding on the methods of achieving them. It is the first management function, because all of the other functions are useless without the solid foundation of a plan. There are four main step:

Step 1: Develop forecasts and basic planning assumptions:

Step 2: Define specific objects Step 3: Develop alternative courses of action Step 4: Decide on a course of action

14

Planning is important because it provides direction and a sense of unity for a firm. It helps to ensure that the firm’s efforts are all aimed at achieving the same objective, rather than being haphazard and uncoordinated.

Most managers distinguish between strategic planning and operational (tactical) planning.

Strategic planning is the process of developing a broad plan for how a business is going to compete in its industry , what its goals should be and what policies will be needed to achieve these goals.

15

Operational Planning is the process of formulating short-term plans for implementing the firm’s overall strategic plan.

Different levels of managers usually emphasize different types of planning. Top level managers devote most of their planning time to strategic planning. Lower-level managers are devoted to operational or tactical planning. Middle-level managers devote some planning time to both strategic and operational planning.

16

Setting goals and objectives: Setting goals and objectives is the heart of the planning process- a manager first has to identify what he or she wants to achieve before courses of action can be formulated. An objective is a specific achievement to be attained at some future date. A well-written objective should be SMART:

17

Specific: enough detail to be meaningful. Measurable: quantifable and capbale of being

judged against a standard. Assignable: delegated to an individual or a group

charged with performance. Realistic: high enough to require hard work, but not

so high as to discourage performance. Timely: attached to a schedule for successful

completion.

18

For example “ achieving a 40 percent share of the fast food market in London by 1992” might be an objective for Burger King Corparation.

19

Management by objectives (MBO) is a technique in which a superior and subordinates jointly set the subordinates’ goals and objectives and periodically assess progress toward these goals. The use of MBO is based on the assumption that when employess participate in setting their own goals, they are more apt to be committed to accomplishing them.

The MBO process:

20

1. Manager established her own objectives in writing.

2. First meeting with employee (the manager explains her objectives, describe MBO process).

3. Employee established objectives (the manager plays the role of coach when necessary).

4. Second meeting with employee (the manager and the employee discuss and jointly agree on what the employee will do for a specific time period).

5. Employee implements action plan (the employee attacks the jobs to be done).

21

6. Periodic progres updates (the manager periodically measures the employee’s progress toward his objectives, offering help and support when neccessary)

7. Target date (on the target date for achieving the employee’s objectives, the manager and the employee assess his performance)

8. Feedback and recognizition ( the manager must give the employee feedback concerning his performance)

9. Set new objectives and repeat the process 22

Organizing: Organizing is the process of arranging the resources of the firm in such a way that its activities systematically contribute to the firm’s goals. The purposes of organizing are to give each person a distinct task and to ensure that these tasks are coordinated in such a way that the firm accomplishes its goals.

23

Staffing: Staffing is the process of recruiting, selecting, training, appraising, and developing employees. It is a crucial management function. Human resource determines success or failure.

Directing: Directing is the process of motivating and leading employees to ensure that the firm accomplishes its objectives.

Controlling: Controlling is the task of ensuring that activities are producing the planned results. It is opposite side of the planning coin.

24

Decision Making It is true that the basic functions of management

are planning , organizing, staffing, directing, and controlling. But each function involves decisions.

There are two basic types of decisions: routine decisions and nonroutine decisions

A routine decision is a decision that must be faced over and over.

A nonroutine decision is one that is nonrecurring and so cannot be completely planned for in advance. 25

The decision making process is the seven basic steps that one goes through to make a decision:

1. Recognizing a problem or opportunity

2. Gathering information

3. Developing alternatives

4. Analyzing alternatives

5. Choosing the best alternative

6. Implementing the decision

7. Evaluating the decision

26

First, a business opportunity must be recognized before it can be explored. Similarly, a problem must be recognized before it can be attacked. Here it is important to define the problem clearly and decide whether or not anything will be done about it.

After recognizing the problem or opportunity, the decision maker’s next step is to gather information. This might involve talks with company personnel and outsiders who might provide greater insight. Company records and secondary sources of information such as libraries also might be used.

27

Next the decision maker begins to look for alternative courses of action. The help of others might be sought in brainstorming sessions. In such sessions, people are encouraged to suggest alternatives freely as they come to mind.

After making a list of alternatives, the decision maker begins to analyze them critically. Alternatives that are not likely to pay off are eliminated.

Once the decision has been made, the manager must make sure that the decision is implemented.

Finally, as the decision is being implemented, the decision maker will want to evaluate the results of the decision. 28

Managing the Future The future holds an incredible amount of change: the

increasing globalization of business; world markets growing and shrinking with phenomenal speed; international competitors appearing and disappearing almost overngiht; increasing pressure to meet quality,design and service standards; speed and agility as absolute requirements to compete; greater difficulty in recruiting employees; greater importance on managing information; and many other changes yet to appear.

29

In the future managers must encourage change and willingness to take risks. They must develop organizations build on speed and flexibility. They must create strategies for capturing and using vital information to gain competitive edge in reaching the market.

Management styles will be dramatically different too. Managers at all levels will be depend more heavily on participative management techniques. Management efforts will focus more on building an attitude of team-work among workers.

30

Future managers will need is leadership ability. Effective leaders must provide a sense of direction for the company and an electrifying desire for taking it there. In the future simply managing won’t be enough. The dean of the Wharton School of Business says:

“Forget managers; what we need are leaders.”

31