1 managing the business enterprise chapter 5 department of business administration eastern...

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MANAGING THE BUSINESS MANAGING THE BUSINESS ENTERPRISEENTERPRISE

CHAPTER 5CHAPTER 5

DDepartment of Business Administrationepartment of Business AdministrationEastern Mediterranean UniversityEastern Mediterranean University

GaziMağusa, TRNCGaziMağusa, TRNC

This slide set is prepared for use with Ebert and Griffin, Business Essentials. Fifth Edition. Prentice Hall, New Jersey. 2005.

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TOPICS SUMMARYTOPICS SUMMARY

Setting Goals and Formulating Strategy

The Management ProcessTypes of ManagersBasic Management SkillsManagement and the Corporate

Culture

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Principles of management apply to all kinds of organizations -- private or public; profit or not-for-profit; service producing or goods producing.

Managers work in all kinds of organizations at all levels.

Regardless of the size or nature of an organization, managers are among its most important assets.

In this chapter, the management process is described and the skills that are required by managers are discussed.

INTRODUCTIONINTRODUCTION

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SETTING GOALS AND SETTING GOALS AND FORMULATING STRATEGYFORMULATING STRATEGY

Every business needs goalsEvery manager has to start by setting

goals.

Goal : objective that a business hopes and plans to achieve in the future (hedef; amaç)

Managers must set goals and then carry out actions (eylemler) in order to achieve those goals

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STRATEGYSTRATEGY

Strategy: The broad set of organizational plans for achieving organizational goals

Types of strategy:

– Corporate Strategy

– Business Strategy

– Functional Strategy

let’s see each one..Taken from publisher’s slide set for Ch.6 of textbook.

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STRATEGYSTRATEGY

Types of Strategy: Corporate strategy - strategy for determining the firm’s

overall attitude toward growth and the way it will manage its businesses or product lines. (şirket/kurum stratejisi)

Business (or competitive) strategy - strategy at the business-unit or product-line level, focusing on a firm’s competitive position (rekabet stratejisi)

Functional strategy - strategy by which managers in specific areas/departments decide how best to achieve corporate goals by being as productive (üretken) as possible (fonksiyonel strateji)

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SETTING GOALS AND SETTING GOALS AND FORMULATING STRATEGYFORMULATING STRATEGY

A goal is an objective that a business hopes and plans to achieve.

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SETTING BUSINESS GOALSSETTING BUSINESS GOALS

Goals are also used as performance targets; they are used as a measure of organizational success or failure.

An organization commits its resources on all levels to achieve its goals.

When you set personal goals (such as attending a university to get an education), don’t you commit your resources to achieve those goals?

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Purposes of Goal Setting in organizations:1. Goal setting provides direction (yön) and

guidance (yol gösterici) for managers at all levels.

2. Goal setting helps firms allocate resources.

3. Goal setting helps to define corporate culture (kurumsal kültür)

4. Goal setting helps managers assess (değerlendirme, ölçme) performance.


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Goals depend upon the company’s purpose or mission.– Mission: overall purpose of an

organization (misyon; varoluş nedeni). The mission of an organization defines its reason for existence.

It asks the question “Why are we in business?”

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SETTING BUSINESS GOALSSETTING BUSINESS GOALSThe mission also includes – a definition of products and services the organization

provides, – technologies used, – types of markets, important customer needs, and

distinctive competencies - those characteristics or areas of expertise that sets the firm apart from others.

Mission Statement: organization’s statement of how it will achieve its purpose in the environment in which it conducts its business (Misyonun Yazılı Olarak Açıklanması)

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SOME EXAMPLES OF MISSION SOME EXAMPLES OF MISSION STATEMENTSSTATEMENTS

Eastern Mediterranean University, as an institution of higher learning, is dedicated to the dissemination (yayma) of knowledge through high-quality teaching; to promoting the discovery of knowledge through scholarly research; and to the application of knowledge for the good of humanity.

CLICK THE IMAGE

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Top management prepares and circulates mission statements.– Consider the mission statements of two

companies making the same product -- watches.Timex -- sells low cost reliable watches in department

stores Rolex -- sells high quality, high priced watches at

selected jewellery storesAs a result, these two companies have very different

missions.

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Kinds of goals

Regardless of a company’s purpose and mission, every firm has three kinds of goals:

1. Long-term goals (uzun vadeli amaçlar)

2. Intermediate goals (orta vadeli amaçlar)

3. Short term goals (kısa vadeli amaçlar)

Let us discuss each one briefly....

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1. Long-term goals typically five years or morechanges from industry to industry

in the computer industry “long term” might be 2 years; in the steel industry “long term” may mean 15 years

Examples:– increase market share from 20 % to 45 % in 6 years

– become a world leader in communications technology in 10 years

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2. Intermediate goalsusually are set for a period of one to five yearscompanies set intermediate goals in several

functional areas such as marketing, production, finance, human resources, and R & D (research and development)

Examples:– increase sales by 5 % in two years (marketing)– reduce production cost by 10 % in one year (production)– an increase in return-on-investment (yatırım getirisi) of 5

% in 4 years (finance)

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3. Short-term goals these goals are set for less than one yeardetermined for several functional areas such

as marketing, production, finance, human resources, and R & D (research and development)

same examples as in intermediate term but for a period of one year or less

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FORMULATING STRATEGYFORMULATING STRATEGY

What is a strategy?

It is a broad program that describes what the organization wants to do in order to achieve long term goals.

Strategy Formulation: Creation of a broad program for defining and meeting an organization’s goals.

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Strategy formulation involves three basic steps:

1. Setting strategic goals

2. Analyzing the organization and its environment

3. Matching the organization and its environmentNOTE: In the past, strategy formulation was done exclusively by top management; today lower level managers and employees also participate in this process

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Strategy Formulation

Set Strategic

Goals

Analyze the Organization

Analyze the Environment

Match the Organization

and its Environment

Formulate Strategy

A Well-Formulated Strategy Is Vital to a Business’s Success

Figure taken from publisher’s slide set for Ch.6 of textbook.

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FORMULATING STRATEGYFORMULATING STRATEGYLet us discuss each one briefly:

1. Setting strategic goals:

Strategic goals: long-term goals derived (obtained) from an organization’s mission statement. These are goals focusing on broad organizational issues and apply to the whole company; set by top management

areas ---› market standing, innovation, human resources, financial resources, physical resources, productivity, social responsibility, and profit

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FORMULATING STRATEGYFORMULATING STRATEGY2. Analyzing the organization and its environment

(Environmental Analysis) (çevre analizi)Environmental analysis is the process of scanning (taramak) the business environment for threats (tehditler) and opportunities (fırsatlar)

Opportunities -- new markets, new technology, new inventions (such as the SONY transistor radio story), new more favorable government regulations, etc.

Threats -- new competitors (Napster vs. record companies), new and unfavorable government regulations, changing consumer tastes and preferences, and many more.

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FORMULATING STRATEGYFORMULATING STRATEGYAnalyzing the Organization (also called Organizational Analysis)Managers must also examine internal (inside the organization) factors. This is the process of analyzing a company’s strengths and weaknesses (şirketin güçlü ve zayıf yönleri)Some examples of strengths:

strong financial positiona well-trained and dedicated workforce (iş gücü)managerial talent (able managers) and technical

expertise little or no competition

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Some examples of weaknesses:poor financial positionpoor workforcenot enough managerial talent lack of technical expertiseoutdated technology (eski teknoloji)strong competitorsshrinking (decreasing) market share

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FORMULATING STRATEGYFORMULATING STRATEGY 3. Matching the Organization and Its

Environment

This is the final step in strategy formulation. It is the heart of strategy formulation.

EnvironmentalOpportunities

EnvironmentalThreats

OrganizationalWeaknesses

OrganizationalStrengths

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A POPULAR TECHNIQUE FORA POPULAR TECHNIQUE FORSTRATEGY FORMULATIONSTRATEGY FORMULATION

SWOT ANALYSIS

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

NOT IN THE TEXTBOOK

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– Matching companies with their environments is necessary for successful strategy formulation and then planning and conducting the business.

– Matching of company strengths and weaknesses with the opportunities and threats of the environment also determines whether the firm typically takes risks or behaves more conservatively.

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A Hierarchy of Plans (Levels of Plans)– Actions are needed to achieve organizational goals.

These actions must be planned in order to achieve goals. Each level of goals has a corresponding level of plans.

– Plans can be viewed on three levels:1. Strategic plans (uzun vadeli stratejik planlar)

2. Tactical plans (orta vadeli taktik planlar)

3. Operational plans (kısa vadeli işletme planları)

Let us see what these plans are....

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FORMULATING STRATEGYFORMULATING STRATEGY1. Strategic Plans -- plans that include decisions

about resource allocations, company priorities, and steps needed to meet strategic goals. Determined by board of directors and top management.

2. Tactical Plans -- “shorter range” plans that are concerned with implementing the strategic plan in the intermediate term. Usually prepared by upper and middle management.

3. Operational Plans -- plans which set short-term targets for daily, weekly, or monthly performance

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Contingency Planning and Crisis Management– contingency plannig : identifying aspects

of a business or its environment that might entail (require) changes in strategy

– a protection against unexpected changes that might take place

– it is planning for change

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Crisis Management– organization’s methods for dealing with

emergencies (kriz yönetimi) “love-bug” computer virusearthquakes (countries)any unexpected event that might cause big

problems if not dealt with effectively

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THE MANAGEMENT PROCESSTHE MANAGEMENT PROCESS

What is management?

It is the process of planning, organizing, directing, and controlling an organization’s

financialphysicalhuman information

resources in order to achieve its goals.

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Managers in all organizations perform the same set of functions:

1. Planning

2. Organizing

3. Directing (now called Leading)

4. Controlling

Each one is discussed in the following

slides...

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Planning is done in order to determine what an organization needs to do and how best to get it done (planlama)– establishing objectives and goals for the

organization and determining the best ways for achieving them

– all other functions depend on planning

Goals StrategyTactical &Oper. Plans

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Organizing is the process of determining how best to arrange an organization’s resources and activities into a coherent structure (örgütleme)

Directing is the process of guiding and motivating employees to meet the organization’s goals and objectives. Today the term “leading” (liderlik)

is more common.

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Controlling is the process of monitoring (izlemek) an organization’s performance at all levels to ensure that it is meeting its goals and objectives. (denetleme)– costs– quality of product or service– productivity– market performance– cash position

are just a few areas for control.

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THE MANAGEMENT PROCESSTHE MANAGEMENT PROCESSTHE CONTROL PROCESS

EstablishStandards(goals)

Take Action

Performance=

Standards?

Continue

MeasurePerformance

YES NO

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TYPES OF MANAGERSTYPES OF MANAGERS

All managers plan, organize, direct, and control.

But not all managers have the same degree of responsibility for these activities.

Thus we will classify managers according to levels and areas of responsibility.

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Levels of Management– The three basic levels of management are

top, middle, and first-line.– Top Managers -- those who are responsible

to the board of directors and stockholders for a firm’s overall performance and effectiveness. (üst yönetim)

president, vice president, treasurer, chief executive officer (CEO), chief financial officer (CFO)

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– Middle Managers -- managers responsible for implementing (uygulamak) the strategies, policies, and decisions made by top managers (orta düzey yönetim)

plant manager (fabrika müdürü), operations manager (işletme müdürü), division manager

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– First-Line Managers -- managers responsible for supervising the work of employees (alt düzey yönetim)

supervisor (şef), office manager, group leader, project manager (proje yöneticisi), site manager (şantiye müdürü veya şefi)

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Areas of Management

Top, middle, and first-line managers work in a variety of areas. These are the following:– Human Resource Managers (İnsan Kaynakları

Yöneticileri) recruit, hire and train employees; evaluate

performance; determine compensation (ödeme)One department or several departments may be

present in companies

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– Operations Managers (Üretim veya İşletme Yöneticileri)

Operations (işlemler; işletme) are systems by which a firm produces goods and services

production (üretim); inventory (stok); quality control (kalite kontrolu); transportation (ulaştırma)

vice-president for operations (top); plant managers (middle); production supervisors (first-line)

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– Marketing Managers (Pazarlama Yöneticileri)

Marketing is the development, pricing, promotion, and distribution of goods and services. Marketing managers are responsible for getting products from producers to consumers.

vice president for marketing (pazarlamadan sorumlu genel müdür yardımcısı); regional marketing managers (pazarlama bölge müdürü), district sales managers (semt satış müdürü) in large cities

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– Information Managers (Bilgi Sistemleri Yöneticileri)

Information managers design, and implement systems to gather, organize, and distribute information. This is a new type of manager because of the huge increase in all kinds of information and the need for it to be managed effectively.

chief information officer (bilgi sistemleri müdürü)

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– Financial Managers (Finansal Yöneticiler)

Financial managers are responsible for planning and supervising accounting functions and financial resources.

chief financial officer; vice president for finance; division controller; accounting supervisor

– Other Managerspublic relations managers; research &

development managers; legal affairs managers; etc.

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BASIC MANAGEMENT SKILLSBASIC MANAGEMENT SKILLS

Management skills (yönetsel beceriler)

Irrespective of the type or size of the organization, managers employ (use) five basic kinds of skills:

1. Technical skills

2. Human relations skills

3. Conceptual skills 4. Decision-making skills5. Time-management skills

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BASIC MANAGEMENT SKILLSBASIC MANAGEMENT SKILLSTechnical Skills (teknik beceriler)

– Skills needed to perform specialized tasks; ability and knowledge to perform the mechanics of a particular job

operate a drill press (matkap); operate a commercial laundry machine; prepare a balance sheet; use Excel to prepare an income statement; use MINITAB to perform statistical analysis, fill out an order form correctly, etc.)

– developed through education, training and experience

– especially important for first-line supervisors

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BASIC MANAGEMENT SKILLSBASIC MANAGEMENT SKILLSHuman Relations Skills (İnsan ilişkileri

becerileri)– skills required to understand other people and to

interact effectively (to get along) with them; get people to work effectively as a team. (to inspire trust in people and encourage them to try new things and to offer new ideas)

– important at all levels of management; especially for middle managers, who must act as bridges between top managers, first-line managers and managers from other areas of the organization.

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Conceptual Skills (kavramsal beceriler)– abilities to think in the abstract (soyut), diagnose

and analyze different situations, and see beyond the present situation; “ability to see the whole picture”

– conceptual abilities help managers to recognize (see) new market opportunities and threats. They help them analyze the probable outcomes (olası sonuçlar) of their decisions

– most important for top managers; least for first-line supervisors

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Decision-Making Skills (karar verme becerileri)– skills in defining problems and selecting the

best courses of action– what is decision-making?

It is the process of identifying a decision situation, analyzing the problem, weighing the alternatives, arriving at a decision, taking action, and evaluating the results.

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Define the ProblemGather FactsDevelop Alternatives

Implement the Chosen AlternativeFollow Up and Evaluatethe Chosen Alternative

Evaluate AlternativesSelect the Best Alternative

THE DECISION MAKING PROCESS

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Time Management Skills (Zaman Kullanım Becerileri)

Time management skills are those skills associated with the productive use of time.

Time is a valuable resource; thus it should be used wisely.

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BASIC MANAGEMENT SKILLSBASIC MANAGEMENT SKILLS– Causes of wasted time:

Paperwork -- letters and reportsTelephone -- too much time spent speaking on the phoneMeetings -- too much time spent on meetings

– clear agenda (gündem)– start on time– keep focused on the agenda (sadede gel!!)– end the meeting on time

Internet and E-mail is another source of time waste these days if one is not careful about it.

“What would you like to drink?” routine in Turkey and Cyprus (Ne içersiniz? faslı)

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Management Skills for the Twenty-First Century

Basically two important challenges are faced by managers as we enter the 21st century:

1. Global Management Skills

2. Management and Technology Skills

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1. Global Management Skills

Managers must equip themselves with

– special tools– techniques– skills

necessary to compete in a global environment.

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Managers of the next century will need to understand– foreign markets– cultural differences– motives and practices of foreign rivals

(yabancı rakipler)

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In the future, businesses will need and hire managers who are capable of understanding international operations.

YOU, as business students, should do your best to prepare yourselves to become the kind of graduate who will attract the attention of employers. This means hard work and seriousness of purpose on your part.

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BASIC MANAGEMENT SKILLSBASIC MANAGEMENT SKILLS2. Technology Skills

Managers have always had to deal with information. Today managers are overloaded with information.

computer technologycommunication technologycomputer networkinge-mail tele-conferencinge-business

All these and much more require a different kind of manager than what we are used to.

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MANAGEMENT AND THE MANAGEMENT AND THE CORPORATE CULTURECORPORATE CULTURE

What is corporate culture?

It is the shared beliefs, values, norms, and experiences that characterize an organization. (kurumsal kültür)– A strong corporate culture serves several

purposes: It directs employees’ efforts and helps everyone work

toward the same goals It helps new employees learn accepted behaviors It gives each organization its own identity (kimlik)

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Communicating the Culture and Managing Change– Corporate culture influences

management philosophymanagement stylemanagement behavior

– Managers must carefully consider the kind of culture they want for their organizations, then work to develop that culture by communicating with everyone who works there.

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– Communicating the Culture

Managers must use effective communication in order to accomplish the following tasks:

managers must have a clear understanding of the culture

managers must transmit (iletmek) the culture to others in the organization; they must also communicate the mission of the organization to their employees

managers should maintain the culture by rewarding (ödüllendirmek) and promoting (yükseltmek) those who understand it and work toward maintaining it

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– Managing Change

Organizations must sometimes change their cultures. This means that they must communicate the nature of the change to both

employees andcustomers

– Organizations must continuously change in view of the changes taking place in the environment, technology, consumer tastes and preferences.

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