USINESS 7e PART 2

UNDERSTANDING THE
BUSINESS OF
MANAGING

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USINESS 7e CHAPTER 6

Managing the
Business Enterprise

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BUSINESS 7e 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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BUSINESS 7e Who Are Managers?

 All corporations depend on

effective management.
 The principles of
management apply to all
kinds of organizations.
 Managers are among an
organization’s most
important resources.

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USINESS 7e What Are Goals?

Objectives that a
business hopes and
plans to achieve

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USINESS 7e 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 firm’s
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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 firm’s competitive position
 Functional strategy involves managers in
specific areas who decide how best
to achieve corporate goals
through productivity

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BUSINESS 7e Hierarchy of Strategy

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BUSINESS 7e 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?

Organization’s
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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
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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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USINESS 7e What Is Strategy Formulation?

Creation of a broad
program for defining
and meeting an
organization’s goals

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BUSINESS 7e Strategy Formulation

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BUSINESS 7e Setting Strategic Goals

 Strategic goals are long-term goals

derived directly from a firm’s 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

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of scanning the business environment
for threats and opportunities
 Organizational analysis is the process
of analyzing a firm’s strengths and
weaknesses

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 Matching the Organization and
Its Environment

 The matching process is the heart of

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strategy formulation.
 The matching process may determine
whether a firm typically takes risks or
behaves more conservatively.

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BUSINESS 7e 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
company’s 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
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aspects of a business or its environment
that might entail changes in strategy
 Crisis management involves an
organization’s methods for dealing with
emergencies

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USINESS 7e What Is Management?

Process of planning,
organizing, directing
and controlling an
organization’s
resources to achieve
its goals

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 The Management Process

 Planning determines what an organization

BUSINESS 7e
needs to do and how best to get it done
 Organizing determines how best to arrange an
organization’s resources and activities into a
coherent structure
 Directing involves guiding and motivating
employees to meet an organization’s objectives
 Controlling monitors an organization’s
performance to make sure that the firm is
meeting its goals

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BUSINESS 7e The Control Process

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 Types of Managers

 Top managers are responsible to the

BUSINESS 7e
board of directors and stockholders for a
firm’s 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


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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
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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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BUSINESS 7e The Decision-Making Process

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 Management Skills for the
21st Century

 Global management skills include the

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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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USINESS 7e What Is Corporate Culture?

The shared experiences,

stories, beliefs and
norms that characterize
an organization

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BUSINESS 7e 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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BUSINESS 7e Managing Change

Three-stage process:
 Analysis of the company’s 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 firm’s new values.

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