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Chapter Seven

Understanding the

Learning Objectives
1. Define what management is.
2. Describe the four basic management
functions: planning, organizing, leading and
motivating, and controlling.
3. Distinguish among the various kinds of
managers, in terms of both level and area of
4. Identify the key management skills and the
managerial roles.
5. Explain the different types of leadership.
6. Discuss the steps in the managerial decisionmaking process.

Learning Objectives (contd)

7. Describe how organizations benefit from
total quality management.
8. Summarize what it takes to become a
successful manager today.

What Is Management?
The process of coordinating people and other
resources to achieve the goals of an
Material resources
The tangible physical resources an organization uses

Human resources
The people who staff the organization and use the other
resources to achieve the goals of the organization

Financial resources
The funds the organization uses to meet its obligations to
investors and creditors

Information resources
The information about internal and external business
environmental conditions that the firm uses to its
competitive advantage

The Four Main Resources of Management

Basic Management Functions

The Management Process

Establishing organizational goals and deciding
how to accomplish them

A statement of the basic purpose that makes an
organization different from others

Strategic planning
The process of establishing an organizations
major goals and objectives and allocating the
resources to achieve them

Planning (contd)
Establishing goals and objectives
An end result that the organization is expected to
achieve over a one-to-ten year period

A specific statement detailing what the organization
intends to accomplish over a shorter period of time

Properly set goals are

Set at every level in the organization
Consistent (supportive) with each other
Optimized (balanced) to reduce conflicts between goals

Planning (contd)
Establishing plans to accomplish goals and
An outline of the actions by which the organization intends to
accomplish its goals and objectives

An organizations broadest set of plans, a guide for major
policy setting and decision making

Tactical plan
A smaller-scale plan to implement a strategy

Operational plan
A plan to implement a tactical plan

Contingency plan
A plan of alternative courses of action if the organizations
other plans are disrupted or become ineffective

Organizing the Enterprise

The grouping of resources and activities to
accomplish some end result in an efficient and
effective manner

Leading and Motivating

Influencing people to work toward a common goal

Providing reasons for people to work in the best interests
of the organization

The combined processes of leading and motivating

Controlling Ongoing Activities

Evaluating and regulating ongoing
activities to ensure that goals are achieved

The Control Function

Kinds of Managers
Levels of Management
Top managerguides and
controls the overall fortunes of
the organization
Middle managerimplements
the strategy and major policies
developed by top management
First-line manager
coordinates and supervises the
activities of operating

The coordinated effort of all

three levels of managers is
required to implement the
goals of any company

Areas of Management
Financial Managers
Responsible for the organizations financial resources

Operations Managers
Manage the systems that convert resources into goods and

Marketing Managers
Responsible for facilitating the exchange of products
between the organization and its customers or clients

Human Resources Managers

Manage the organizations human resources programs

Administrative Managers (General Managers)

Not associated with any specific functional area; provide
overall administrative guidance and leadership

Areas of Management Specialization

Other areas may have to be added
depending on the nature of the firm and
the industry

What Makes Effective Managers?

Key Management Skills
Technical skill
A special skill needed to accomplish a
specialized activity

Conceptual skill
The ability to think in abstract terms

Interpersonal skill
The ability to deal effectively with other people

What Makes Effective Managers? (contd)

Managerial Roles
Decisional roles
Involve various aspects of management
decision making
Entrepreneur, disturbance handler, resource
allocator, negotiator

Interpersonal roles
The manager deals with people
Figurehead, liaison, leader

Informational roles
A manager either gathers or provides
Monitor, disseminator, spokesperson

The ability to influence others
Leadership vs. management
Formal leadership
Legitimate power of position is the basis for

Informal leadership
Not recognized formally by the

Styles of Leadership
Holds all authority and responsibility, with
communication usually moving from top to bottom

Gives authority to employees and allows
subordinates to work as they choose with a
minimum of of interference; communication flows
horizontally among group members

Holds final responsibility but also delegates
authority to others, who help determine work
assignments; communication is active upward and

Which Leadership Style Is Best?

Matching style to the situation
Effective leadership depends on
Interaction among the employees
Characteristics of the work situation
The managers personality

Managerial Decision Making

The act of choosing one alternative
from among a set of alternatives
Major steps in the managerial decisionmaking process

The Managerial Decision-Making Process

Identifying the problem or opportunity
The discrepancy between an actual condition
and a desired condition

A positive problem

Problem-solving impediments
Preconceptions about the problem
Focusing on unimportant matters while
overlooking significant issues
Analyzing symptoms rather than causes
Failing to look ahead

Managerial Decision-Making Process (contd)

Generating alternatives
Encouraging participants to come up with new

Blast! Then Refine

Reevaluating objectives, modifying them if
necessary, and devising a new solution

Selecting an alternative
Choosing an alternative that is not the best
possible solution, but one that adequately
solves the problem

Managerial Decision-Making Process (contd)

Implementing and evaluating the
Requires time, planning, preparation of
personnel, and evaluation of the results
An effective decision removes the
difference between the actual condition
and the desired condition
If a problem still exists, managers may
Decide to give the chosen alternative more time
Adopt a different alternative
Start the process all over again

Managing Total Quality

Total Quality Management (TQM)
The coordination of efforts directed at

Improving customer satisfaction

Increasing employee participation
Strengthening supplier partnerships
Facilitating an organizational atmosphere of
continuous quality improvement

Issues Crucial to TQM

Top management commitment
Coordination of efforts

What It Takes to Become a Successful

Personal Skills
Oral communication
Written communication
Critical thinking

Education and Experience

A solid academic background
Practical work experience