Ch01 Instructor Manual
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Chapter 1: Management and Managers
CHAPTER 1 MANAGEMENT AND MANAGERS LEARNING OBJECTIVES 1. 2. 3. 4. 5.
Define what management is. Identify and explain the basic managerial functions. Understand the roles that managers play. Discuss the scope of responsibilities of functional and general managers. Describe the three levels of managers in terms of the skills they need and the activities in which they are involved. 6. Identify major changes in the 21st century and explain how they will affect management of organizations. 7. Explain the interactions between all of the major functions that managers perform; the interactions between planning, organizing, leading, and controlling. 8. Explain why it is important to study management.
CHAPTER OVERVIEW This introductory chapter provides an overview of the functions of management, the roles that managers play in organizations, and the types of challenges that managers will face in the twenty-first century. In addition, the skills needed at different levels of management are introduced and discussed, and the differences between functional and general managers are explained. The chapter also includes a discussion on how the manager’s job will change as a result of changes in the business environment during the 21st century. The major factors affecting the way in which organizations are managed are expected to be (1) the Internet and information technology, (2) increasing globalization, (3) increasing diversity, (4) intellectual capital, and (5) increased emphasis on ethics. The chapter concludes with an overall framework for learning about management and an explanation of why the study of management is important.
PEDAGOGY GRID Chapter Boxes
Main Points
Facing the Challenge/Meeting the Challenge:
•
Can Anyone Save Nissan Motor Co., Ltd.? / Carlos Ghosn, Star of Nissan and the Auto Industry
•
1
Nissan was getting deeper and deeper into trouble throughout the 1990s, with very high debt and too many brands that were not differentiated from each other or their competitors. Cutting costs and insisting on accountability enabled Carlos Ghosn to
Chapter 1: Management and Managers
save Nissan. Leaders in Action: The Avon Lady • Andrea Jung took over a company in serious trouble and revitalized it by engaging every major principle of good management. At the Forefront: Managing in the 21st Century • Five factors will have special importance in the 21st century—Internet and information technology, increasing globalization, increasing diversity, intellectual capital, and ethics. Now Apply It: Are You Ready to Lead in the • Check to see if you have skills that will be 21st Century? needed to be a successful leader.
LECTURE NOTES I. What is Management? A. Management is defined as the process of administering and coordinating resources effectively and efficiently in an effort to achieve the goals of the organization. Mary Parker Follett referred to it as “the art of getting things done through people.” 1. Effectiveness is defined as the degree to which organizational goals are achieved. 2. Efficiency refers to using the fewest inputs (people, money, etc.) to generate a given output. 3. An organization is a group of individuals who work together toward a common goal. Organizations can be for-profit or not-for-profit. Organizations are made up of people whose efforts must be coordinated in order for the organization to achieve its goals. II. What Managers Do A. Planning: Setting goals and defining the actions necessary to achieve those goals in light of the situation. B. Organizing: Determining the tasks to be done, who will do them, and how they will be managed and coordinated. C. Leading: Inspiring the members of the organization to work toward the accomplishment of the organization’s goals. D. Controlling: Establishing and understanding what is required to achieve goals, measuring actual performance, identifying deviations between planned and actual results, and taking corrective action as necessary.
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III. Roles of Managers A. Role refers to the behavior that is expected in a particular situation. 1. Interpersonal roles: The manager’s responsibility for managing relationships with organizational members and other constituents a. figurehead, leader, liaison 2. Informational roles: The manager’s responsibility for ensuring that the people with whom they work have sufficient information to do their jobs effectively b. monitor, disseminator, spokesperson 3. Decisional roles: The manager’s responsibility for processing information and reaching decisions c. entrepreneur, disturbance handler, resource allocator, negotiator IV. Managerial Scope, Levels and Skills A. Scope of responsibility: the extent and nature of the manager’s job in terms of his or her focus duties and work relationships 1. Functional managers are responsible for work groups that are segmented according to function. Examples: Finance Manager, Production Manager. Functional managers typically report to a general manager 2. General managers are responsible for supervising several different departments and coordinating their end results. Examples: Regional Manager, Business Unit Manager B. Levels of Management and Relative Importance of Skills Refer to Figures 1.3 and 1.4. 1. Managers at all levels of the organization engage in planning, organizing, leading, and controlling, but managers at different levels tend to be more or less involved in certain types of activities that require different kinds of skills. a. First-line managers supervise individuals who are directly responsible for producing the organization’s products and services. They carry titles such as production supervisor, line manager, section chief, or account manager. Technical skills tend to be most important for first-line managers. These skills involve the knowledge and use of tools, techniques, processes, and procedures specific to a particular field. First-line managers also use human skills and conceptual skills.
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Chapter 1: Management and Managers
b. Middle managers supervise first-line managers or staff departments. They have titles such as department head, product manager, or marketing manager. Human skills are most important for middle managers because they must coordinate the work of many people and groups of people. These skills involve managing group dynamics, encouraging cooperation, conflict resolution, and extensive communication efforts. Middle managers also use technical skills and conceptual skills. c. Top-level managers provide the strategic direction for the organization. They carry titles such as chief executive officer (CEO), president, chief operations officer (COO), or executive vice-president. Conceptual skills are used by top-level managers to set the strategic direction for the organization. These skills enable top-level managers to analyze information about the external and internal environments, to appropriately structure their organizations, and to develop distinctive personalities or cultures for their organizations. Top-level managers also need human and technical skills. V. Managing in the 21st Century. A. The Internet and Information Technology 1. E-business (i.e. doing business via the Internet) is expanding and improving its profitability. a. Traditional “brick and mortar” businesses are adding Internet service to complement their existing businesses. b. Rapid and extensive information exchange results in tighter links between suppliers and organizations. c. Customers can get more information about products and services, enabling more effective comparison shopping. d. Blogs provide personal information about products and services, both positive and negative. 2. All of these factors increase the bargaining power of customers and provide greatly increased opportunities for global business. B. Increasing Globalization 1. The Internet enables companies to access previously inaccessible geographic markets and allows organizations to more easily move segments of their companies to other countries.
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Chapter 1: Management and Managers
2. Globalization is expanding through increasing numbers of partnerships among businesses from various countries. 3. Managers at all levels will need to understand the effects of operating in a global environment. C. Increasing Diversity 1. Diversity refers to the heterogeneity of the population and workforce, mostly in terms of gender and race. a. A diverse workforce makes achieving a strong organizational culture, group cohesiveness, and consensus on common goals more difficult. D. Intellectual Capital 1. Intellectual capital refers to the total of an organization’s knowledge. According to Thomas Steward, there are three types of intellectual capital. a. Structural capital: The accumulated knowledge and know-how of the organization represented by its patents, trademarks and copyrights, proprietary databases, and systems b. Customer capital: The value of established relationships with customers and suppliers c. Human capital: The cumulative skills and knowledge of people in the organization E. Ethics 1. An unusually large number of top-level managers have faced allegations of unethical behavior in recent years. The Sarbanes-Oxley Act is a relatively new law that requires businesses to use certain accounting rules intended to prohibit financial abuses by managers. VI. An Overall Framework A. Planning 1. Planning must be done to establish the goals and set the strategy for achieving those goals. Planning includes understanding the markets and industry (external environment) and the competencies, weaknesses, and operations of the organization (internal environment).
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Chapter 1: Management and Managers
B. Organizing and Leading 1. Understanding the state of organizational design, authority and responsibility, reporting relationships, communicating, human behavior, and leadership must all support the overall strategy of the organization. C. Controlling
Refer to Figure 1.5.
1. Everything that is done in the organization must be evaluated and guided so that it is directed toward achieving the overall goals of the organization. 2. Feedback is necessary in order to understand what has been done so far. Feedback allows managers to take corrective action when necessary to ensure achievement of organizational goals. VII.Why Study Management? A. The basic functions that managers perform, the roles managers play, and the skills managers use apply to the management of all organizations. B. Every job at every level requires at least some planning, organizing, and controlling. Most students will soon be supervising one or more people and will need some leading skills. C. Even informal organizations such as fraternities, sororities, and intramural sports teams need to be managed.
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REVIEW QUESTIONS AND SUGGESTED ANSWERS 1. (Learning Objective 1) Define management. Management is defined as the process of administering and coordinating resources effectively and efficiently in order to achieve the organization’s goals. It involves the functions of planning, organizing, leading, and controlling. 2. (Learning Objective 2) Define the concept of management within an organizational context. Describe the major functions of the management process and why they are important. Organizations are made up of people whose efforts must be coordinated in order for the organization to achieve its goals. Management is the process of administering and coordinating resources effectively and efficiently in order to achieve those goals. The functions of management include planning, organizing, leading, and controlling. All of these four functions are important because they contribute to the accomplishment of the organization’s goals and objectives. Planning involves setting goals and defining the actions necessary to achieve those goals. Organizing involves determining the tasks to be done, who will do them, and how those tasks will be managed and coordinated. Leading involves motivating employees to accomplish the organization’s goals. Finally, controlling provides a mechanism for managers to identify deviations between planned and actual results. 3. (Learning Objective 3) Describe the roles of the manager as outlined by Mintzberg. Interpersonal Roles: • Figurehead: performing ceremonial duties • Leader: working with and through employees to meet organizational goals • Liaison: establishing working relationships with individuals both inside and outside the organization Informational Roles: • Monitor: gathering useful information from inside and outside the organization • Disseminator: distributing information as needed • Spokesperson: communicating information to individuals or groups outside of the unit or organization Decisional Roles: • Entrepreneur: initiating efforts to take advantage of opportunities • Disturbance handler: resolves conflicts • Resource allocator: determining which projects will receive organizational resources • Negotiator: negotiating with employees, suppliers, customers and work groups 4. (Learning Objective 4) Describe the responsibilities of the functional manager. Describe the responsibilities of the general manager. 7
Chapter 1: Management and Managers
A functional manager is responsible for a work group that is segmented according to function. For example, the manager of a marketing department is typically responsible for managing only the activities of the marketing department. A general manager is typically responsible for managing several different departments that are involved in different tasks. For example, the manager of a grocery store will be responsible for the produce department, the meat department, the bakery, and so on. Because functional managers are responsible for supervising employees who are working in the same area (e.g., marketing), they must have superior technical skills. General managers, who supervise employees across departments, need to have stronger human skills in order to coordinate these diverse groups. 5. (Learning Objective 5) Distinguish among the three levels of managers in terms of the skills they need and the activities in which they are involved. Top managers need well-developed conceptual skills because they engage in planning activities for the organization. Middle managers need well-developed human skills because they work with employees in their own departments and coordinate activities across departments. First-line managers need well-developed technical skills as they are most closely involved with the employees who actually produce the goods or services provided by their organization. 6. (Learning Objective 6) Identify major changes in the 21st century and explain how they will affect management of organizations. The major changes in the 21st century include the Internet and information technology, increasing globalization, increasing diversity, intellectual capital, and increased emphasis on ethics. The Internet and information technology allow businesses to easily expand from the limitations of a traditional “brick and mortar” market to an unlimited global market and provide for tighter links between suppliers and organizations. In addition, customers can obtain and share more information about products and services, increasing the bargaining power of customers. The Internet enables companies to access previously inaccessible geographic markets and allows organizations to more easily move segments of their companies to other countries. Globalization is expanding through increasing numbers of partnerships among businesses from various countries, and managers at all levels will need to understand the effects of operating in a global environment. Increasing workforce diversity makes achieving a strong organizational culture, group cohesiveness, and consensus on common goals more difficult. Structural intellectual capital refers to the accumulated knowledge and know-how of the organization represented by its patents, trademarks and copyrights, proprietary databases, and systems. Customer intellectual capital refers to the value of established relationships with
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Chapter 1: Management and Managers
customers and suppliers. Human intellectual capital refers to the cumulative skills and knowledge of people in the organization. As intellectual capital becomes more important, managers will need the skills necessary to manage that capital. Ethics has become a priority issue for many organizations as a result of the unusually large number of top-level managers who have faced allegations of unethical behavior in recent years. The Sarbanes-Oxley Act is a relatively new law that requires businesses to use certain accounting rules intended to prohibit financial abuses by managers. Managers must understand the importance of ethical behavior and promote a culture of ethical behavior within their organizations. 7. (Learning Objective 7) Explain the meaning of the overall framework presented in the chapter. Explain how the basic management functions interact. The overall framework presented in the chapter sets the context for the rest of the book and provides a context for how this course fits into students’ overall study of business and organizations. In addition, it provides a context for how other courses relate to the functions of management. Planning includes understanding markets and industry as well as the internal competencies, weaknesses, and operations of the organization to establish appropriate goals and strategies. Organizing and leading also require understanding internal competencies, weaknesses, and operations in order to support the achievement of organizational goals and strategies. Controlling involves analyzing the activities of the organization to determine whether its plans, structure, and leadership are actually achieving the established goals and when to take corrective action if necessary. 8. (Learning Objective 8) Explain why it is important to study management. It is important to study management because the basic functions that managers perform, the roles managers play, and the skills managers use apply to the management of all organizations. Every job at every level requires at least some planning, organizing, and controlling. In addition, most students will soon be supervising one or more people and will need some leading skills. Even informal organizations such as fraternities, sororities, and intramural sports teams need to be managed.
DISCUSSION QUESTIONS AND SUGGESTED ANSWERS 1. How is the increasing diversity of this nation influencing the student body at your university? Is the university administration taking proactive steps to ensure diversity on your campus? Does it maintain programs to ensure that diversity is celebrated rather than simply tolerated? With a small group, discuss how diversity in a team must be managed in order to have the diversity result in better team performance rather than cause difficulties with team performance.
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Chapter 1: Management and Managers
This question provides students the opportunity to assess the impact of diversity on an organization that they are familiar with—the college or university they are attending. You might suggest to your students that they contact their university’s Admissions Office or Office of Student Affairs to get information on the diversity of their student population and on diversity initiatives within the university. Ultimately, you want your students to answer the following three questions: Is diversity appreciated at their universities? Do the teachers and administrators do a good job of embracing diversity and bringing people from different backgrounds together in a positive manner? How can diversity be used to improve organizations rather than being a problem? 2. Discuss the overall framework for management that is presented in the chapter with one or more other students. Why does “everything” that an organization does have to be focused on the overall goals of the organization? This question provides students the opportunity to examine the overall framework presented in the chapter, which should reinforce their understanding of the importance of management and its interactions with all aspects of an organization. 3. Write a short paper in which you explain how and why the Internet will affect how businesses operate. This assignment is designed to encourage students to think about the many ways in which organizations, and the functions of managers within organizations, are affected by the Internet. Virtually every aspect of business operations is affected in some way. 4. Identify a company that you believe has a strong global presence and one that you believe does not. Compare and contrast these organizations. Present your assessment to several classmates orally. This exercise is intended to encourage students to think very seriously about the impact of globalization. Even an organization that does not have a global presence will be affected directly or indirectly by aspects of globalization. 5. Organize a small group of students in which each student comes from a different country. Discuss each student’s view about the importance of teamwork. Is each student’s view influenced by the country from which s/he came? The purpose of this exercise is to help students recognize and understand the importance of culture as it applies to perceptions of teamwork. For example, collectivist cultures view teamwork as much more important than do individualistic cultures. 6. With a small group of classmates, discuss the importance of leading in overall management. Should you appoint a leader of this discussion group before you begin? What happens if you do not? Does one emerge?
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Chapter 1: Management and Managers
Students will have the opportunity to discuss and observe the role of leadership in organizations by examining its importance in management and seeing what happens if they do or do not appoint a group leader.
THINKING CRITICALLY: DEBATE THE ISSUE Is Management Universal? This chapter suggests that management is universal—that the same basic functions are necessary in all organizations. The exercise asks students to form teams, half of which are to prepare arguments in support of the book’s assertion, and the other half of which are to prepare arguments refuting the book’s assertion. Web Resources Management Functions: {http://extension.osu.edu/~mgtexcel/Function.html} Management - Wikipedia: {http://en.wikipedia.org/wiki/Management} Farm and Ranch Business Management Functions: {http://trmep.tamu.edu/cg/factsheets/rm3-20.pdf}
EXPERIENTIAL EXERCISE 1.1 Test for Success This is an excellent exercise that provides students insight into when “things are going good” and “things are going poorly” in a person’s career. Part I illustrates the telltale signs of a career that is on the right track and the types of events that typically precede a major promotion. In contrast, Part II illustrates the signs of a career that is not on track, indicating that, for an employee in this predicament, it might be time to make a move.
ETHICS: TAKE A STAND Review the section of this chapter that discussed ethics. Select one of the managers mentioned, Dennis Kozlowski, Mark Swartz, Martha Stewart, Kenneth Lay, etc. Search for information concerning what has happened with that person. Was s/he found guilty in court? Did s/he serve prison time, etc.? Ask another person to do the same. Discussion Questions and Suggested Answers: 1. Is what this person did ethical or not? Be sure to explain why you believe it is ethical or not. As with all questions concerning ethics, there will be differences of opinion. Some may argue that the person was entitled to the “excesses” that were taken or that the actions taken 11
Chapter 1: Management and Managers
were not illegal and therefore not a problem. Others will take a more narrow approach, suggesting that any actions that may have harmed employees or other stakeholders financially or otherwise were unethical. 2. Is what this person did legal or not? Again, be sure to explain, and present evidence as to why you believe it is legal or not. Although it may appear on the surface that the question of legality should be easily resolved, even laws can be argued from a variety of viewpoints. After all, this is how lawyers make their money. Even so, the legality of specific actions is generally clearer than the issue of whether those actions are ethical, and this may make it more difficult in some cases for students to argue their position, and especially to present evidence in support of that position. 3. Did what this person did result in negative consequences for the owners of the company? If the person’s behavior and decisions did result in negative consequences for the owner, was that wrong? Students should be able to determine fairly easily whether the actions of the person they chose resulted in negative consequences for the owners of the company. The question of whether those negative consequences suggest that the behavior and/or decisions were wrong is more subjective, and students should be prepared to defend their positions.
END OF CHAPTER CASE A Day in the Life of Jeremy Jackson The case depicts a day in the life of Jeremy Jackson, a project manager for Solutions Unlimited, Inc. Jackson has a busy day that is filled with examples of managerial activities. The purpose of the case is to illustrate to students that the topics that are written about in the textbook and that we talk about in class are reflected in the day-to-day activities of busy and effective managers. Discussion Questions and Suggested Answers: 1. Identify the basic managerial functions in which Jeremy engaged during the day; i.e. planning, organizing, leading, and controlling. Jeremy began his day by checking his electronic planner to see what had been planned for that day and started to plan the agenda for a meeting later that morning. Jeremy engages indirectly in controlling activities through the meeting at which the members discuss whether their timeline and goals can be achieved. Jeremy then engages in leading by telling Greg that he trusts his knowledge and will defer to his judgment on the project timetable. At lunch with his manager, Jeremy engages in leading by quickly adapting to the concerns of the partner and discussing the project’s merits and feasibility. He engages in planning again when he outlines his schedule for the next day.
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2. When did Jeremy act in (1) interpersonal roles, (2) informational roles, and (3) decisional roles? There are numerous examples of Jeremy acting in each of these roles throughout the day. Ask students to identify them. 3. Did Jeremy spend his time appropriately? If so, in what ways? How might he have adjusted what he did to be more effective? Jeremy may have tried to manage his time appropriately, but many events in a manager’s day tend to be unplanned, or at least difficult to control. He spent too much time on the phone with his manager when he should have been finalizing the meeting agenda. He did not manage the meeting well, wasting the members’ time with an extended argument over the project timeline. He also spent two hours at lunch explaining the project’s merits and feasibility, which prevented him from running the errands he had planned. VIDEO GUIDE Timbuk2—The Art of Management The story of Timbuk2’s transformation centers on a change in management philosophy as well as implementation of new business processes. Spearheaded by Mark Dwight, who became CEO and president in 2002, the revitalized Timbuk2 was able to expand product lines and move into new markets. Dwight is a good example of “getting things done through people” and demonstrates how a top executive must coordinate resources to accomplish Timbuk2’s goals. Discussion Questions and Suggested Answers: 1. How well does Dwight fulfill a manager’s four primary functions of planning, organizing, leading, and controlling? Which of the traits of Business Week’s “best” managers does he display? Cite specific examples from the case and the video. Mark Dwight successfully fulfills the manager’s four main functions: • Planning: Dwight analyzed the current situation at Timbuk2 and then developed a clear vision for company. He prepared a 5-year plan with goals and strategy to improve efficiency and an operational plan to guide company’s shorter-term activities. • Organizing: Once Dwight recognized the shortcomings of the current production methods, he determined that the company should shift to build-to-stock processes to improve efficiency. He also hired additional staff to support the company’s expansion program and decided to go offshore to manufacture more complicated products while keeping design and one factory local. • Leading: Dwight had the vision to see how Timbuk2 could add products while retaining its cult status. He also guided the company through the difficult transition to a new management style and production methodology. At the same time, he understood the importance of motivating employees and creating a “fun-loving culture” along with a more disciplined
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•
approach. He acknowledges the importance of idea sharing and giving employees a say, as shown in the Tag Junkie meeting. Controlling: Dwight implemented financial controls and instituted daily meetings where operations staff monitors progress towards specific goals.
Dwight appears to display most of the traits of Business Week’s best managers: vision, goals, competitive economy, strategy, customer-driven, smart marketing, increasing strength in foreign markets, innovation, strong diverse leadership, embraces technology, tight lid on costs, and increasing profitability are common. For example, deciding to move some production offshore contributed to cost control and profitability, while keeping the San Francisco plant for build-tostock and custom designs of the basic messenger bags satisfied customer needs and provided quick turn-around time. Adding online ordering capability to the redesigned Timbuk2 Web site was an effective use of technology. 2. “I am the experienced executive here, and it's my charter to manage the company. It's not a democracy,” says Mark Dwight. How does this statement sum up his approach to management? Is it an effective one? While this statement may seem harsh, Dwight recognized that Timbuk2 needed more managerial discipline and displayed solid leadership in implementing his vision for the company. The looser, consensus-driven style of the founders was no longer able serving the company’s needs and was in fact impeding its growth. At the same time, he understands that managing does not mean dictating how everything must be done. He listens to other ideas and consults with key employees before making an informed decision. He was not afraid to make changes that were unpopular with many existing employees—changes that probably saved the company. 3. Dwight faced considerable resistance from the existing managers when he assumed control of Timbuk2 and wanted to move production of new products overseas. Describe several ways Dwight can use the different management roles to smooth the transition and win over these employees. Dwight can use managerial roles effectively to convince his employees of the benefits of outsourcing some production. Dwight should focus on the leadership role to bring together groups from different departments to discuss the major changes and how they will affect each function. By soliciting input he will motivate employees to work with the new systems rather than fight them. Providing detailed cost analyses (monitoring and disseminating—informational roles) will demonstrate to his employees the advantages of moving to overseas manufacturing, such as larger, more cost-effective production runs and cost savings, which will result in improved profitability. Dwight should use the negotiator aspect of the decisional role to gain employees’ support for the entrepreneurial decision to go overseas, and in his role as a disturbance handler minimize conflict 4. Based on the Tag Junkie meeting shown in the video, evaluate Dwight’s leadership abilities.
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The Tag Junkie product development brainstorming session demonstrated Dwight’s good leadership skills, such as vision, creativity, and organization. He achieved buy-in from the employees most involved in the project. He was willing to listen and to defer to others with good ideas, asking questions to solicit input about name, design, product characteristics, target market, and more. At the end of the meeting, employees had a clearer vision of the project, its timeline, and the next steps in the launch process. He made his employees feel valued and included in decision making.
15
CHAPTER 1 MANAGEMENT AND MANAGERS LEARNING OBJECTIVES 1. 2. 3. 4. 5.
Define what management is. Identify and explain the basic managerial functions. Understand the roles that managers play. Discuss the scope of responsibilities of functional and general managers. Describe the three levels of managers in terms of the skills they need and the activities in which they are involved. 6. Identify major changes in the 21st century and explain how they will affect management of organizations. 7. Explain the interactions between all of the major functions that managers perform; the interactions between planning, organizing, leading, and controlling. 8. Explain why it is important to study management.
CHAPTER OVERVIEW This introductory chapter provides an overview of the functions of management, the roles that managers play in organizations, and the types of challenges that managers will face in the twenty-first century. In addition, the skills needed at different levels of management are introduced and discussed, and the differences between functional and general managers are explained. The chapter also includes a discussion on how the manager’s job will change as a result of changes in the business environment during the 21st century. The major factors affecting the way in which organizations are managed are expected to be (1) the Internet and information technology, (2) increasing globalization, (3) increasing diversity, (4) intellectual capital, and (5) increased emphasis on ethics. The chapter concludes with an overall framework for learning about management and an explanation of why the study of management is important.
PEDAGOGY GRID Chapter Boxes
Main Points
Facing the Challenge/Meeting the Challenge:
•
Can Anyone Save Nissan Motor Co., Ltd.? / Carlos Ghosn, Star of Nissan and the Auto Industry
•
1
Nissan was getting deeper and deeper into trouble throughout the 1990s, with very high debt and too many brands that were not differentiated from each other or their competitors. Cutting costs and insisting on accountability enabled Carlos Ghosn to
Chapter 1: Management and Managers
save Nissan. Leaders in Action: The Avon Lady • Andrea Jung took over a company in serious trouble and revitalized it by engaging every major principle of good management. At the Forefront: Managing in the 21st Century • Five factors will have special importance in the 21st century—Internet and information technology, increasing globalization, increasing diversity, intellectual capital, and ethics. Now Apply It: Are You Ready to Lead in the • Check to see if you have skills that will be 21st Century? needed to be a successful leader.
LECTURE NOTES I. What is Management? A. Management is defined as the process of administering and coordinating resources effectively and efficiently in an effort to achieve the goals of the organization. Mary Parker Follett referred to it as “the art of getting things done through people.” 1. Effectiveness is defined as the degree to which organizational goals are achieved. 2. Efficiency refers to using the fewest inputs (people, money, etc.) to generate a given output. 3. An organization is a group of individuals who work together toward a common goal. Organizations can be for-profit or not-for-profit. Organizations are made up of people whose efforts must be coordinated in order for the organization to achieve its goals. II. What Managers Do A. Planning: Setting goals and defining the actions necessary to achieve those goals in light of the situation. B. Organizing: Determining the tasks to be done, who will do them, and how they will be managed and coordinated. C. Leading: Inspiring the members of the organization to work toward the accomplishment of the organization’s goals. D. Controlling: Establishing and understanding what is required to achieve goals, measuring actual performance, identifying deviations between planned and actual results, and taking corrective action as necessary.
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III. Roles of Managers A. Role refers to the behavior that is expected in a particular situation. 1. Interpersonal roles: The manager’s responsibility for managing relationships with organizational members and other constituents a. figurehead, leader, liaison 2. Informational roles: The manager’s responsibility for ensuring that the people with whom they work have sufficient information to do their jobs effectively b. monitor, disseminator, spokesperson 3. Decisional roles: The manager’s responsibility for processing information and reaching decisions c. entrepreneur, disturbance handler, resource allocator, negotiator IV. Managerial Scope, Levels and Skills A. Scope of responsibility: the extent and nature of the manager’s job in terms of his or her focus duties and work relationships 1. Functional managers are responsible for work groups that are segmented according to function. Examples: Finance Manager, Production Manager. Functional managers typically report to a general manager 2. General managers are responsible for supervising several different departments and coordinating their end results. Examples: Regional Manager, Business Unit Manager B. Levels of Management and Relative Importance of Skills Refer to Figures 1.3 and 1.4. 1. Managers at all levels of the organization engage in planning, organizing, leading, and controlling, but managers at different levels tend to be more or less involved in certain types of activities that require different kinds of skills. a. First-line managers supervise individuals who are directly responsible for producing the organization’s products and services. They carry titles such as production supervisor, line manager, section chief, or account manager. Technical skills tend to be most important for first-line managers. These skills involve the knowledge and use of tools, techniques, processes, and procedures specific to a particular field. First-line managers also use human skills and conceptual skills.
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b. Middle managers supervise first-line managers or staff departments. They have titles such as department head, product manager, or marketing manager. Human skills are most important for middle managers because they must coordinate the work of many people and groups of people. These skills involve managing group dynamics, encouraging cooperation, conflict resolution, and extensive communication efforts. Middle managers also use technical skills and conceptual skills. c. Top-level managers provide the strategic direction for the organization. They carry titles such as chief executive officer (CEO), president, chief operations officer (COO), or executive vice-president. Conceptual skills are used by top-level managers to set the strategic direction for the organization. These skills enable top-level managers to analyze information about the external and internal environments, to appropriately structure their organizations, and to develop distinctive personalities or cultures for their organizations. Top-level managers also need human and technical skills. V. Managing in the 21st Century. A. The Internet and Information Technology 1. E-business (i.e. doing business via the Internet) is expanding and improving its profitability. a. Traditional “brick and mortar” businesses are adding Internet service to complement their existing businesses. b. Rapid and extensive information exchange results in tighter links between suppliers and organizations. c. Customers can get more information about products and services, enabling more effective comparison shopping. d. Blogs provide personal information about products and services, both positive and negative. 2. All of these factors increase the bargaining power of customers and provide greatly increased opportunities for global business. B. Increasing Globalization 1. The Internet enables companies to access previously inaccessible geographic markets and allows organizations to more easily move segments of their companies to other countries.
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2. Globalization is expanding through increasing numbers of partnerships among businesses from various countries. 3. Managers at all levels will need to understand the effects of operating in a global environment. C. Increasing Diversity 1. Diversity refers to the heterogeneity of the population and workforce, mostly in terms of gender and race. a. A diverse workforce makes achieving a strong organizational culture, group cohesiveness, and consensus on common goals more difficult. D. Intellectual Capital 1. Intellectual capital refers to the total of an organization’s knowledge. According to Thomas Steward, there are three types of intellectual capital. a. Structural capital: The accumulated knowledge and know-how of the organization represented by its patents, trademarks and copyrights, proprietary databases, and systems b. Customer capital: The value of established relationships with customers and suppliers c. Human capital: The cumulative skills and knowledge of people in the organization E. Ethics 1. An unusually large number of top-level managers have faced allegations of unethical behavior in recent years. The Sarbanes-Oxley Act is a relatively new law that requires businesses to use certain accounting rules intended to prohibit financial abuses by managers. VI. An Overall Framework A. Planning 1. Planning must be done to establish the goals and set the strategy for achieving those goals. Planning includes understanding the markets and industry (external environment) and the competencies, weaknesses, and operations of the organization (internal environment).
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B. Organizing and Leading 1. Understanding the state of organizational design, authority and responsibility, reporting relationships, communicating, human behavior, and leadership must all support the overall strategy of the organization. C. Controlling
Refer to Figure 1.5.
1. Everything that is done in the organization must be evaluated and guided so that it is directed toward achieving the overall goals of the organization. 2. Feedback is necessary in order to understand what has been done so far. Feedback allows managers to take corrective action when necessary to ensure achievement of organizational goals. VII.Why Study Management? A. The basic functions that managers perform, the roles managers play, and the skills managers use apply to the management of all organizations. B. Every job at every level requires at least some planning, organizing, and controlling. Most students will soon be supervising one or more people and will need some leading skills. C. Even informal organizations such as fraternities, sororities, and intramural sports teams need to be managed.
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REVIEW QUESTIONS AND SUGGESTED ANSWERS 1. (Learning Objective 1) Define management. Management is defined as the process of administering and coordinating resources effectively and efficiently in order to achieve the organization’s goals. It involves the functions of planning, organizing, leading, and controlling. 2. (Learning Objective 2) Define the concept of management within an organizational context. Describe the major functions of the management process and why they are important. Organizations are made up of people whose efforts must be coordinated in order for the organization to achieve its goals. Management is the process of administering and coordinating resources effectively and efficiently in order to achieve those goals. The functions of management include planning, organizing, leading, and controlling. All of these four functions are important because they contribute to the accomplishment of the organization’s goals and objectives. Planning involves setting goals and defining the actions necessary to achieve those goals. Organizing involves determining the tasks to be done, who will do them, and how those tasks will be managed and coordinated. Leading involves motivating employees to accomplish the organization’s goals. Finally, controlling provides a mechanism for managers to identify deviations between planned and actual results. 3. (Learning Objective 3) Describe the roles of the manager as outlined by Mintzberg. Interpersonal Roles: • Figurehead: performing ceremonial duties • Leader: working with and through employees to meet organizational goals • Liaison: establishing working relationships with individuals both inside and outside the organization Informational Roles: • Monitor: gathering useful information from inside and outside the organization • Disseminator: distributing information as needed • Spokesperson: communicating information to individuals or groups outside of the unit or organization Decisional Roles: • Entrepreneur: initiating efforts to take advantage of opportunities • Disturbance handler: resolves conflicts • Resource allocator: determining which projects will receive organizational resources • Negotiator: negotiating with employees, suppliers, customers and work groups 4. (Learning Objective 4) Describe the responsibilities of the functional manager. Describe the responsibilities of the general manager. 7
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A functional manager is responsible for a work group that is segmented according to function. For example, the manager of a marketing department is typically responsible for managing only the activities of the marketing department. A general manager is typically responsible for managing several different departments that are involved in different tasks. For example, the manager of a grocery store will be responsible for the produce department, the meat department, the bakery, and so on. Because functional managers are responsible for supervising employees who are working in the same area (e.g., marketing), they must have superior technical skills. General managers, who supervise employees across departments, need to have stronger human skills in order to coordinate these diverse groups. 5. (Learning Objective 5) Distinguish among the three levels of managers in terms of the skills they need and the activities in which they are involved. Top managers need well-developed conceptual skills because they engage in planning activities for the organization. Middle managers need well-developed human skills because they work with employees in their own departments and coordinate activities across departments. First-line managers need well-developed technical skills as they are most closely involved with the employees who actually produce the goods or services provided by their organization. 6. (Learning Objective 6) Identify major changes in the 21st century and explain how they will affect management of organizations. The major changes in the 21st century include the Internet and information technology, increasing globalization, increasing diversity, intellectual capital, and increased emphasis on ethics. The Internet and information technology allow businesses to easily expand from the limitations of a traditional “brick and mortar” market to an unlimited global market and provide for tighter links between suppliers and organizations. In addition, customers can obtain and share more information about products and services, increasing the bargaining power of customers. The Internet enables companies to access previously inaccessible geographic markets and allows organizations to more easily move segments of their companies to other countries. Globalization is expanding through increasing numbers of partnerships among businesses from various countries, and managers at all levels will need to understand the effects of operating in a global environment. Increasing workforce diversity makes achieving a strong organizational culture, group cohesiveness, and consensus on common goals more difficult. Structural intellectual capital refers to the accumulated knowledge and know-how of the organization represented by its patents, trademarks and copyrights, proprietary databases, and systems. Customer intellectual capital refers to the value of established relationships with
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customers and suppliers. Human intellectual capital refers to the cumulative skills and knowledge of people in the organization. As intellectual capital becomes more important, managers will need the skills necessary to manage that capital. Ethics has become a priority issue for many organizations as a result of the unusually large number of top-level managers who have faced allegations of unethical behavior in recent years. The Sarbanes-Oxley Act is a relatively new law that requires businesses to use certain accounting rules intended to prohibit financial abuses by managers. Managers must understand the importance of ethical behavior and promote a culture of ethical behavior within their organizations. 7. (Learning Objective 7) Explain the meaning of the overall framework presented in the chapter. Explain how the basic management functions interact. The overall framework presented in the chapter sets the context for the rest of the book and provides a context for how this course fits into students’ overall study of business and organizations. In addition, it provides a context for how other courses relate to the functions of management. Planning includes understanding markets and industry as well as the internal competencies, weaknesses, and operations of the organization to establish appropriate goals and strategies. Organizing and leading also require understanding internal competencies, weaknesses, and operations in order to support the achievement of organizational goals and strategies. Controlling involves analyzing the activities of the organization to determine whether its plans, structure, and leadership are actually achieving the established goals and when to take corrective action if necessary. 8. (Learning Objective 8) Explain why it is important to study management. It is important to study management because the basic functions that managers perform, the roles managers play, and the skills managers use apply to the management of all organizations. Every job at every level requires at least some planning, organizing, and controlling. In addition, most students will soon be supervising one or more people and will need some leading skills. Even informal organizations such as fraternities, sororities, and intramural sports teams need to be managed.
DISCUSSION QUESTIONS AND SUGGESTED ANSWERS 1. How is the increasing diversity of this nation influencing the student body at your university? Is the university administration taking proactive steps to ensure diversity on your campus? Does it maintain programs to ensure that diversity is celebrated rather than simply tolerated? With a small group, discuss how diversity in a team must be managed in order to have the diversity result in better team performance rather than cause difficulties with team performance.
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This question provides students the opportunity to assess the impact of diversity on an organization that they are familiar with—the college or university they are attending. You might suggest to your students that they contact their university’s Admissions Office or Office of Student Affairs to get information on the diversity of their student population and on diversity initiatives within the university. Ultimately, you want your students to answer the following three questions: Is diversity appreciated at their universities? Do the teachers and administrators do a good job of embracing diversity and bringing people from different backgrounds together in a positive manner? How can diversity be used to improve organizations rather than being a problem? 2. Discuss the overall framework for management that is presented in the chapter with one or more other students. Why does “everything” that an organization does have to be focused on the overall goals of the organization? This question provides students the opportunity to examine the overall framework presented in the chapter, which should reinforce their understanding of the importance of management and its interactions with all aspects of an organization. 3. Write a short paper in which you explain how and why the Internet will affect how businesses operate. This assignment is designed to encourage students to think about the many ways in which organizations, and the functions of managers within organizations, are affected by the Internet. Virtually every aspect of business operations is affected in some way. 4. Identify a company that you believe has a strong global presence and one that you believe does not. Compare and contrast these organizations. Present your assessment to several classmates orally. This exercise is intended to encourage students to think very seriously about the impact of globalization. Even an organization that does not have a global presence will be affected directly or indirectly by aspects of globalization. 5. Organize a small group of students in which each student comes from a different country. Discuss each student’s view about the importance of teamwork. Is each student’s view influenced by the country from which s/he came? The purpose of this exercise is to help students recognize and understand the importance of culture as it applies to perceptions of teamwork. For example, collectivist cultures view teamwork as much more important than do individualistic cultures. 6. With a small group of classmates, discuss the importance of leading in overall management. Should you appoint a leader of this discussion group before you begin? What happens if you do not? Does one emerge?
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Students will have the opportunity to discuss and observe the role of leadership in organizations by examining its importance in management and seeing what happens if they do or do not appoint a group leader.
THINKING CRITICALLY: DEBATE THE ISSUE Is Management Universal? This chapter suggests that management is universal—that the same basic functions are necessary in all organizations. The exercise asks students to form teams, half of which are to prepare arguments in support of the book’s assertion, and the other half of which are to prepare arguments refuting the book’s assertion. Web Resources Management Functions: {http://extension.osu.edu/~mgtexcel/Function.html} Management - Wikipedia: {http://en.wikipedia.org/wiki/Management} Farm and Ranch Business Management Functions: {http://trmep.tamu.edu/cg/factsheets/rm3-20.pdf}
EXPERIENTIAL EXERCISE 1.1 Test for Success This is an excellent exercise that provides students insight into when “things are going good” and “things are going poorly” in a person’s career. Part I illustrates the telltale signs of a career that is on the right track and the types of events that typically precede a major promotion. In contrast, Part II illustrates the signs of a career that is not on track, indicating that, for an employee in this predicament, it might be time to make a move.
ETHICS: TAKE A STAND Review the section of this chapter that discussed ethics. Select one of the managers mentioned, Dennis Kozlowski, Mark Swartz, Martha Stewart, Kenneth Lay, etc. Search for information concerning what has happened with that person. Was s/he found guilty in court? Did s/he serve prison time, etc.? Ask another person to do the same. Discussion Questions and Suggested Answers: 1. Is what this person did ethical or not? Be sure to explain why you believe it is ethical or not. As with all questions concerning ethics, there will be differences of opinion. Some may argue that the person was entitled to the “excesses” that were taken or that the actions taken 11
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were not illegal and therefore not a problem. Others will take a more narrow approach, suggesting that any actions that may have harmed employees or other stakeholders financially or otherwise were unethical. 2. Is what this person did legal or not? Again, be sure to explain, and present evidence as to why you believe it is legal or not. Although it may appear on the surface that the question of legality should be easily resolved, even laws can be argued from a variety of viewpoints. After all, this is how lawyers make their money. Even so, the legality of specific actions is generally clearer than the issue of whether those actions are ethical, and this may make it more difficult in some cases for students to argue their position, and especially to present evidence in support of that position. 3. Did what this person did result in negative consequences for the owners of the company? If the person’s behavior and decisions did result in negative consequences for the owner, was that wrong? Students should be able to determine fairly easily whether the actions of the person they chose resulted in negative consequences for the owners of the company. The question of whether those negative consequences suggest that the behavior and/or decisions were wrong is more subjective, and students should be prepared to defend their positions.
END OF CHAPTER CASE A Day in the Life of Jeremy Jackson The case depicts a day in the life of Jeremy Jackson, a project manager for Solutions Unlimited, Inc. Jackson has a busy day that is filled with examples of managerial activities. The purpose of the case is to illustrate to students that the topics that are written about in the textbook and that we talk about in class are reflected in the day-to-day activities of busy and effective managers. Discussion Questions and Suggested Answers: 1. Identify the basic managerial functions in which Jeremy engaged during the day; i.e. planning, organizing, leading, and controlling. Jeremy began his day by checking his electronic planner to see what had been planned for that day and started to plan the agenda for a meeting later that morning. Jeremy engages indirectly in controlling activities through the meeting at which the members discuss whether their timeline and goals can be achieved. Jeremy then engages in leading by telling Greg that he trusts his knowledge and will defer to his judgment on the project timetable. At lunch with his manager, Jeremy engages in leading by quickly adapting to the concerns of the partner and discussing the project’s merits and feasibility. He engages in planning again when he outlines his schedule for the next day.
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2. When did Jeremy act in (1) interpersonal roles, (2) informational roles, and (3) decisional roles? There are numerous examples of Jeremy acting in each of these roles throughout the day. Ask students to identify them. 3. Did Jeremy spend his time appropriately? If so, in what ways? How might he have adjusted what he did to be more effective? Jeremy may have tried to manage his time appropriately, but many events in a manager’s day tend to be unplanned, or at least difficult to control. He spent too much time on the phone with his manager when he should have been finalizing the meeting agenda. He did not manage the meeting well, wasting the members’ time with an extended argument over the project timeline. He also spent two hours at lunch explaining the project’s merits and feasibility, which prevented him from running the errands he had planned. VIDEO GUIDE Timbuk2—The Art of Management The story of Timbuk2’s transformation centers on a change in management philosophy as well as implementation of new business processes. Spearheaded by Mark Dwight, who became CEO and president in 2002, the revitalized Timbuk2 was able to expand product lines and move into new markets. Dwight is a good example of “getting things done through people” and demonstrates how a top executive must coordinate resources to accomplish Timbuk2’s goals. Discussion Questions and Suggested Answers: 1. How well does Dwight fulfill a manager’s four primary functions of planning, organizing, leading, and controlling? Which of the traits of Business Week’s “best” managers does he display? Cite specific examples from the case and the video. Mark Dwight successfully fulfills the manager’s four main functions: • Planning: Dwight analyzed the current situation at Timbuk2 and then developed a clear vision for company. He prepared a 5-year plan with goals and strategy to improve efficiency and an operational plan to guide company’s shorter-term activities. • Organizing: Once Dwight recognized the shortcomings of the current production methods, he determined that the company should shift to build-to-stock processes to improve efficiency. He also hired additional staff to support the company’s expansion program and decided to go offshore to manufacture more complicated products while keeping design and one factory local. • Leading: Dwight had the vision to see how Timbuk2 could add products while retaining its cult status. He also guided the company through the difficult transition to a new management style and production methodology. At the same time, he understood the importance of motivating employees and creating a “fun-loving culture” along with a more disciplined
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•
approach. He acknowledges the importance of idea sharing and giving employees a say, as shown in the Tag Junkie meeting. Controlling: Dwight implemented financial controls and instituted daily meetings where operations staff monitors progress towards specific goals.
Dwight appears to display most of the traits of Business Week’s best managers: vision, goals, competitive economy, strategy, customer-driven, smart marketing, increasing strength in foreign markets, innovation, strong diverse leadership, embraces technology, tight lid on costs, and increasing profitability are common. For example, deciding to move some production offshore contributed to cost control and profitability, while keeping the San Francisco plant for build-tostock and custom designs of the basic messenger bags satisfied customer needs and provided quick turn-around time. Adding online ordering capability to the redesigned Timbuk2 Web site was an effective use of technology. 2. “I am the experienced executive here, and it's my charter to manage the company. It's not a democracy,” says Mark Dwight. How does this statement sum up his approach to management? Is it an effective one? While this statement may seem harsh, Dwight recognized that Timbuk2 needed more managerial discipline and displayed solid leadership in implementing his vision for the company. The looser, consensus-driven style of the founders was no longer able serving the company’s needs and was in fact impeding its growth. At the same time, he understands that managing does not mean dictating how everything must be done. He listens to other ideas and consults with key employees before making an informed decision. He was not afraid to make changes that were unpopular with many existing employees—changes that probably saved the company. 3. Dwight faced considerable resistance from the existing managers when he assumed control of Timbuk2 and wanted to move production of new products overseas. Describe several ways Dwight can use the different management roles to smooth the transition and win over these employees. Dwight can use managerial roles effectively to convince his employees of the benefits of outsourcing some production. Dwight should focus on the leadership role to bring together groups from different departments to discuss the major changes and how they will affect each function. By soliciting input he will motivate employees to work with the new systems rather than fight them. Providing detailed cost analyses (monitoring and disseminating—informational roles) will demonstrate to his employees the advantages of moving to overseas manufacturing, such as larger, more cost-effective production runs and cost savings, which will result in improved profitability. Dwight should use the negotiator aspect of the decisional role to gain employees’ support for the entrepreneurial decision to go overseas, and in his role as a disturbance handler minimize conflict 4. Based on the Tag Junkie meeting shown in the video, evaluate Dwight’s leadership abilities.
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The Tag Junkie product development brainstorming session demonstrated Dwight’s good leadership skills, such as vision, creativity, and organization. He achieved buy-in from the employees most involved in the project. He was willing to listen and to defer to others with good ideas, asking questions to solicit input about name, design, product characteristics, target market, and more. At the end of the meeting, employees had a clearer vision of the project, its timeline, and the next steps in the launch process. He made his employees feel valued and included in decision making.
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