Content: Starting Up A Business Introduction To Management Business And Its Environment Size And Growth Of Business

Part 1 Content: Starting up a business Introduction to Management Business and its environment  Size and growth of business

Starting up a Business

Introduction Factors of Production Land Labor Capital Entrepreneur

Business Plan It’s a working document which

helps the owner to monitor current operations, plan the future of the business and to evaluate the actions necessary for the success of the business

In essence it is a statement of Current situation (a situational audit) Where the business is

going?(objective) How it will get there? (strategy) The financial implication of the proposed activities The viability of the proposal

Content of a business plan Summary A description of the business The product or service The market Marketing plan  Pricing policy  Advertising & other form of promotion  Selling and distribution  Product launch and product development Manufacturing and Operation plan Financial Information

Choosing the right Location Choice of the region Choice of particular site within the region Questions to consider Availability of material Cost and availability of suitable labor Location of the market Transport cost Cost of the land Government grants or regulation (If any)

Option for starting up a business Buying Renting Work from Home E-business / virtual existence Franchise

Introduction to Management Objectives: To explain the functional areas of the management Identify and analyze the tasks that are common to all managers Analyze the process of decision making

The Functional Areas of Management Personnel Functions  Employee resourcing  Training and development  Compensation & Pay  Employee relations  Welfare Production Function  Purchasing & inventories R & D  Production Planning  Operations  Quality Control  Distribution

Marketing Function  Researching the market  Product Development  Development of strategies Accounting & Finance

Function  Financial accounting  Cost accounting  Management

accounting

Management Functions and Process  most

useful manager’s job  Planning

conceptualization

of

the

- defining goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate activities  Organizing - determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are made  Leading - directing and motivating all involved parties and dealing with employee behavior issues  Controlling - monitoring activities to ensure

The Decision-Making Process Problem Identification

“My salespeople need new computers”

Analysis of Alternatives Acer Compaq Gateway HP Micromedia NEC Sony Toshiba

Identification of Decision Criteria Price Weight Warranty Screen type Reliability Screen size

Selection of an Alternative Acer Compaq Gateway HP Micromedia NEC Sony Toshiba

Allocation of Weights to Criteria

Reliability 10 Screen size 8 Warranty 5 Weight 5 Price 4 Screen type 3

Development of Alternatives Acer Compaq Gateway HP Micromedia NEC Sony Toshiba

Implementation of an Alternative

Gateway

Evaluation of Decision Effectiveness

Decisions in the Management Functions

© Prentice Hall, 2002

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The Manager As Decision Maker Rational Decision Making  decisions are consistent, value-maximizing choices

within specified constraints  managers assumed to make rational decisions  Assumptions of Rationality - decision maker would:

be objective and logical  carefully define a problem  have a clear and specific goal  select the alternative that maximizes the likelihood of achieving the goal  make decision in the firm’s best economic interests 

 managerial

© Prentice Hall, 2002

decision making seldom meets all the tests 6-15

Rationality Single, welldefined goal is to be achieved All alternatives and consequences are known Preferences are clear

Preferences are constant and stable © Prentice Hall, 2002

Problem is clear and unambiguous

Rational Decision Making

Final choice will maximize payoff

No time or cost constraints exist 6-16

The Manager As Decision Maker (cont.)  Bounded Rationality

behave rationally within the parameters of

a simplified decision-making process that is limited by an individual’s ability to process information satisfice - accept solutions that are “good enough” escalation of commitment - increased commitment to a previous decision despite evidence that it may have been wrong refusal to admit that the initial decision © Prentice Hall, 2002 6-17

The Manager As Decision Maker (cont.) Role of Intuition intuitive decision making -

subconscious process of making decisions on the basis of experience and accumulated judgment does not rely on a systematic or thorough analysis of the problem generally complements a © Prentice Hall, 2002 6-18 rational analysis

What Is Intuition? Decisions based on ethical values or culture

Values or ethics-based decisions

Subconscious mental processing Decisions based on subconscious data © Prentice Hall, 2002

Decisions based on experience

Experiencedbased decisions

Intuition

Decisions based on feelings and emotions

Affectinitiated decisions

Cognitivebased decisions Decisions based on skills, knowledge, or training 6-19

The Manager As A Decision Maker (cont.) Types of Problems and Decisions  Well-Structured Problems - straightforward,

familiar, and easily defined  Programmed Decisions - used to address structured problems minimize the need for managers to use discretion  facilitate organizational efficiency 

 procedure

- series of interrelated sequential steps used to respond to a structured problem  rule - explicit statement of what to do or not to do  policy - guidelines or parameters for decision making © Prentice Hall, 2002

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The Manager As A Decision Maker (cont.)  Types of Problems and Decisions (cont.)  Poorly-Structured Problems - new, unusual problems for which information is ambiguous or incomplete  Nonprogrammed Decisions - used to address poorly- structured problems  produce

a custom-made response  more frequent among higher-level managers  few decisions in the real world are either fully

programmed or nonprogrammed © Prentice Hall, 2002

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Decisions, And Level In The Organization Ill-structured

Type of Problem

Top

Nonprogrammed Decisions

Level in Organization

Programmed Decisions Well-structured © Prentice Hall, 2002

Lower 6-22

The Manager As A Decision Maker (cont.)  Decision-Making Conditions

Certainty - outcome of every

alternative is known idealistic rather than realistic Risk - able to estimate the probability of outcomes stemming from each alternative expected value - the conditional return from each possible outcome multiply expected revenue from each outcome by the probability © Prentice Hall, 2002of each outcome 6-23

Expected Value for Revenues from the Addition of One Ski Lift

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The Manager As A Decision Maker (cont.)  Decision-Making Conditions (cont.)

 Uncertainty - not certain about outcomes and

unable to estimate probabilities  psychological orientation of decision maker  maximax choice - optimistic  maximizing the maximum possible payoff  maximin choice - pessimistic  maximizing the minimum possible payoff  minimax - minimize the maximum “regret”

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The Manager As A Decision Maker (cont.) Decision-Making Styles  two dimensions define the approach to decision

making  way

of thinking - differs from rational to intuitive  tolerance for ambiguity - differs from a need for consistency and order to the ability to process many thoughts simultaneously  define four decision-making styles  Directive - fast, efficient, and logical  Analytic - careful and able to adapt or cope with new situations  Conceptual - able to find creative solutions  Behavioral - seek acceptance of decisions © Prentice Hall, 2002

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Decision-Making Styles Tolerance for Ambiguity

High

Analytic

Conceptual

Directive

Behavioral

Low Rational © Prentice Hall, 2002

Way of Thinking

Intuitiv e 6-27

Managing Workforce Diversity Diversity in Decision Making  Advantages - diverse employees:  provide fresh perspectives  offer differing interpretations of problem definition  increase the likelihood of creative and unique solutions  Disadvantages - diverse employees:  require

more time to reach a decision  may have problems of communication  may create a more complex, confusing, and ambiguous decision-making process  may have difficulty in reaching agreement

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Overview Of Managerial Decision-Making Approach Decision Making • Rationality • Bounded Rationality • Intuition

Types of Problems and Decisions • Well-structured - programmed • Poorly structured - nonprogrammed

Decision-Making Conditions • Certainty • Risk • Uncertainty © Prentice Hall, 2002

Decision-Making Process

Decision Maker Style • Directive • Analytic • Conceptual • Behavioral

Decision • Choose best alternative - maximizing - satisficing • Implementing • Evaluating

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