Business Forum
CHAPTER 1 Managing Effectively in a Global World
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Learning Objectives
1 Describe the four functions of management.
2 Understand what managers at different organizational levels do.
3 Define the skills needed to be an effective manager.
4 Summarize the major challenges facing managers today.
5 Recognize how successful managers achieve competitive advantage.
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Almost everyone has worked for a good supervisor, played for a good coach, or taken a class with a good professor. What made these managers so effective? Was it because they always had a plan and set goals to guide their people toward accomplishing what needed to get done? Maybe it had something to do with being organized and always prepared. Or maybe these managers were effective because of the way they motivated, inspired, and led their employees, players, or students. Of course, they were probably good at keeping things under control and making changes when needed.
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Management
Management
The process of working with people and resources to accomplish organizational goals
Efficiency, effectiveness
Copyright AP Images
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To be effective is to achieve organizational goals.
To be efficient is to achieve goals with minimal waste of resources—that is, to make the best possible use of money,
time, materials, and people.
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The Four Functions of Management
Planning
Specifying goals and deciding the actions needed to achieve those goals
Organizing
Assembling and coordinating the resources needed to achieve goals
Leading
Stimulating people to be high performers
Controlling
Monitoring and reacting to performance
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There are four functions of management: planning, organizing, leading and controlling. All managers regardless of rank and title will fulfill these functions in some manner.
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Exhibit 1.1 Examples of Planning Activities
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As Exhibit 1.1 illustrates, planning activities include analyzing current situations, anticipating the future, determining
objectives, deciding on what types of activities the company will engage, choosing corporate and business strategies, and determining the resources needed to achieve the organization’s goals. Plans set the stage for action.
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Your Turn 1
Questions:
Consider the chart to the right.
Would you say you relate positively to your current (or previous) boss? Why or why not?
What could your boss do differently to improve the way he or she relates to you?
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Look at the bar chart (Chapter 1, Section 2.1). By a show of hands, how many of you would say that you relate positively to your current (or previous) boss? Why or why not? What could your boss do to improve the way he or she relates to you?
Answers will vary but if consistent with the general working population, the majority of the class might raise their hands. Students will still have a variety of recommendations about how this relationship could improve, though, including recommendations for communication and feedback on performance.
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Four Different Levels of Managers (1 of 2)
Top-level managers
Senior executives responsible for the overall management and effectiveness of the organization
Middle-level managers
Managers located in the middle layers of the organizational hierarchy, reporting to top-level executives
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Organizations—particularly large organizations—have many levels. The types of managers found in an organization are typically defined by four different organizational levels: top-level manager, middle-level manager, frontline manager, and team leader. This slide introduces the concept and provides background on the upper two levels.
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Four Different Levels of Managers (2 of 2)
Frontline managers
Lower-level managers who execute the operational activities of the organization
Team leader
Employees who are responsible for facilitating successful team performance
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Exhibit 1.3 Transformation of Management Roles and Activities
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Exhibit 1.3 lists three managers and their changing roles, as well as their key activities.
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Your Turn 2
?
Question:
While frontline managers have direct control over their employees, team leaders do not.
What strategies can team leaders use to direct team members to achieve organizational objectives?
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While frontline managers have direct managerial control over their employees, team leaders do not have direct control over team members. What strategies can team leaders use to direct team members to achieve organizational objectives?
Answers will vary but students might discuss how team leaders can make sure the team has a shared vision of their goals, objectives, and expectations for members.
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Three Roles That All Managers Perform
Interpersonal roles
Leader, liaison, figurehead
Informational roles
Monitor, disseminator, spokesperson
Decisional roles
Entrepreneur, disturbance handler, resource allocator, negotiator
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A classic study of top executives found that they spend their time engaging in 10 key activities, falling into three broad categories or roles.
Interpersonal roles: Leader—Staffing, training, and motivating people to achieve organizational goals. Liaison—Maintaining a network of outside contacts and alliances that provide information and favors. Figurehead—Performing symbolic duties on behalf of the organization, like greeting important visitors and attending social events.
Informational roles: Monitor—Seeking information to develop a thorough understanding of the organization and its environment. Disseminator—Sharing information between different people like employees and managers, sometimes interpreting and integrating diverse perspectives. Spokesperson—Communicating on behalf of the organization about plans, policies, actions, and results.
Decisional roles: Entrepreneur—Searching for new business opportunities and initiating new projects to create change. Disturbance handler—Taking corrective action during crises or other conflicts. Resource allocator—Providing funding and other resources to units or people, including making major organizational decisions. Negotiator—Engaging in negotiations with parties inside and outside the organization.
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Managers Need Three Broad Skills (1 of 2)
Technical skills
Ability to perform a specialized task involving a particular method or process
E.g., web design
Conceptual and decision skills
Ability to identify and resolve problems for the benefit of the organization and its members
For example, picking a location for a new office
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Managers need a variety of skills to do these things well. Skills are specific abilities that result from knowledge, information, aptitude, and practice. Although managers need many individual skills, which you will learn about throughout this course, three general categories are crucial: technical skills, conceptual and decision skills, and the following slide shows the third, interpersonal and communication skills.
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Managers Need Three Broad Skills (2 of 2)
Interpersonal and communication skills
Ability to lead, motivate, and communicate effectively with others, soft skills
For example, counseling employees
Successful managers often demonstrate high emotional intelligence (EQ).
Understanding yourself
Managing yourself
Dealing effectively with others
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Interpersonal and communication skills influence the manager’s ability to work well with people. These skills are often called people skills or soft skills. Managers spend the great majority of their time interacting with people, and they must develop their abilities to build trust, relate to, and communicate effectively with those around them. Your people skills often make a difference in the level of success you achieve.
Good, successful managers often demonstrate a set of interpersonal skills known collectively as emotional intelligence (or EQ). EQ combines three skill sets: Understanding yourself—including your strengths and limitations as a manager. Managing yourself—dealing with emotions, making good decisions, seeking feedback, and exercising self-control. Working effectively with others—listening, showing empathy, motivating, and leading.
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Exhibit 1.4 Importance of Skills at Different Managerial Levels
| Technical Skills | Conceptual/Decision Skills | Interpersonal/Communication Skills | |
| Top manager | Low | High | High |
| Middle manager | Medium | High | High |
| Frontline manager | High | Medium | High |
| Team leader | High | Medium | High |
Source: Adapted from R. Katz, “Skills of an Effective Administrator,” Harvard Business Review 52, no. 5 (September-October 1974), pp. 90-102.
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As Exhibit 1.4 illustrates, the importance of these skills vary by managerial level. Technical skills are most important early in your career when you are a team leader and frontline manager. Conceptual and decision skills become more important than technical skills as you rise higher in the company and occupy positions in the middle and top manager ranks. But interpersonal and communication skills are important throughout your career, at every level of management. One way to increase the effectiveness of your interpersonal and communication skills is by being emotionally intelligent at work.
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Major Challenges Facing Managers
Globalization
Technological change
The importance of knowledge and ideas
Collaboration across organizational boundaries
Increasingly diverse labor force
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What defines the competitive landscape of today’s businesses? You will be reading about many relevant issues in the coming chapters, but we begin here by highlighting five key elements that make the current business landscape different from those of the past:
Globalization
Technological change
The importance of knowledge and ideas
Collaboration across organizational boundaries
Increasingly diverse labor force
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Today’s Realities
Businesses operate on a global scale.
Technology is continuously advancing.
Knowledge management is critical.
Collaboration boosts performance.
Diversity needs to be leveraged.
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This slide continues the discussion of challenges to management by applying high-level consequences or required actions against them. Bullets correspond to sub headings in the text.
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Sources of Competitive Advantage (1 of 5)
Innovation
Quality
Service
Speed
Cost competitiveness
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Successful companies have strong managers who know they are in a competitive struggle to survive and win. To do this, you have to gain advantage over your competitors and earn a profit. You gain competitive advantage by being better than your competitors at doing valuable things for your customers. But what does this mean, specifically? To succeed, managers must deliver the fundamental success drivers: innovation, quality, service, speed, and cost competitiveness.
Details on these drivers are provided on subsequent slides.
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Sources of Competitive Advantage (2 of 5)
Innovation
Innovations is the introduction of new goods and services.
Often the most important innovation is not the product itself, but how it is delivered.
Quality
Quality is the excellence of your product (goods or services).
Historically, quality referred to attractiveness, lack of defects, reliability, and long-term dependability.
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Innovation is the introduction of new goods and services. Your firm must adapt to changes in consumer demand and to new competitors. Products don’t sell forever; in fact, they don’t sell for nearly as long as they used to because so many competitors are introducing so many new products all the time. Likewise, you have to be ready with new ways to communicate with customers and deliver products to them, as when the Internet forced traditional merchants to learn new ways of reaching customers directly. Globalization and technological advances have accelerated the pace of change and thus the need for innovation.
Historically, quality pertained primarily to the physical goods that customers bought, and it referred to attractiveness, lack of defects, reliability, and long-term dependability. The traditional approach to quality was to check work after it was completed and then eliminate defects. But then W. Edwards Deming, J. M. Juran, and other quality gurus convinced managers to take a more complete approach to achieving total quality. This includes several objectives: Preventing defects before they occur. Achieving zero defects in manufacturing. Designing products for quality. The goal is to plan carefully, prevent from the beginning all quality-related problems, and live a philosophy of continuous improvement in the way the company operates. Deming and his ideas were actually rebuffed by U.S. managers; only when he found an audience in Japan, and Japan started grabbing big chunks of market share from the United States in vehicles, computer chips, and TVs, did U.S. managers start internalizing and practicing his quality philosophy.
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Sources of Competitive Advantage (3 of 5)
Service
The speed and dependability with which an organization delivers what customers want
Speed
Fast and timely execution, response, and delivery of results
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In a competitive context, service means giving customers what they want or need, when and where they want it. So service is focused on continually meeting the changing needs of customers to establish mutually beneficial long-term relationships. Service is also an important offering for many companies that sell tangible goods
Speed—rapid execution, response, and delivery of results—often separates the winners from the losers. How fast can you develop and get a new product to market? How quickly can you respond to customer requests? You are far better off if you are faster than the competition—and if you can respond quickly to your competitors’ actions. Speed is no longer just a goal of some companies; it is a strategic imperative. Speed combined with quality is a measure that a company is operating efficiently.
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Sources of Competitive Advantage (4 of 5)
Cost competitiveness
Keeping costs low to achieve profits and be able to offer prices that are attractive to consumers
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Cost competitiveness means keeping costs low enough so the company can realize profits and price its products (goods or services) at levels that are attractive to consumers. Toyota’s efforts to trim product development processes are also partly aimed at cost competitiveness. Making the processes more efficient through collaboration between design and manufacturing employees eliminates wasteful steps and procedures. Needless to say, if you can offer a desirable product at a lower price, it is more likely to sell.
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Sources of Competitive Advantage (5 of 5)
Don’t assume that you can settle for delivering just one source of competitive advantage.
The best managers and companies deliver them all.
Trade-offs may occur among the five sources of competitive advantage, but this doesn’t need to be a zero-sum game.
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Trade-offs may occur among the five sources of competitive advantage, but this doesn’t need to be a zero-sum game where one has to suffer at the expense of another. Columbia Hotel Management is in the business of managing hotel properties around the country. Some of these hotels include Comfort Suites (Georgia and Tennessee), Holiday Inn (Illinois), Ramada Plaza (Texas), and the Quality Inn (Mississippi). The director of human resources for the company focused on cost savings when he decided to outsource some of the more routine human resources tasks such as payroll and benefits management. Turning over those responsibilities to a vendor that specializes in performing them efficiently freed the HR director to engage in higher-level HR strategies and projects that can help his organization provide outstanding services for the hotel properties it manages. Making decisions about outsourcing and cost savings are just some important ways to help your organization achieve competitive advantage.
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Challenge
Moms and Dads as Managers
How does a parent perform the functions of planning, organizing, leading, and controlling?
Develop 3 to 4 specific examples for each management function.
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Exercise from prep card.
GROUP CHALLENGE: “Moms and Dads as Managers”
Divide the class into groups of three to five students and ask them to brainstorm about the following questions:
How does a parent perform the function of planning?
Examples will likely include activities related to preparing children for various stages of education, from kindergarten through college. For example, making decisions about school placement and ongoing educational activities to ensure success.
How does a parent perform the function of organizing?
Examples here might include parents’ employment, budgeting, mortgage or rental payments, hiring of babysitters or tutors, etc.
How does a parent perform the function of leading?
Answers may vary more here based on parenting styles but will highlight activities related to directing, motivating, and communicating with family members.
How does a parent perform the function of controlling?
Students might mention disciplinary aspects of parenting or various safeguards and probationary periods encountered throughout childhood.
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Chapter Review
Four functions of management
Planning, organizing, leading, controlling
Four different levels of managers
Top, middle, frontline, team leader
Three broad skills that managers need
Interpersonal, informational, decisional
Major challenges facing managers
Sources of competitive advantage
Innovation, quality, service, speed, cost competitiveness
©McGraw-Hill Education.
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Redbox Video Questions
One source of competitive advantage is to be able to meet customers' changing needs. Explain how Redbox has been able to do this.
In what ways has Redbox used technology to improve the services it offers to customers?
Explain how Redbox leverages its diverse workforce.
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Redbox was created to fill a customer need in the marketplace—renting low-cost movies in a convenient location. It is now America's No. 1 choice for movie rentals and has over 27,800 kiosks across the country dispensing DVDs, Blu-ray, and video games. Located conveniently in over 400 retail partnerships, customers can rent a DVD for only $1 per day. Redbox has responded to the challenges of continuously advancing technology by allowing customers to view kiosks' inventory and reserve items online, and search Redbox's database for the closest kiosk that has a desired item in stock. A diverse workforce is important to Redbox to help it better understand its customers and address its customers' wants and needs.
FOLLOW-UP QUESTIONS:
One source of competitive advantage is to be able to meet customers' changing needs. Explain how Redbox has been able to do this.
Redbox allows customers to purchase low-cost movies at a convenient location.
How has the collaboration between McDonald's and Redbox benefited both companies?
McDonalds’ dinner business was slow and installing Redbox video kiosks helped increase business during slow periods. Redbox customers also must return the next day to return the movie, increasing the likelihood of more business at McDonalds. Redbox benefited by placing their kiosks in high traffic areas.
In what ways has Redbox used technology to improve the services it offers to customers?
Customers can use their phones or the Internet to find kiosk locations, find movies, check inventory of the movies, and purchase rentals.
Explain how Redbox leverages its diverse workforce.
Employee diversity allows for a better understanding of Redbox’s customer base.
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Appendix 1 Examples of Planning Activities
The graphic gives the examples of planning activities.
Analyze current situation.
Anticipate the future.
Determine objectives.
Decide in what actions to engage.
Choose a business strategy.
Determine resources to achieve goals.
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Appendix 2 Your Turn 1
Percentage of employees who say…
They relate positively to their boss: 77 percent
Their boss is competent: 50 percent
Their boss rewards them for accomplishments: 30 percent
Their boss is a good role model and mentor: 29 percent
They feel motivated by their boss: 22 percent
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Appendix 3 Exhibit 1.3 Transformation of Management Roles and Activities
Frontline managers. From: Operational implementers. To: Aggressive entrepreneurs. Key Activities: 1. Creating and pursuing new growth opportunities for the business. 2. Attracting and developing resources. 3. Managing continuous improvement within the unit.
Middle-Level Managers. From: Administrative controllers. To: Supportive coaches and mentors. Key Activities: 1. Developing individuals and supporting their activities. 2. Linking dispersed knowledge and skills across units. 3. Managing the tension between short-term purpose and long-term ambition.
Top-Level Managers. From: Resource allocators. To: Institutional leaders and strategic thinkers. Key Activities: 1. Establishing high performance standards. 2. Institutionalizing a set of norms and values to support cooperation and trust. 3. Creating an overarching corporate purpose and ambition.
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