Management And Organizations Week 1 Basic Concepts PDF

MANAGEMENT AND ORGANIZATIONS BASIC CONCEPTS IN MANAGEMENT WEEK 1 Asst. Prof. Dr. Birol BAYSAK  MANAGEMENT AND ORGANIZATIONS SOURCE MATERIALS & RECOMMENDED READING Kocel, T., (2003). Isletme Yoneticiligi. Beta Publications. Simsek, M. S., & Cel...

MANAGEMENT AND ORGANIZATIONS BASIC CONCEPTS IN MANAGEMENT WEEK 1 Asst. Prof. Dr. Birol BAYSAK  MANAGEMENT AND ORGANIZATIONS SOURCE MATERIALS & RECOMMENDED READING Kocel, T., (2003). Isletme Yoneticiligi. Beta Publications. Simsek, M. S., & Celik, A. (2015). Yonetim ve organizasyon. Egitim Bookstore. Kast, F. E., & Rosenzweig, J. E. (1974). Organization and management: A systems approach. McGraw-Hill. Robbins, S. P., De Cenzo D. A., Coulter, M. (2016). Fundamentals of Management. Pearson Kadri MİRZE, Introduction to Business, Literatur Publishing, 2002. 2  LEARNING OBJECTIVES Explain the objectives what business is Describe the entrepreneurs who start the business Describe the managers, the people who administer the business operations Explain the management levels and managers’ required skills Understand what managers really do to administer a business Understand the other working people under supervision: the non- managers Define the general and industrial environment that the business operates in Discuss the businesses’ relationship with its environment Explain how managers match their organizations with the enviromental changes. 3  BASIC CONCEPTS OF BUSINESS What is a Business ? A business is any organization that provides goods or services to satisfy customers’ needs and wants for a profit. Any activity that provides goods or services to consumers for the purpose of making a profit. Business should be defined as an activity, which provides society (or others) needed goods and services at a profit. 4  BASIC CONCEPTS OF BUSINESS Our relationships with businesses The hospital where we were born Schools we went to Market, stores, virtual stores where we shop Restaurants and cafes where we sit with our friends The hostel, hotels we went on vacation Insurance companies, banks Gyms, cinemas Although we are not aware of it, we establish relationships with many businesses, each of which is of different nature and for different purposes, to meet our needs. 5  BASIC CONCEPTS OF BUSINESS Goods and Services Goods and services are commonly called products in business life. The goods that are produced could be tangible such as bread, computers, buildings cars, televisions, or soda. A service is an action or work that are intangible products performed for monetary compensation as healthcare, insurance, entertainment, cleaning, transportation etc. Businesses can generate profits from the sale of goods and/or 6 services.  BASIC CONCEPTS OF BUSINESS Practice Question 1 : How do we define the term “business”? a) A business is any activity that is regulated by state and local government entities in order to insure tax revenue. b) A business is any activity in an environment where more than one company competes for revenue. c) A business is any activity that provides goods or services to customers for the purpose of making a profit. d) A business is any activity that generates employment and salaries for workers. 7  BASIC CONCEPTS OF BUSINESS Profit, Loss, and Value Profit is the amount of revenue or income that a business owner retains after paying all the expenses associated with the operation of the business. If the expenses of the business exceed the revenue or income generated from operations, then the business will suffer a loss. Businesses that suffer extraordinary losses during a short period of time or slowly see their profits decline may end up closing or filing for bankruptcy. When businesses talk about value they are referring to the relationship between the price a customer pays for the good or service and the perceived benefits the customer receives in exchange for their time or money. 8  BASIC CONCEPTS OF BUSINESS Practice Question 4: How do you define “value”? a) when the perception of competition is too expensive b) the perceived benefits by a customer of price to the time and money spent c) when market research establishes the floor price d) when a customer purchases for the lowest price in town 9  BASIC CONCEPTS OF BUSINESS A nonprofit or not-for-profit business is one that provides goods or services to consumers, but its primary goal is not to return profit to the owners of the business. Instead, it uses those profits to provide a public service, advance a cause, or assist others. Their basic purpose is to serve community. 10  BASIC CONCEPTS OF BUSINESS For-profit vs. Non-profit Businesses For-Profit Business Non-Profit Business Provides goods or services to Provides goods or services in consumers for the purpose of order to generate income that making a profit furthers its mission 11  BASIC CONCEPTS OF BUSINESS For-Profit vs. Not-for-Profit/Nonprofit For-Profit Not-for-Profit/Nonprofit Incurs expenses for operations Incurs expenses for operations Provides goods and services to customers Provides goods and services to customers Generates revenues from sales Generates revenues from sales and/or contributions Operated by board of directors, trustees, or Owned by individuals, partners, or shareholders managers Profit is used to pay owners, partners, or Profit is used to further the mission of the shareholders organization Pays salaries to employees and managers Pays salaries to employees and managers Profits are NOT subject to taxation by local, state, Profits are subject to taxation by local, state, and and federal authorities federal authorities 12  BASIC CONCEPTS OF BUSINESS Resources are the inputs used to produce the outputs (goods and/or services). Resources are also called factors of production. 13  BASIC CONCEPTS OF BUSINESS Natural Resources: any natural resource, land, plants, livestock, wind, sun, water, etc. Labor: any human service—physical or intellectual. Also referred to as human capital. Capital: anything that’s manufactured in order to be used in the production of goods and services—for example, equipment. Entrepreneurship: the ability to recognize a profit opportunity, organize the other factors of production, and accept risk. 14  BASIC CONCEPTS OF BUSINESS Factors of Production: Baking a Cake Natural resources: Wind harnessed to produce electricity Labor: The baker's labor, creativity, and skills Capital: Ovens, cake pans, and ingredients Entrepreneurship: Individual or bakery 15  BASIC CONCEPTS OF BUSINESS An entrepreneur is an individual who starts a business and risks losses (in terms of money, time and reputation) for profits. Therefore, profits are the rewards entrepreneurs receive for producing goods and services that consumers want. 16  BASIC CONCEPTS OF BUSINESS Why Do People Become Entrepreneurs? 3 Main Reasons that People Become Entrepreneurs Be their own Boss: Ambition to own their own firm - become frustrated working in traditional jobs Pursue their own ideas : Some people are naturally alert, and when they recognize ideas for new products or services, they have a desire to see those ideas realized Pursue financial rewards: Generate income 17  BASIC CONCEPTS OF BUSINESS Characteristics of Entrepreneurs: Being their own boss Creative personalities Having an internal locus of control Having self confidence Optimistic people People with high energy People with vision People with tolerance with failure People with tolerance for ambiguity Pepole with need to achieve 18  BASIC CONCEPTS OF BUSINESS Practice Question 5 : What are the four factors of production needed by businesses to operate? a) Natural resources, labor, factories, and entrepreneurship. b) Natural resources, labor, capital, and entrepreneurship. c) Sustainable resources, labor, capital, and entrepreneurship. d) Capital, production lines, entrepreneurship, and factories. 19  BASIC CONCEPTS OF BUSINESS Understanding Functional Areas 20  BASIC CONCEPTS OF BUSINESS Operations Operations are where inputs (factors of production) are converted to outputs (goods and services). Operations is the heart of a business, pumping out goods and services in a quantity and of a quality that meets the needs of customers. The operations manager is responsible for overseeing the day-to-day business operations, which can include ordering raw materials or scheduling workers to produce tangible goods. 21  BASIC CONCEPTS OF BUSINESS Marketing Marketing identifies customers’ needs and designs products and services that meet those needs. The marketing function includes: Promoting goods and services Determining how the goods and services will be delivered Developing a pricing strategy to capture market share while remaining competitive Building and overseeing businesses’ Internet presence 22  BASIC CONCEPTS OF BUSINESS Finance Finance involves planning for, obtaining, and managing a company’s funds. Finance managers plan for both short- and long-term financial capital needs and analyze the impact that borrowing will have on the financial well-being of a business. The finance department answer questions about how funds should be raised, the long-term cost of borrowing funds, and the implications of financing decisions for the long-term health of the business. Accounting is a crucial part of the Finance functional area. Accountants provide managers with information needed to make decisions about the allocation of company resources. 23  BASIC CONCEPTS OF BUSINESS Research and Development It is the lifeblood of manufacturing businesses. R&D is staffed with scientists, thought-leaders, subject-matter experts, and industry analysts striving to provide the organization with knowledge and ideas to keep up and ahead of the competition. R&D is led by the Chief Technology Officer (CTO) who manages a Development VP or similar title depending on what technology products are being produced. 24  Who Are Managers? Where Do They Work? Organization A deliberate collection of people brought together to accomplish some specific purpose Common Characteristics of Organizations Goals People Structure 25  What Three Characteristics Do All Organizations Share? Exhibit 1-1 Three Characteristics of Organizations 1. Goals, which express the distinct purpose of a particular organization 2. People, who make decisions and engage in work activities to reach the organization’s goals, and 3. A deliberate structure, which systematically defines and limits its members’ behavior 26  What Is Management? Management ? The process of getting things done effectively and efficiently, with and through people. Efficiency: Doing a task correctly (doing things right). Getting the most output from the least amount of inputs. Effectiveness: Doing the right things. Attainment of organizational goals. 27  What Is Management? Exhibit 1-3 Efficiency and Effectiveness 28  BASIC CONCEPTS OF BUSINESS Management A manager is the person who combines all these resources- tangible and or intangible – for accomplishing the task. The primary role of managers in business is to supervise other people’s performance. Most management activities fall into the following categories: Managerial Functions Planning: Setting long-term and short-term goals for the business, as well as short term strategies needed to execute against those goals. Organizing: Organizing the operations of a business in the most efficient way, enabling the business to us its resources effectively. Controlling: When people or processes stray from the path, managers are often the first ones to notice and take corrective action. Leading: The manager may lead work teams or groups through a new process of the development of a new product. The manager may also be seen as a leader of the organization when it interacts with the community, 29 customers, and suppliers.  BASIC CONCEPTS OF BUSINESS There are two important issues that a manager should consider: The resources to be employed The tasks to be completed Task completion is the primary responsibility of all managers. They do not usually get involved directly in performing these tasks. They lead people to do the things. 30  BASIC CONCEPTS OF BUSINESS Management Levels The managers have different jobs at different levels in the company’s management pyramid. They work in different departments such as: marketing manufacturing, finance, accunting, human resources, research and development (R&D). 31  BASIC CONCEPTS OF BUSINESS Managers are the ones who accomplish the tasks by other people in an effective and efficient way by utilizing the 4 function (planning, organizing, leading and controlling) of management. Their job is very complex and requires a range of skills. Managerial skills : Conceptual, human, and technical skills. 32  BASIC CONCEPTS OF BUSINESS MANAGEREIAL SKILLS CONCEPTUAL SKILL: It is an ability to see the organization as a whole with its interrelated and independent parts, departments and divisions within the context of its industry and the general environment. This managerial skill requires a good mission identification, strategic thinking, strategy formulation and an ability to create vision. 33  BASIC CONCEPTS OF BUSINESS MANAGEREIAL SKILLS HUMAN SKILL: It relates to the manager’s ability to work with people. This skill is equally important for the all management levels and should be present in all managers in the organizational hierarchy. A manager’s success in motivating, communicating, coordinating and resolving conflicts between employees is dependent on this skill. 34  BASIC CONCEPTS OF BUSINESS MANAGEREIAL SKILLS TECHNICAL SKILL: It is the ability of managers to perform specific tasks. This skill includes a mastery of methods, techniques and equipment involved in functions. In the lower management level, this skill is very important for performing tasks. 35  BASIC CONCEPTS OF BUSINESS MANAGEREIAL SKILLS 36  Is the Manager’s Job Universal? (2 of 5) Level in the Organization Exhibit 1-6 Management Activities by Organizational Level Source: Based on T. A. Mahoney, T. H. Jerdee, and S. J. Carroll, “The Job(s) of Management,” Industrial Relations 4, no. 2 (1965), p. 103 37  BASIC CONCEPTS OF BUSINESS 38  BASIC CONCEPTS OF BUSINESS Informational Roles: This role pertains to managers collecting and disseminating information necessary in performing managerial functions. They monitor the necessary information from many sources and then disseminate this information to other interested parties. They also act as spokesperson to make announcements. 39  BASIC CONCEPTS OF BUSINESS Interpersonal Roles: Performing their duties, managers are also involved in interpersonal relations with others in or out of the company. They act as figureheads and present their company to public. They also act as leaders to their subordinates and direct them in their tasks. Managers link people and act as a liaison pin between them. 40  BASIC CONCEPTS OF BUSINESS Decisional Roles: Managers always make decisions in performing their tasks. This is the most important and primary duty of managers. They sometimes create new businesses when they see new opportunities around. This is their entrepreneur role in the company. Many conflicts occur within or out of the company. One important role of managers is the disturbance handler role. They resolve numereous small or big problems. 41  BASIC CONCEPTS OF BUSINESS Exhibit 1-1 Minztberg’s Managerial Roles Role Description Interpersonal Blank Figurehead Symbolic head; required to perform a number of routine duties of a legal or social nature. E.g : A factory supervisor gives a group of high school students a tour of the plant, they are acting in a figurehead role. Leader Responsible for the motivation and direction of employees Liaison Maintains a network of outside contacts who provide favors and information Informational Blank Monitor Receives a wide variety of information; serves as nerve center of internal and external information of the organization Disseminator Transmits information received from outsiders or from other employees to members of the organization 42  BASIC CONCEPTS OF BUSINESS [Exhibit 1-1 Continued] Role Description Spokesperson Transmits information to outsiders on organization’s plans, policies, actions, and results; serves as expert on organization’s industry Decisional Entrepreneur Searches organization and its environment for opportunities and initiates projects to bring about change Disturbance handler Responsible for corrective action when organization faces important, unexpected disturbances Resource allocator Makes or approves significant organizational decisions. Managers are responsible for allocating human, physical, and monetary resources. Negotiator Responsible for representing the organization at major negotiations. they discuss issues and bargain with other units (internal or external) to gain advantages for their own unit. Source: H. Mintzberg, The Nature of Managerial Work, 1st ed., © 1973, pp. 92–93. Reprinted and electronically reproduced 43 by permission of Pearson Education, Inc., New York, NY.  Is the Manager’s Job Universal? (4 of 5) Size of the Organization Exhibit 1-7 Managerial Roles in Small and Large Businesses Source: Based on J. G. P. Paolillo, “The Manager’s Self-Assessments of Managerial Roles: Small 44 vs. Large Firms,” American Journal of Small Business, January–March 1984, pp. 61–62  BASIC CONCEPTS OF BUSINESS Practice Question What are the three categories of Mintzberg's 10 Management Roles? a) Interpersonal, Informational, and Decisional b) Leadership, Operational, and Strategic c) Tactical, Analytical, and Creative d) Administrative, Technical, and Financial E) Creative, Operational, Technical 45 Thank you for your participation