Management Lectures 4-5 PDF

Nature of Management and the Organization What do Managers do? managers make decisions about the use of the organization’s resources and are concerned with planning, organizing, directing, and controlling the organization’s activities....

Nature of Management and the Organization What do Managers do? managers make decisions about the use of the organization’s resources and are concerned with planning, organizing, directing, and controlling the organization’s activities. Management functions 1. Planning 2. Organizing 3. Directing 4. Controlling 1. Planning what should be done and by whom goal is what the firm wishes to achieve (profit, product quality, volume of sales, etc.) Nature of Management and the Organization 1  Objectives that derive from the MISSION Sales Market Share Efficiency Growth The Mission "We aim to be Earth’s most customer centric company. Our mission is to continually raise the bar of the customer experience by using the internet and technology to help consumers find, discover and buy anything, and empower businesses and content creators to maximise their success." - Amazon → answer to the question “What business are we in?” 2. Organizing Structuring the resources of a company and their activities in order to accomplish objectives in an efficient and effective manner. 3. Directing Motivating and leading employees to achieve organizational objectives 4. Controlling Evaluating and correcting the activities to keep the organization on course: Measure performance Take corrective action when it is necessary Investigate causes of deviation Comparing present performance with objectives Nature of Management and the Organization 2  Levels of Management 1. Top Management (CEO, President, Executive VPs) 2. Middle Management (Plant managers, Department managers, Division managers) 3. First-line management (Foremen, Supervisors, Office managers) Areas of management financial manager product and operations manager it manager marketing manager administrative manager HR manager Managers skills 1. Technical Expertise a. most needed by first-line managers 2. Conceptual Skills a. important for top management 3. Analytical Skills Nature of Management and the Organization 3  a. important for top management 4. Human Relation Skills a. important for all levels of management How do companies make decisions? 1. Recognize and define the situation 2. Develop options 3. Analyze options 4. Select the best option 5. Implement the decision 6. Monitor the consequences The Organization Organizational culture is a firm’s shared values, traditions, rules, and role models for behavior. may be expressed in: Memos Ceremonies Mission statements Manuals Code of ethics Dress codes, work habits, etc. take Google for example: employees are being offered free meals, gyms, dog- friendly parks, financial bonuses and open presentations by high level executives Functional areas and Core operations Nature of Management and the Organization 4  1. R&D 2. Finance 3. Marketing 4. Manufacturing Core operations R&D Procurement Manufacturing Sales & Marketing Logistics 1. R&D fundamental research quality check problem solving with existing products and upgrades new product development 2. Procurement recognition of needs spend analysis placing orders supplier identification contract management and supplier 3. Manufacturing planning quality control technical skills + economics Nature of Management and the Organization 5  maintenance processing and assembling raw materials 4. Sales & Marketing Define sales policies - the 4P Sales and Marketing skills + technical skills advertising and communication campaign understand the customer, competitor’s offering selling the firm’s product and optimizing economic profitability 5. Logistics transport, store and move raw materials, semi finished and finished products multidisciplinary skills Debt and Equity Management Equity (provided by owners) Debt (provided by lenders) suffers the general risk of only bankruptcy risk enterprise rewarded by dividends - MORE rewarded by interest - MORE FLEXIBLE RIGID Substantial influence on decision little influence on decisions making lower risk/lower expected high risks/higher expected rewards reward Human Resources Management recruitment of personnel employee relations (unions, job compensation and benefits) training and development Nature of Management and the Organization 6  promotion analyzing tasks, workload, and performance Organizational Structure a structure is the arrangement of the relationship of positions within an organization Specialization it is the division of labor into specific tasks and the assignment of employees to do a single task. The goal is EFFICIENCY. 6 Sources of specialization learning economies through repetition uneven distribution of skills differentiation of managers and technical orientations costs of preparation different technical performances of the plants identification at work and motivation Consequences of extreme specialization employees can become bored and dissatisfied with their job result: poor work quality, more injuries, high employee turnover. Departmentalization the grouping of jobs into working units usually called departments, units, groups or divisions. Departments are usually organized by: Nature of Management and the Organization 7  Function ( Production, Marketing, Finance, Distribution and R&D) Product (Stereo Equipment, Computer Electronic, Consumer Telecommunication,Industrial Telecommunication) Geographic region (European, Latin American, Middle East, Pacific Basin) Customer (Consumer foods, Industrial foods) Span of Control Wide span of management: a manager directly supervises a large number of employees Narrow span of management: a manager directly supervises only a few subordinates Centralization giving tasks and empowering employees Delegation gives: responsibility to employees to carry out tasks accountability: employees are answerable to a superior for the outcome Degrees of centralization : Centralized Structure → more decision making on the higher levels of management Decentralized Structure → more decisions on the lower levels of management Formalization Standardizing behavior through rules, regulations, procedures, training, etc. increases as a firm gets older, larger, regulated Main Problems: Nature of Management and the Organization 8  Less organizational flexibility discourages organizational learning or creativity increases job dissatisfaction and work stress Rules and procedures become focus of attention Forms of organizational structure Line structure → Convenience Store(Owner→Manager→Assistant Manager→Hourly Employees) Some advantages are: clear chain of command which enables managers to make quick decisions Some disadvantages are: managers must possess a wide range of knowledge and skills as they are responsible for a variety of activities Line-and-Staff (functional-based) structure traditional relationship between superiors and subordinates specialized managers assist line managers staff managers do not have authority over line managers Multidivisional structure (example → LVMH) organizes departments into larger groups called divisions corporate headquarters set the vision for the whole group inevitably creates work duplication permits the delegation of decision-making authority Advantages: Nature of Management and the Organization 9  better decisions are made faster and tend to be more innovative delegation of decision-making authority by focusing each division on a common region,product, customer, etc. → it is more likely to provide products that meet the needs of its particular customers Disadvantages: it creates work duplication which makes it more difficult to realize economies of scale that result from grouping functions together isolation among organizational areas Matrix Structure: Nasa was the first one to implement it because it needed to coordinate different projects at the same time Advantages: Provides flexibility it draws on very specific expertise it develops general managers and reduces the burden of CEOs Disadvantages: matrix is generally expensive matrix is quite complex employees may be confused about whose authority has priority Team Structure (Freshii) not hierarchical little or absent work formalization teams accountable for their performance Nature of Management and the Organization 10  good for employees’ engagement and motivation structure made of multiple work groups with weak or no authority lines between them Nature of Management and the Organization 11