Transcript Ch 6 - Managing the Business
CHAPTER 6
Managing the Business Enterprise
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Learning Objectives
Explain the importance of setting goals and formulating strategies as the starting points of effective management Describe the four activities that constitute the
management process
Identify types of managers by level and area Describe the five basic management skills Describe the development and explain the importance of corporate culture Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Goals and Strategies
Goals are performance objectives that a firm plans to achieve The starting point of successfully managing a business The planned method of reaching a goal is the “strategy” Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Purpose of Setting Goals
Provides direction, guidance and motivation Assists in allocating resources Helps to define corporate culture Helps managers assess performance Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Mission Statement
Describes how the organization will achieve its purpose (reason for being) Clarifies who the organization serves, what it offers, and how it will be provided include core values and ethical commitment Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Kinds of Goals
Goals are set for various time horizons
Long-term
five or more years
Intermediate
one to five years
Short-term
less than one year
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Formulating Strategy
Strategic goals
long-term goals based on the mission statement SWOT analysis is an evaluation technique
Analyse an organization and its environment by identifying
Internal: Strengths and Weaknesses External: Opportunities and Threats
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Formulating Strategy
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Matching the Organization to the Environment
Final step in strategy formulation
matching company strengths to environmental opportunities
minimizing the impact of threats and company weaknesses Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Hierarchy of Planning
Purpose Mission Statement Strategic Plans Strategic Plans Tactical Plans Tactical Plans Tactical Plans Tactical Plans Operational Plans Operational Plans Operational Plans Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Operational Plans Operational Plans Operational Plans Copyright © 2008 Pearson Education Canada
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Levels of Strategies
Corporate-Level Strategy
What businesses will we pursue?
How do these businesses relate to each other?
Business-Level Strategy (competitive)
How will we compete in our chosen area? Functional Strategy
What actions can our department pursue to reach the overall goals?
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Corporate-Level Strategies
Concentration
on one product/line
Growth Integration Diversification Investment Reduction
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Growth Options
Market Penetration
Increase sales in current markets Product Development
Develop improved products for current market Geographic Expansion
Expand into new locations Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Market Penetration
Attempting to increase market share
focus on existing products and services in current markets
increasing current efforts in the market segment(s) where the firm already has a presence Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Geographic Expansion
Firm introduces its current product/service line to new market segments Can involve new geographic regions as well, including foreign markets Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Product Development
The firm creates new products/services, or modifies existing products to better serve its market segments Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Integration Options
Vertical integration
a firm strives to gain ownership of its suppliers or its retailers Horizontal integration
a firm strives to gain ownership of its competitors Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Diversification Options
Related diversification
a firm adds new related products or services to its line Conglomerate diversification
a firm adds new, and unrelated, product or services to its line Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Investment Reduction
Retrenchment
Reducing activity or operations
Retreat to core businesses Divestment
Selling or liquidating one or more businesses Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Business-Level Competitive Strategies Cost Leadership Differentiation Focus
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Cost Leadership
Striving to have the lowest costs in the industry Permits the firm to lower prices to gain customers or to respond to the competition ’s pricing policies Useful in industries that are price sensitive Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Differentiation
Striving to provide goods and services that are distinctive from its competitors
product design
packaging
promotion Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Focus
Serving a particular market segment May involve the use of one of the other generic strategies to serve the needs of the market niche more effectively
Cost leadership
Differentiation Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Contingency Planning and Crisis Management
Contingency Planning
Identify in advance changes that might occur
Identify ways the company can respond to changes Crisis Management
Methods for dealing with emergencies Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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The Management Process
A series of activities developed to allow businesses to achieve their goals Planning Organizing Leading Controlling Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Planning
Determining what the business needs to do and the best way to achieve it 1. Establish 3. Develop actions for how to achieve 5. Assess effectiveness Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Organizing
Determining how to use existing resources to implement the plan Jobs must be arranged in a structure to create an efficient task system Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Leading
Guiding and motivating subordinates to meet the firm ’s objectives Managers have various responsibilities with regard to their employees
The authority to give orders
The ability to guide employees
The power to motivate subordinates Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Controlling Managers monitor the firm ’s performance
determine if goals have been met
determine what actions were most effective in achieving goals
understanding what went wrong and how to fix it Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Establish Standard Measure Performance
Steps In the Control process
Does performance meet desired standard/goal?
Yes No Continue Current Activities Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Adjust performance or Change standard Copyright © 2008 Pearson Education Canada
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Levels of Management
Top Management
President, CEO, CFO, Vice President, Treasurer
responsible for overall performance of the firm Middle Management
Plant Manager, Operations Manager, Division Manager,
responsible for implementing decisions of top managers First-Line Managers
Supervisor, Office Manager, Foreman
responsible for supervising employees Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Areas of Management
Marketing Managers
get products and services to buyers Financial Managers
plan and oversee financial resources Operations Managers
control production, inventory, and quality Human Resource Managers
hire, train, evaluate, and compensate employees Information Managers
design and implement systems to collect, process, and organize information needed to make decisions Copyright © 2008 Pearson Education Canada Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke
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Management Skills
Technical
the ability to do specialized tasks such as keyboarding, artwork, accounting, marketing etc.
Human Relations
“people skills” that enable managers to understand and get along with others Conceptual
the ability to view problems creatively and abstractly, and to accurately analyze situations Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Management Levels and Skills
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Decision-Making Skills
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Time Management Skills
Productive use of time
Leading causes of wasted time
Paperwork Telephone Meetings Email
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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21st Century Management Skills
Global management
understanding foreign markets & international operations
awareness of cultural differences
practices of foreign competitors Management and Technology
understanding communications & information technology
computer networks
effects of easy access to information on decision-making
understanding of teamwork Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Corporate Culture
A firm ’s personality
shared experience of employees
stories, beliefs, and norms that characterize the organization
culture can direct employee’s efforts Forces shaping culture
Top management values
History, shared experiences
Stories and legends
Strong behavioural norms Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Communicating the Culture
Make sure new and existing managers understand the culture Develop a clear mission statement for the firm Communicate the culture to employees Reward those who understand and maintain the culture Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada
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Managing Change
Cultural change process 1.
2.
3.
Environmental analysis shows need for change
Conflict and resistance
Management formulates vision of new company
With a focus on customer needs and competition
New systems of appraisal and compensation
Enforce new values
Business, Sixth Canadian Edition, by Griffin, Ebert, and Starke Copyright © 2008 Pearson Education Canada