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BUS 5425

Entrepreneurship

Essays Week Four

Chapter One

Look at competition today in the automobile, airline, and even clothes industries. The word “Competition” can bring out the best or the worst in an organization. Microsoft was had legal charges brought against them years ago for attempting to eliminate competition and even monopolize the market. When organizations focus strongly on current competition, new organizations slowly begin to slip into the industry. This was the case many years ago with the Big Three (Chrysler, Ford, and GM). They were very focused on each other and really did not pay attention to Toyota. Now, according to US News, the top four wealthiest automakers are Toyota ($214 Billon), Volkswagen ($101 Billon), Daimler (Mercedes-Benz) ($84.3 Billon), and BWM ($71. Billion). The Big Three has dropped tremendously; GM is ranked sixth ($52.9 Billion), Ford is eighth ($44.1 Billon), and Fiat Chrysler is tenth ($36.6 Billon). When new companies begin coming into the market, this can create many problems with competition. In fact, Michael Porter sees this as a very powerful source. Now, Tesla is now beginning to make a great deal of noise in the world of competition.

1. Consider the following article

https://www.trefis.com/stock/tsla/model/trefis?easyAccessToken=PROVIDER_fdb11db659bd1a59ae20da362d0b1971a252c2be

. Based on the article, it seems within the last few years, Tesla has entered the market with a bang. Based on the article and chapter one, how is Tesla competing within the market place?

Chapter 6

Consider the readings from the text and the power points from Chapter Six in answering questions two and three.

2. In slide 24, it documents CEO pay of the top executive in various industries. Select one of the CEO’s from the slide, conduct some research on your chosen CEO and the company where they are CEO, and then explain if they are worth the amount they earn. Please validate your answer based on the performance of the organization.

3. In slide 25, successful diversity recruiting is the topic. The slide provides five successful keys to conducting this activity. For number three, your job is to add one more key that you feel is imperative for diversity recruiting to be successful. Conduct research outside the text in determining your additional successful key. Validate your answer

Chapter 7

4. Read the following article

https://hackernoon.com/jeff-bezos-ceo-amazon-explains-his-business-model-to-shareholders-80228d4e9233

about Amazon and Jeff Bezos (sorry about the ads) and Chapter Seven. After reading both of these sources, what was Bezos’ model, and what was the culture of the organization at Amazon?

Part 3
Chapter 6

Managing for Quality and Competitiveness

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

We begin part 3 of your textbook, Managing for Quality and Competitiveness, with chapter 6, The Nature of Management.
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CHAPTER 6
The Nature of Management
CHAPTER 7
Organization, Teamwork, and Communication
CHAPTER 8
Managing Service and Manufacturing Operations
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In chapter 6, we take a look at the nature of management. For any organization—small or large, for profit or nonprofit—to achieve its objectives, it must have equipment and raw materials to turn into products to market, employees to make and sell the products, and financial resources to purchase additional goods and services, pay employees, and generally operate the business. To accomplish this, it must also have one or more managers to plan, organize, staff, direct, and control the work that goes on. This chapter introduces the field of management. It examines and surveys the various functions, levels, and areas of management in business. The skills that managers need for success and the steps that lead to effective decision making are also discussed.
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Learning Objectives
LO 6-1 Define management and explain its role in the achievement of organizational objectives.
LO 6-2 Describe the major functions of management.
LO 6-3 Distinguish among three levels of management and the concerns of managers at each level.
LO 6-4 Specify the skills managers need in order to be successful.
LO 6-5 Summarize the systematic approach to decision making used by many business managers.
LO 6-6 Recommend a new strategy to revive a struggling business.
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After reading this chapter you will be able to:
Define management and explain its role in the achievement of organizational objectives.
Describe the major functions of management.
Distinguish among three levels of management and the concerns of managers at each level.
Specify the skills managers need in order to be successful.
Summarize the systematic approach to decision making used by many business managers.
Recommend a new strategy to revive a struggling business.

Management and Managers
Management
A process designed to achieve an organization’s objectives by using its resources effectively and efficiently in a changing environment
Effectively means having the intended result
Efficiently means accomplishing the objectives with a minimum of resources
Managers
Those individuals in organizations who make decisions about the use of resources and who are concerned with planning, organizing, staffing, directing and controlling the organization’s activities to reach its objectives
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Management is a process designed to achieve an organization’s objectives by using its resources effectively and efficiently in a changing environment. Effectively means having the intended results; efficiently means accomplishing the objectives with a minimum of resources.
Managers make decisions about the use of the organization’s resources and are concerned with planning, organizing, staffing, directing and controlling activities to reach the organization’s objectives. The decision to introduce
new products in order to reach objectives is often a key management duty. Management is universal. It takes place not only in business, but also in government, the military, labor unions, hospitals, schools, and religious groups—any organization requiring the coordination of resources.
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The Importance of Management
Every organization must acquire resources to effectively pursue objectives and coordinate use to turn out final goods and services
Employees
Important in helping a firm attain its objectives
Recruit, train, compensate, and provide benefits to foster loyalty
Acquiring Supplies
Ensuring that products are made available to customers
In global markets firms enlist hundreds of diverse suppliers
Financial resources
To pay for essential activities
Owners, shareholders, banks, and other financial institutions
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Every organization must acquire resources (people, raw materials and equipment, money, and information) to effectively pursue its objectives and coordinate their use to turn out a final good or service.
Employees are one of the most important resources in helping a business attain its objectives. Successful companies recruit, train, compensate, and provide benefits (such as shares of stock and health insurance) to foster employee loyalty.
Acquiring suppliers is another important part of managing resources and ensuring that products are made available to customers. As firms reach global markets, companies such as Walmart, Corning, and Charles Schwab enlist hundreds of diverse suppliers that provide goods and services to support operations. A good supplier maximizes efficiencies and provides creative solutions to help the company reduce expenses and reach its objectives.
Finally, the manager needs adequate financial resources to pay for essential activities. Primary funding comes from owners and shareholders, as well as banks and other financial institutions.
All these resources and activities must be coordinated and controlled if the company is to earn a profit. Organizations must also have adequate supplies of resources of all types, and managers must carefully coordinate their use if they are to achieve the organization’s objectives.
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Management Functions
Planning
Planning activities to achieve the organization’s objectives
Organizing
Organizing resources and activities to achieve the organization’s objectives
Staffing
Staffing the organization with qualified people
Directing
Directing employees’ activities toward achievement of objectives
Controlling
Controlling the organization’s activities to keep it on course
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To harmonize the use of resources so the business can develop, produce and sell products, managers engage in a series of activities:
Planning: Activities to achieve the organization’s objectives
Organizing: Resources and activities to achieve the organization’s objectives
Staffing: The organization with qualified people
Directing: Employees’ activities toward achievement of objectives
Controlling: The organization’s activities to keep it on course
Although this book discusses each of the five functions separately, they are interrelated; managers may perform two or more of them at the same time.
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Planning
Planning is the process of determining the organization’s objectives and deciding how to accomplish them; the first function of management
Mission is the statement of an organization’s fundamental purpose and basic philosophy
Objectives are measurable statements on common issues such as profit, competitive advantage, efficiency and growth
Goals are the results the company wants to achieve
Plans specify what should be done, by whom, where, when and how
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Planning, the process of determining the organization’s objectives and deciding how to accomplish them, is the first function of management. Planning is a crucial activity, for it designs the map that lays the groundwork for the other functions. It involves forecasting events and determining the best course of action from a set of options or choices. The plan itself specifies what should be done, by whom, where, when, and how. But before an organization can plan a course of action, it must first determine what it wants to achieve.
A mission or mission statement, is an organization’s fundamental purpose and basic philosophy. It seeks to answer the question: “What business are we in?” A well-developed mission statement,
no matter what the industry or size of business, will answer five basic questions:
1. Who are we?
2. Who are our customers?
3. What is our operating philosophy (basic beliefs, values, ethics, etc.)?
4. What are our core competencies and competitive advantages?
5. What are our responsibilities with respect to being a good steward of
environmental, financial, and human resources?
A goal is the result that a firm wishes to achieve. A company almost always has multiple goals, which illustrates the complex nature of business. A goal has three key components: an attribute sought, such as profits, customer satisfaction, or product quality; a target to be achieved, such as the volume of sales or extent of management training to be achieved; and a time frame, which is the time period in which the goal is to be achieved.
Objectives, the ends or results desired by an organization, derive from the organization’s mission. A business’s objectives may be elaborate or simple. Common objectives relate to profit, competitive advantage, efficiency, and growth.
The principal difference between goals and objectives is that objectives are generally stated in such a way that they are measurable.
Plans specify what should be done, by whom, where, when and how. There are three general types of plans for meeting objectives—strategic, tactical, and operational.
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Strategic Plans
Those plans that establish long-range objectives and overall strategy or course of action by which a firm fulfills its mission
Generally cover periods ranging from one year or longer
Plans to add products
Purchase companies
Sell unprofitable segments of the business
Issue stock
Move into international markets
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There are three general types of plans for meeting objectives—strategic, tactical, and operational. A firm’s highest managers develop its strategic plans, which establish the long-range objectives and overall strategy or course of action by which the firm fulfills its mission. Strategic plans generally cover periods ranging from one year or longer. They include plans to add products, purchase companies, sell unprofitable segments of the business, issue stock, and move into international markets.
Strategic plans must take into account the organization’s capabilities and resources, the changing business environment, and organizational objectives. Plans should be market-driven, matching customers’ desire for value with operational capabilities, processes, and human resources.
Apollo Global Management and Metropoulos made the strategic plan to purchase the Hostess snack business after the firm declared bankruptcy
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Tactical Plans
Short-range plans (one year or less) designed to implement the activities and objectives specified in the strategic plan
Keep the firm on course established in the strategic plan
An ever-changing market requires firms to develop short-run or tactical plan to deal with the changing environment
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Tactical plans are short range and designed to implement the activities and objectives specified in the strategic plan. These plans, which usually cover a period of one year or less, help keep the organization on the course established in the strategic plan. Because tactical plans allow the organization to react to changes in the environment while continuing to focus on the company’s overall strategy, management must periodically review and update them. Declining performance or failure to meet objectives set out in tactical plans may be one reason for revising them.
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Operational Plans
Very short-term plans that specify actions individuals, work groups, or departments need to accomplish in order to achieve the tactical plan and ultimately the strategic plan
Apply to details in executing activities quickly
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Operational plans are very short term and specify what actions specific individuals, work groups, or departments need to accomplish in order to achieve the tactical plan and ultimately the strategic plan. They apply to details in executing activities in one month, week, or even day.
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Retail Store Example (1 of 2)
A retailing store with a five-year strategic plan to invest $5 billion in 500 new retail stores may develop 5 tactical plans (each covering 1 year) specifying:
How much to spend to set up each new store
Where to locate
When to open each new store
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A retailing organization with a five-year strategic plan to invest $5 billion in 500 new retail stores may develop five tactical plans (each covering one year) specifying how much to spend to set up each new store, where to locate, and when to open each new store.
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Retail Store Example (2 of 2)
Tactical plans are designed to execute the overall strategic plan
They are easier to adjust or abandon if changes in the environment or the company’s performance so warrant
Operational plans may specify the schedule for:
opening 1 new store
Hiring and training new employees
Obtaining merchandise
Opening for actual business
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Tactical plans are designed to execute the overall strategic plan. Because of their short-term nature, they are easier to adjust or abandon if changes in the environment or the company’s performance so warrant.
Returning to our retail store example, operational plans may specify the schedule for opening one new store, hiring and training new employees, obtaining merchandise, and opening for actual business.
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Crisis Management or
Contingency Planning
An element in planning that deals with potential disasters such as product tampering, oil spills, fire, earthquake, computer virus
~51% of companies have outdated disaster recovery and business continuity plans
Herbalife does businesses in 90 countries, and contingency plans must often be made for fluctuating exchange rates
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Another element of planning is crisis management or contingency planning, which deals with potential disasters such as product tampering, oil spills, fire, earthquake, computer viruses, or even a reputation crisis due to unethical or illegal conduct by one or more employees. Unfortunately, many businesses do not have updated contingency plans to handle the types of crises that their companies might encounter. Approximately 51 percent of companies have outdated disaster recovery and business continuity plans. Businesses that have correct and well-thought-out contingency plans tend to respond more effectively when problems occur than do businesses who lack such planning.
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Organizing
The structuring of resources and activities to accomplish objectives in an efficient and effective manner
Helps create synergy
Establishes lines of authority
Improves communication
Helps avoid duplication of resources
Improves competitiveness by speeding up decision making
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Rarely are individuals in an organization able to achieve common goals without some form of structure. Organizing is the structuring of resources and activities to accomplish objectives in an efficient and effective manner. Organizing is important for several reasons. It helps create synergy, whereby the effect of a whole system equals more than that of its parts. It also establishes lines of authority, improves communication, helps avoid duplication of resources, and can improve competitiveness by speeding up decision making. Organizing occurs continuously because change is inevitable.
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Staffing
Hiring people to carry out the work of the organization
Managerial duties
Recruiting
Determining what skills are needed for specific jobs
Motivating and training employees
Determining pay and benefits
Preparing employees for higher-level jobs
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Once managers have determined what work is to be done and how it is to be organized, they must ensure that the organization has enough employees with appropriate skills to do the work. Hiring people to carry out the work of the organization is known as staffing. Beyond recruiting people for positions within the firm, managers must determine what skills are needed for specific jobs, how to motivate and train employees, how much to pay, what benefits to provide, and how to prepare employees for higher-level jobs in the firm at a later date.
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Monster.com and Staffing
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Some companies choose to recruit people to hire through online job websites such as Monster.com
Monster.com is one of the world’s largest employment websites
Using websites like Monster.com falls under the staffing function of management
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Some companies choose to recruit people to hire through online job websites such as Monster.com. Monster.com is one of the world’s largest employment websites. Using websites like Monster.com falls under the staffing function of management.
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Downsizing
The elimination of a significant number of employees from an organization
Production, sales and technical positions can be outsourced to countries with lower labor costs
Downsizing helps companies reduce costs quickly
This involves loss of jobs and lowered morale for remaining employees
An effective manager will promote optimism and positive thinking while minimizing criticism and fault-finding
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Another aspect of staffing is downsizing, the elimination of significant numbers of employees from an organization, which has been a pervasive and much-talked-about trend. Staffing can be outsourced to companies that focus on hiring and managing employees. Many firms downsize by outsourcing production, sales, and technical positions to companies in other countries with lower labor costs. Downsizing has helped numerous firms reduce costs quickly and become more profitable (or become profitable after lengthy losses) in a short period of time.
Downsizing and outsourcing, however, have painful consequences. Obviously, the biggest casualty is those who lose their jobs, along with their incomes, insurance, and pensions. Some find new jobs quickly; others do not. Another victim is the morale of the remaining employees at downsized firms. After a downsizing situation, an effective manager will promote optimism and positive thinking and minimize criticism and fault-finding.
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Directing
Motivating and leading employees to achieve organizational objectives
Telling employees what to do and when to do it using deadlines, then encourage them to do their work
Determining and administering rewards and recognition
Providing incentives but recognition and appreciation are often the best motivators
Ask workers to contribute ideas for reducing costs, making equipment more efficient, improving customer service, or even developing new products
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Once the organization has been staffed, management must direct the employees. Directing is motivating and leading employees to achieve organizational objectives. Good directing involves telling employees what to do and when to do it through the implementation of deadlines, and then encouraging them to do their work.
Managers may motivate employees by providing incentives—such as the promise of a raise or promotion—for them to do a good job. But most workers want more than money from their jobs: They need to know that their employer values their ideas and input. Smart managers, therefore, ask workers to contribute ideas for reducing costs, making equipment more efficient, improving customer service, or even developing new products.
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Controlling
The process of evaluating and correcting activities to keep the organization on course
Measuring performance
Comparing performance with standards or objectives
Identifying deviations from the standards
Investigating the causes of deviations
Taking corrective action when necessary
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Planning, organizing, staffing, and directing are all important to the success of an organization, whether its objective is earning a profit or something else. But what happens when a firm fails to reach its goals despite a strong planning effort? Controlling is the process of evaluating and correcting activities to keep the organization on course.
Control involves five activities:
Measuring performance
Comparing present performance with standards or objectives
Identifying deviations from the standards
Investigating the causes of deviations
Taking corrective action when necessary.
Controlling and planning are closely linked. Planning establishes goals and standards. By monitoring performance and comparing it with standards, managers can determine whether performance is on target. When performance is substandard, management must determine why and take appropriate actions to get the firm back on course. In short, the control function helps managers assess the success of their plans.
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Levels of Management
As the pyramid shape implies, there are generally more middle managers than top managers, and still more first-line managers
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Many organizations have multiple levels of management—top management, middle management, and first-line, or supervisory management. These levels form a pyramid, as shown in this slides figure. As the pyramid shape implies, there are generally more middle managers than top managers, and still more first-line managers. Very small organizations may have only one manager (typically, the owner), who assumes the responsibilities of all three levels. Large businesses have many managers at each level to coordinate the use of the organization’s resources.
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Time Spent on Management Functions
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Managers at all three levels of management perform all five management functions but the time spent on each function varies. This slide displays the importance of management functions to managers in each level.
For Top Managers, the most important management function is planning. Middle Managers most consuming function is organizing; while First-Line Managers spend most of their time controlling.

Top Management
The president and other top executives of a business, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operations officer (COO), who have overall responsibility for the organization
In publically-owned corporations, CEO’s boss is board of directors
Compensation committees work directors and CEOs to keep pay in line with performance
Workforce diversity is good for workers and for the bottom line
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In businesses, top managers include the president and other top executives, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operations officer (COO), who have overall responsibility for the organization. With technological advances accelerating and privacy concerns increasing, some companies are adding a new top management position—chief privacy officer (CPO).
Top-level managers spend most of their time planning. They make the organization’s strategic decisions, decisions that focus on an overall scheme or key idea for using resources to take advantage of opportunities.
Compensation committees are increasingly working with boards of directors and CEOs to attempt to keep pay in line with performance in order to benefit stockholders and key stakeholders. Successful management translates
into happy stockholders who are willing to compensate their top executives fairly and in line with performance.
Workforce diversity is an important issue in today’s corporations. Effective managers at enlightened corporations have found that diversity is good for workers and for the bottom line. Putting together different kinds of people to solve problems often results in better solutions.
DID YOU KNOW? Only 4.6 percent of Fortune 500 CEOs are women.
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Facebook’s Top Management
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Mark Zuckerberg, CEO and founder of Facebook, manages the overall strategic direction of the company
Plays a key role in representing the company to stakeholders
In 2012, announced he would take an annual salary of just $1
Sheryl Sandberg, Facebook’s chief operating officer, is responsible for the daily operation of the company
COO reports to CEO and is often considered to be number two in command
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Mark Zuckerberg, CEO and founder of Facebook, manages the overall strategic direction of the company and plays a key role in representing the company to stakeholders. Sheryl Sandberg, Facebook’s chief operating officer, is responsible for the daily operation of the company. The COO reports to the CEO and is often considered to be number two in command. In public corporations, even chief executive officers have a boss—the firm’s board of directors.
In 2012 it was announced Mark Zuckerberg would go from his current salary of $600,000 to an annual salary of just $1.
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The Highest Paid CEOs
CEO Company Compensation
Larry Ellison Oracle $78.4 million
Robert Iger Walt Disney Productions $34.3 million
Kenneth I. Chenault American Express $24.4 million
Randall L. Stephenson Apple $20.6 million
Muhtar Kent Coca-Cola $20.4 million
James P. Gorman Morgan Stanley $18 million
Meg Whitman Hewlett-Packard $17.6 million
Virginia Rometty IBM $13.97 million
Jeff Bezos Amazon $1.68 million
Warren Buffett Berkshire Hathaway $485,606

Given the importance and range of top managements’ decisions, top managers generally have many years of varied experience and command top salaries. In addition to salaries, top managers’ compensation packages typically include bonuses, long-term incentive awards, stock, and stock options. The table on this slide lists the compensation packages of different CEOs. Top management may also get perks and special treatment that is criticized by stakeholders.

Five Rules of Successful
Diversity Recruiting
Get everyone involved
Showcase your diversity
Work with diversity groups within your community
Spend money
Sell, sell, sell – and measure your return on investment
A diverse workforce is better at making decisions regarding issues related to consumer diversity
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Managers from companies devoted to workforce diversity devised five rules that make diversity recruiting work:
Get everyone involved: Educate all employees on the tangible benefits of diversity recruiting to garner support and enthusiasm for those initiatives.
Showcase your diversity: Prospective employees are not likely to become excited about joining your company just because you say that your company is diversity-friendly; they need to see it.
Work with diversity groups within your community: By supporting community-based diversity organizations, your company will generate the priceless word-of-mouth publicity that will lead qualified diversity candidates to your company.
Spend money: If you are serious about diversity recruiting, you will need to spend some money getting your message out to the right places.
Sell, sell, sell—and measure your return on investment: Employers need to sell their company to prospective diversity employees and present them with a convincing case as to why their company is a good fi t for the diversity candidate.
A diverse workforce is better at making decisions regarding issues related to consumer diversity. Reaching fast-growing demographic groups such as Hispanics, African Americans, Asian Americans, and others will be beneficial to large companies as they begin to target these markets.
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Middle Managers
Those members of an organization responsible for the tactical planning that implements the general guidelines established by top management
Have more focused responsibilities and spend more time organizing than other managers
In business, plant managers, division mangers and department mangers make up middle management
The ranks of middle managers have been shrinking as more companies downsize to be more productive
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Rather than making strategic decisions about the whole organization, middle managers are responsible for tactical planning that will implement the general guidelines established by top management. Thus, their responsibility is more narrowly focused than that of top managers. Middle managers are involved in the specific operations of the organization and spend more time organizing than other managers. In business, plant managers, division managers, and department managers make up middle management. The ranks of middle managers have been shrinking as more and more companies downsize to be more productive.
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First-Line Managers
Those who supervise both workers and the daily operations of an organization
Responsible for implementing plans established by middle management and directing workers’ daily performance
Spend most of their time directing and controlling
Commonly called foreman, supervisor and office service manager
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Most people get their first managerial experience as first-line managers, those who supervise workers and the daily operations of the organization. They are responsible for implementing the plans established by middle management and directing workers’ daily performance on the job. They spend most of their time directing and controlling. Common titles for first-line managers are foreman, supervisor, and office service manager.
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Areas of Management (1 of 2)
Financial Manager
Focus on obtaining the money needed for the successful operation of the organization and using that money in accordance with organizational goals
Production and Operations Manager
Develop and administer the activities involved in transforming resources into goods, services, and ideas ready for the marketplace
Human Resources Manager
Handle the staffing function and deals with employees in a formalized manner
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At each level of management, managers specialize in the areas of: finance, production and operations, human resources, marketing and administration.
While larger firms will most likely have all of these managers, in smaller firms these important tasks may fall onto the owner
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Areas of Management (2 of 2)
Marketing Manager
Responsible for planning, pricing, and promoting products and making them available to customers through distribution
Information Technology (IT) Manager
Responsible for implementing, maintaining, and controlling technology applications in business, such as computer networks
Administrative Manager
Manage an entire business or a major segment of a business; do not specialize in a particular function
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Managing Automation and Robots in the Workplace
As digital technology and automation came to the forefront in business operations, many thought the managerial function would no longer be necessary—however, the opposite has proven to be true
Technical and leadership skills valued more highly among today’s managers as their former roles of overseeing employees on a production line have declined
These duties are now delegated to employees who oversee the operations of the machines on the production lines
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As digital technology and automation came to the forefront in business operations, many thought the managerial function would no longer be necessary. However, the opposite has proven to be true. Managers are still necessary, but their activities have changed. Technical and leadership skills are valued more highly among today’s managers as their former roles of overseeing employees on a production line have declined. These duties are now delegated to the employees who oversee the operations of the machines on the production lines.
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Managerial Roles
Decisional
Entrepreneur
Disturbance handler
Resource allocator
Negotiator
Informational
Monitor
Disseminator
Spokesperson
Interpersonal
Figurehead
Leader
Liaison
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Type of Role Specific Role Examples of Role Activities
Decisional Entrepreneur Commit organizational resources to develop innovative goods and services; decide to expand internationally to obtain new customers for the organization’s products.
Disturbance handler Move quickly to take corrective action to deal with unexpected problems facing the organization from the external environment, such as a crisis like an oil spill, or from the internal environment, such as producing faulty goods or services.
Resource allocator Allocate organizational resources among different functions and departments of the organization; set budgets and salaries of middle and first-level managers.
Negotiator Work with suppliers, distributors, and labor unions to reach agreements about the quality and price of input, technical, and human resources; work with other organizations to establish agreements to pool resources to work on joint projects.
Informational Monitor Evaluate the performance of managers in different functions and take corrective action to improve their performance; watch for changes occurring in the external and internal environment that may affect the organization in the future.
Disseminator Inform employees about changes taking place in the external and internal environment that will affect them and the organization; communicate to employees the organization’s vision and purpose.
Spokesperson Launch a national advertising campaign to promote new goods and services; give a speech to inform the local community about the organization’s future intentions.
Interpersonal Figurehead Outline future organizational goals to employees at company meetings; open a new corporate headquarters building; state the organization’s ethical guidelines and the principles of behavior employees are to follow in their dealings with customers and suppliers.
Leader Provide an example for employees to follow; give direct commands and orders to subordinates; make decisions concerning the use of human and technical resources; mobilize employee support for specific organizational goals.
Liaison Coordinate the work of managers in different departments; establish alliances between different organizations to share resources to produce new goods and services.
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Technical Expertise
Technical Expertise
Specialized knowledge and training needed to perform jobs related to particular areas of management
Needed most by first-line managers and least critical to top-level managers
32
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Technical expertise is the specialized knowledge and training needed to perform jobs that are related to particular areas of management. This knowledge is needed most by first-line managers and least critical to top-level managers.
32

Conceptual Skills
Conceptual Skills
Ability to think in abstract terms and see how parts fit together to form the whole
Needed most by top level managers
Evaluate where the company will be in the future
33
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Conceptual skills are the ability to think in abstract terms and to see how parts fit together to form the whole. These skills are need most by top level managers. Top management must be able to evaluate continually where the company will be in the future.
33

Financial Manager
Financial managers are responsible for obtaining the necessary funding for organizations to succeed, both in the short term and in the long term
This financial manager of a city hedge fund analyzes data from financial charts
34
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This financial manager of a city hedge fund analyzes data from financial charts. Financial managers are responsible for obtaining the necessary funding for organizations to succeed, both in the short term and in the long term.
34

Analytical Skills
Analytical Skills
Ability to identify relevant issues, recognize their importance, understand relationships between them and perceive underlying causes of a situation
Most important to the success of top level managers
Resolving ethical issues often requires analytical skills
35
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Analytical skills are the ability to identify relevant issues, recognize their importance, understand the relationships between them and perceive the underlying causes of a situation. Analytical skills are most important to the success of top level managers. Resolving ethical issues often requires analytical skills.
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Human Relations Skills
Human Relations Skills
Ability to deal with people, both inside and outside the organization
Those who can relate, communicate well, understand the needs, and show a true appreciation for others are more successful
Important in organizations that provide services, such as hospitals, airlines and banks
36
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Human relation skills are the ability to deal with people, both inside and outside the organization. These skills are especially important in organizations that provide services, such as hospitals, airlines and banks. Those who can relate to others, communicate well with others, understand the needs of others, and show a true appreciation for others are generally more successful than managers who lack such skills.
36

Seven Tips for Successful Leadership
Leadership is the ability to influence employees to work toward organizational goals
Build effective and responsive interpersonal relationships
Communicate effectively – in person, print, e-mail, etc.
Build the team and enable employees to collaborate effectively
Understand the financial aspects of the business
Know how to create an environment in which people experience positive morale and recognition
Lead by example
Help people grow and develop
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Leadership is the ability to influence employees to work toward organizational goals.
Seven helpful tips for successful leadership:
Build effective and responsive interpersonal relationships.
Communicate effectively—in person, print, e-mail, etc.
Build the team and enable employees to collaborate effectively.
Understand the financial aspects of the business.
Know how to create an environment in which people experience positive morale and recognition.
Lead by example.
Help people grow and develop.
37

Leadership Styles
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Autocratic Leaders
Make all the decisions then tell employees what must be done and how to do it
Democratic Leaders
Involve employees in decisions
Free-rein Leaders
Let employees work without much interference; setting performance standards and letting employees find their own way to meet them
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Managers often can be classified into three types based on their leadership style. Autocratic leaders make all the decisions and then tell employees what must be done and how to do it. They generally use their authority and economic rewards to get employees to comply with their directions. Martha Stewart is an example of an autocratic leader. She built up her media empire by paying close attention to every detail.
Democratic leaders involve their employees in decisions. The manager presents a situation and encourages his or her subordinates to express opinions and contribute ideas. The manager then considers the employees’ points of view and makes the decision. Herb Kelleher, co-founder of Southwest Airlines, had a democratic leadership style. Under his leadership, employees were encouraged to discuss concerns and provide input.
Free-rein leaders let their employees work without much interference. The manager sets performance standards and allows employees to find their own ways to meet them. For this style to be effective, employees must know what the standards are, and they must be motivated to attain them. The free-rein style of leadership can be a powerful motivator because it demonstrates a great deal of trust and confidence in the employee. Warren Buffett, CEO of Berkshire Hathaway, exhibits free-rein leadership among the managers who run the company’s various businesses.
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Authentic Leadership
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Authentic Leaders
Different from the other three leadership styles because it is not exclusive
Both democratic and free-rein leaders could qualify as authentic leaders
Passionate about goals and mission of company, display corporate values in the workplace, form long-term relationships with stakeholders
Kim Jordan of New Belgium Brewing is an authentic leader
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Another type of leadership style that has been gaining in popularity is authentic leadership. Authentic leadership is a bit different from the other three leadership styles because it is not exclusive. Both democratic and free-rein leaders could qualify as authentic leaders depending upon how they conduct themselves among stakeholders. Authentic leaders are passionate about the goals and mission of the company, display corporate values in the workplace, and form long-term relationships with stakeholders. Kim Jordan of New Belgium Brewing is an authentic leader. As co-founder of the company, she helped develop the firm’s core values and has ensured that everything New Belgium does aligns with these values.
39

Howard Schultz’s Leadership
Howard Schultz, CEO of Starbucks, has great human relations skills and leadership abilities, as demonstrated by his ability to relate to others
Under his leadership, Starbucks decided to offer health insurance to its part-time workers
40
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Howard Schultz, CEO of Starbucks, has great human relations skills and leadership abilities, as demonstrated by his ability to relate to others. Under his leadership, Starbucks decided to offer health insurance to its part-time workers.
40

Employee Empowerment
When employees are provided with the ability to take on responsibilities and make decisions about their jobs
Participative corporate culture is beneficial – employees feel they are taking an active role in the firm’s success
Leaders must adopt systems that support employee’s ability to provide input and feedback on the company
Manager should be trained to empower employees to make decisions even in challenging situations
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Employee Empowerment occurs when employees are provided with the ability to take on responsibilities and make decisions about their jobs. Employee empowerment does not mean that managers are not needed. Companies that have a participative corporate culture have been found to be beneficial because employees feel like they are taking an active role in the firm’s success. Leaders who wish to empower employees must adopt systems that support an employee’s ability to provide input and feedback on company decisions. Employees must be encouraged to actively participate in decision making. Managers should also be trained in ways to empower employees to make decisions while also guiding employees to challenging situations in which the right decision might not be so clear.
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Leadership in Teams
Today, decisions made by teams are becoming the norm
Effective way for encouraging employee empowerment
Decision making in teams is collective
Most effective teams are when all employees are encouraged to contribute their ideas and recommendations
Outspoken employees dominate the team and engage in groupthink, in which team members go with the majority rather than what they think is the right decision
Training employees how to listen to one another and provide relevant feedback helps prevent
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A section on leadership would not be complete without a discussion of leadership in teams. In today’s business world, decisions made by teams are becoming the norm. Teamwork has often been an effective way for encouraging employee empowerment. Although decision making in teams is collective, the most effective teams are those in which all employees are encouraged to contribute their ideas and recommendations. Teams often result in innovative ideas or decisions that would not have been reached by only one or two people.
However, truly empowering employees in team decision making can be difficult. It is quite common for more outspoken employees to dominate the team and engage in groupthink, in which team members go with the majority rather than what they think is the right decision. Training employees how to listen to one another and provide relevant feedback can help to prevent these common challenges. Another way is to rotate the team leader so that no one person
can assume dominancy.
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Steps in the Decision Making Process
Recognize and define the decision situation
Develop options
Analyze options
Select the best option
Implement the decision
Monitor the consequences
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Managers make many different kinds of decisions. Decision making is important in all management functions and at all levels, whether the decisions are strategic, tactical or operational.
A systematic approach using the following six steps usually leads to more effective decision making:
Recognizing and defining the decision situation
Developing options to resolve the situation
Analyzing the options
Selecting the best option
Implementing the decision
Monitoring the consequences of the decision

Recognizing and Defining the
Decision Situation
The first step in decision making is recognizing and defining the situation
Situations may be positive or negative
Situations calling for small-scale decisions occur without warning
Large-scale decisions generally occur after some warning signs
Once a situation is recognized, management must define it
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The first step in decision making is recognizing and defining the situation. The situation may be negative—for example, huge losses on a particular product—or positive—for example, an opportunity to increase sales. Situations calling for small-scale decisions often occur without warning. Situations requiring large-scale decisions, however, generally occur after some warning signs. Effective managers pay attention to such signals.
Once a situation has been recognized, management must define it. Losses reveal a problem—for example, a failing product. One manager may define the situation as a product quality problem; another may define it as a change in consumer preference. These two viewpoints may lead to vastly different solutions.
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Developing Options and Analyzing Options
The second step in the decision making process is developing options
A list of possible courses of action should include both standard and creative plans
The third step in the decision making process is analyzing options
Management must look at practicality and appropriateness of each option
Consider whether proposed option adequately addresses the situation
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Once the decision situation has been recognized and defined, the next step is to develop a list of possible courses of action. The best lists include both standard and creative plans. As a general rule, more time and expertise are devoted to the development stage of decision making when the decision is of major importance. When the decision is of less importance, less time and expertise will be spent on this stage.
After developing a list of possible courses of action, management should analyze the practicality and appropriateness of each option. An option may be deemed impractical because of a lack of financial resources, legal restrictions, ethical and social responsibility considerations, authority constraints, technological constraints, economic limitations, or simply a lack of information and expertise. When assessing appropriateness, the decision maker should consider whether the proposed option adequately addresses the situation. When analyzing the consequences of an option, managers should consider its impact on the situation and on the organization as a whole.
Technology can help managers maintain an agenda, analyze option, and make decisions
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Selecting the Best Option, Implementing the Decision
The fourth step in the decision making process is selecting the best option
Often a subjective procedure
The fifth step in the decision making process is implementing the decision
This step can be fairly simple, or very complex, depending on the nature of the decision
Prepare for unexpected consequences
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When all courses of action have been analyzed, management must select the best one. Selection is often a subjective procedure because many situations do not lend themselves to quantitative analysis. Of course, it is not always necessary to select only one option and reject all others; it may be possible to select and use a combination of several options.
To deal with the situation at hand, the selected option or options must be put into action. Implementation can be fairly simple or very complex, depending on the nature of the decision. Additionally, they should anticipate resistance from people within the organization. (People tend to resist change because they fear the unknown.) Finally, management should be ready to deal with the unexpected consequences.
46

Monitoring the Consequences
The sixth step in the decision making process is monitoring the consequences
Has the implementation of the decision accomplished the desired result?
Is yes, then the decision was sound
If no, then more analysis is warranted
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After managers have implemented the decision, they must determine whether it has accomplished the desired result. Without proper monitoring, the consequences of decisions may not be known quickly enough to make efficient changes. If the desired result is achieved, management can reasonably conclude that it made a good choice. If the desired result is not achieved, management may discover that the situation was incorrectly defined from the beginning. That may require starting the decision-making process all over again.
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Factors that Affect Decision Making
The use of intuition is usually a result of years of experience in a specific situation or environment
Stress and emotion can also influence decisions negatively
How the problem or situation is framed will determine the final decision, whether it is negative or positive
Finally, confidence and risk propensity are delicate factors in decision making
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It is just as important for managers to make decisions as it is for them to understand the factors that affect decision making. The use of intuition is usually a result of years of experience in a specific situation or environment. The manager will recognize patterns or similarities between the current situation and previous ones and use that information to make decisions. Stress and emotion can also influence decisions negatively. Defensiveness, overreaction, and obsession are indicators that stress and emotion are being factored into the decision making process. How the problem or situation is framed will determine the final decision, whether it is negative or positive. Managers need to ensure that they are seeing the situation objectively. Sometimes bad decisions are reinforced by escalation of commitment, where the manager is committed to a certain activity and yet continues to fail. The more failure occurs, the stronger the commitment becomes. Finally, confidence and risk propensity are delicate factors in decision making. Both attributes must be kept in balance if decisions are to be reasonable and effective.
48

Management in Practice
Management not a cut-and-dried process; there is no mathematical formula for managing a firm and achieving goals
Management expert, John P. Kotter says manager’s functions can be boiled down to two basic activities
Figuring out what to do despite uncertainty, great diversity, and an enormous amount of potentially relevant information
Getting things done through a large and diverse set of people despite having little direct control over most of them
49
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Management is not a cut-and-dried process. There is no mathematical formula for managing an organization and achieving organizational goals, although many managers passionately wish for one! Managers plan, organize, staff, direct, and control, but management expert John P. Kotter says even these functions can be boiled down to two basic activities:
Figuring out what to do despite uncertainty, great diversity, and an enormous amount of potentially relevant information, and
Getting things done through a large and diverse set of people despite having little direct control over most of them.
Managers spend as much as 75 percent of their time working with others—not only with subordinates but with bosses, people outside their hierarchy at work, and people outside the organization itself. In these interactions, they discuss anything and everything remotely connected with their business.
49

Agendas and Networking
Agenda
Calendar containing specific and vague items that cover short-term goals and long-term objectives
Helps manager determine what must be done
Technology tools can help manage agendas
Networking
Building of relationships and sharing of information with colleagues who can help managers achieve the items on their agendas
Provide information and advice on diverse topics
Social media sites have increased ability to network
50
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Managers spend a lot of time establishing and updating an agenda of goals and plans for carrying out their responsibilities. An agenda contains both specific and vague items, covering short-term goals and long-term objectives. Like a calendar, an agenda helps the manager figure out what must be done and how to get it done to meet the objectives set by the organization. Technology tools such as smartphones can help managers manage their agendas, contacts, communications, and time.
Managers also spend a lot of time networking—building relationships and sharing information with colleagues who can help them achieve the items on their agendas. Networks are not limited to immediate subordinates and bosses; they include other people in the company as well as customers, suppliers, and friends. These contacts provide managers with information and advice on diverse topics. Social media sites have increased the ability of both managers and subordinates to network. Internal social networks such as Yammer allow employees to connect with one another, while social networks such as Facebook or Twitter enable managers to connect with customers.

Challenges of the Business World
Rapidly changing technology
Increased scrutiny of individual and corporate ethics and social responsibility
Impact of social media
Changing nature of workforce
New laws and regulations
Increased global competition
Declining education standards
Making the best use of time
51
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Finally, managers spend a great deal of time confronting the complex and difficult challenges of the business world today. Some of these challenges relate to
Rapidly changing technology (especially in production and information processing)
Increased scrutiny of individual and corporate ethics and social responsibility
The impact of social media
The changing nature of the workforce
New laws and regulations
Increased global competition and more challenging foreign markets
Declining educational standards (which may limit the skills and knowledge of the future labor and customer pool)
Time itself—that is, making the best use of it
51

LinkedIn
Websites like LinkedIn are helping managers and employees network with one another to achieve their professional goals
52
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Websites like LinkedIn are helping managers and employees network with one another to achieve their professional goals.
It is only through creativity and imagination that managers can make effective decisions that benefit their organizations.
52

Solve the Dilemma (1 of 3)
Making Infinity Computers Competitive
Infinity Computers Inc. produces notebook computers, they sell through direct mail companies under the Infinity name and in some retail computer stores under their private brand name
Products are not significantly different from competitors’
Do not have extra product-enhancing features
Very price competitive
Strength from the company’s CEO/president George Anderson and the highly motivated, loyal staff
Weakness from having too many employees and too great a reliance on one product
53
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This Solve the Dilemma is taken from Chapter 6, page 199:
Infinity Computers Inc. produces notebook computers, which it sells through direct mail catalog companies under the Infinity name and in some retail computer stores under their private brand names. Infinity’s products are not significantly different from competitors’, nor do they have extra product- enhancing features, although they are very price competitive. The strength of the company has been its CEO and president, George Anderson, and a highly motivated, loyal workforce. The firm’s weakness is having too many employees and too great a reliance on one product. The firm switched to computers with the Intel Core i5 processors after it saw a decline in its netbook computer sales.
53

Solve the Dilemma (2 of 3)
Making Infinity Computers Competitive
Shelly has several options
Maintain current production levels and raises prices
Expand the facility and staff while maintaining the current price
Contract the production of the pies to a national chain, giving Shelly a percentage of profits with minimal involvement
54
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Recognizing that the strategies that initially made the firm successful are no longer working effectively, Anderson wants to reorganize the company to make it more responsive and competitive and to cut costs. The threat of new technological developments and current competitive conditions could eliminate Infinity.
54

Solve the Dilemma (3 of 3)
Making Infinity Computers Competitive
Discussion Questions
Evaluate Infinity’s current situation and analyze its strengths and weaknesses.
Evaluate the opportunities for Infinity, including using its current strategy, and propose alternative strategies.
Suggest a plan for infinity to complete successfully over the next 10 years
55
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Discussion Questions
1. Evaluate Infinity’s current situation and analyze its strengths and weaknesses.
2. Evaluate the opportunities for Infinity, including using its current strategy, and propose alternative strategies.
3. Suggest a plan for Infinity to compete successfully over the next 10 years.
55

Discussion
Name the five functions of management and briefly describe each function.
What skills do managers need? Give examples of how managers use these skills to do their jobs.
Identify the three levels of management. What is the focus of managers at each level?
Explain the steps in the decision-making process.
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Name the five functions of management and briefly describe each function.

The five functions of management include planning, organizing, staffing, directing, and controlling. Planning is the process of selecting a course of action to achieve organizational objectives. Organizing consists of structuring all resources and activities to accomplish objectives in an efficient and effective manner. Staffing is hiring people to carry out the work of the organization. Directing is motivating and leading employees to achieve organizational objectives. Controlling is evaluating and correcting activities to keep the organization on course.
What skills do managers need? Give examples of how managers use these skills to do their jobs.

Skills needed by managers include leadership, technical expertise, conceptual skills, analytical skills, and human relations skills. Leadership is the ability to influence and motivate employees to work toward the achievement of organizational goals. Technical expertise is the specialized knowledge needed to perform a job, such as managing an auto production line. Conceptual skills are the ability to think in abstract terms so that a manager can fit parts together to form a whole perspective of a business operation. Analytical skills are the ability to identify relevant issues and recognize their importance, understand the relationships between them, and perceive their underlying causes. Human relations skills involve dealing with people both inside and outside the organization.
Identify the three levels of management. What is the focus of managers at each level?
The three levels of management include top management, middle management, and first‑line management. Top management includes the president and other top executives who have overall responsibility for the organization. Middle management includes plant managers, division managers, and other managers who have a narrower focus under top managers. First-line management includes all the managers who supervise workers. These managers are involved in the everyday operations of the organization.
Explain the steps in the decision-making process.

Decision making is a six-step process that occurs at all management levels. The first step involves recognizing and defining the situation. Step two involves developing possible courses of action, both standard and creative ones. Step three involves analyzing the feasibility, appropriateness, and consequences of each option. Step four involves selecting the best option from the list of options. The decision is implemented in step five. Step six requires the monitoring of the decision’s consequences. These steps in decision making should be viewed only as a broad framework to help people in their approaches to decision making.

Part 3
Chapter 6

Managing for Quality and Competitiveness

We begin part 3 of your textbook, Managing for Quality and Competitiveness, with chapter 6, The Nature of Management.
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