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COMM1800 Chapter 3 - Managing Businesses for Value

Terms in this set (58)

manager
someone who is responsible for looking after the interests of the business owners and other stakeholders; make and implement strategic decisions that create value
business's owners
own the business and all decision makers should follow their directives
Board of Directors
a group of directors elected by the owners to make critical decisions and serve on a business' governing body on their behalf
senior managers
a level of manager hired by the Board of Directors that directs and coordinates the overall business organization; the CEO/President is the highest senior manager and other Vice Presidents report to the President
management hierarchy
owners
board of directors (in a corporation)
senior managers
functional managers
non-management employees
Where do authority and power come from?
Authority comes from above and power comes from below.
functional/divisional managers
selected by senior managers to run the functional areas (i.e. marketing, production) or divisions (geographic area or product) of the business
CEO
chief executive officer
CFO
chief financial officer
COO
chief operations officer
CIO
chief information officer
CMO
chief marketing officer
controller
the chief accountant
span of influence
the scope of responsibilities that a particular manager has, increasing as managers move up the management hierarchy
What are the 3 activities of managing?
1. planning for the future
2. executing in the present
3. reviewing the past to learn from experiences to enhance the future
planning
involves envisioning the future, finding opportunities, setting goals, finding and analyzing alternatives, selecting the best alternative(s) to achieve these goals and developing systems that will enable the business to execute the selected alternatives; they try to gather as much information as possible and make informed choices because imperfect information creates risk
visioning
the process of looking at the past and present, embracing the forces of change and forecasting the future
strategic plan
the plan used by senior management to set and communicate the business' broad goals and long term objectives, but does not provide specific details; i.e. Hyundai created a strategic plan to enter the US market within 10 years with automobiles that meet the evolving needs of the American consumer
tactical plan
a plan that functional managers use to breakdown broad goals and long-term objectives into more precise goals and actions; i.e. Hyundai's functional managers doing research and determining the best way to implement the strategic plan is to develop a low-cost, quality automobile
operational plan
a plan middle and junior managers use to break down tactical plans into very specific activities and standards to show detail of how actions are to be performed and goals reached
contingency plans
plans developed by all managers that detail what course of action a company should take in case the unexpected occurs
execution
part of the management process that involves using systems to operate the business, according to plans to achieve desired goals; flexibility and adapting to change is critical
reviewing
part of the management process that involves using systems to camper the desired outcomes to the actual results; also involves monitoring how plans are being executed and holding managers accountable for their decisions
control
using systems to monitor execution and attempt to ensure that execution meets the goal of planning, beginning with managers setting clear and reasonable goals
accountability
holding managers responsible for meeting standards by rewarding managers for exceeded them and correcting managers for failing to meet them; ideally, this leads to learning
Porter's 5 Forces
Michael Porter of Harvard Business School's framework of recognizing 5 external forces that affect a business and how much power it has
1. supplier power
2. barriers to entry
3. customer power
4. threat of substitute products
5. rivalry
external environment
the important factors that a business does not directly control, which include the overall economy, customer desires and competitor actions
internal environment
factors that a business can control, including products the business sells, where it will conduct business and how it will manage employees
supplier power
one of Porter's Five Forces that refers to the power that suppliers have in a business' value chain; can the supplier dictate the terms of the relationship? does the business have alternative suppliers?
barrier to entry
one of Porter's Five Forces that refers to the difficulty new businesses may have in entering the market; barriers include government policy, overcoming customer preference and financial requirements
customer power
one of Porter's Five Forces that refers to the power customers have in the business' value chain; does the customer have choices? can the customer dictate the price and terms of the sale?
threat of substitute products
one of Porter's Five Forces that refers to the availability of products that the customer can substitute for the business' products; if customers are dissatisfied with the business's product, can they find alternative products that will met their needs?
rivalry
one of Porter's Five Forces that relates to the intensity of the competition in the industry; how fiercely do competitors response to each other's initiatives?
SWOT analysis
an analogy for "strengths, weaknesses, opportunity and threats" that managers must recognize within their company; strengths and weaknesses are internal to the business and can be controlled, whereas opportunities and threats are external to the business and cannot be controlled
networks
with people, a communication process that brings people and organizations together for a common purpose; networks can include suppliers, competitors, employees, and even the government
formal network
the communication process adopted by senior management that brings a business organization together
informal/social networks
a communication process not formally established by senior management that creates opportunities and challenges in a business through trusted colleague connections;a business, to create the best possible product, must carefully organize the formal team in such a way as to enhance the use of this network; i.e. only some employees getting a pay raise or customers figuring out that the product differs in different markets
team
cohesive groups of people who focus on an objective
centralized organization
a group in which the authority to make decisions to rests on a few senior managers; characteristics of these organizations include consistency and standardization
decentralized organization
a group in which the authority to make and implement decisions rests in many managers, often junior and middle managers; characteristics of these organizations include flexibility, adaptively and creativity; fosters initiative and taking advantage of opportunity when it arises but can create inconsistencies
divisional organization
a group in which the business is divided into certain market, geographic or product-based divisions; beneficial when people in different places have different needs but a disadvantage is that each division must be self-contained and thus have its own areas which could be expensive and inefficient
functional organization
a group in which the business is organized by line or staff functions
line functions
functions directly involved in a company's value chain, specifically inputs, the process(es) used to covert the inputs to outputs and the outputs sold to customers; these include purchases, production and marketing; focuses on the business's expertise according to functions, which gains efficiency and lowers costs, however could result in not recognizing the unique needs of different markets
staff functions
functions indirectly involved in a company's value chain that support activities of the line functions; examples include accounting, finance and information systems
matrix organization
a group organized in a combination of a divisional model and a functional model in attempt to capture the benefits of both models; part of the business reports to 2 bosses which can be an issue
traits of successful managers
1. an ability and willingness to understand the company's business model and strategy
2. honesty and integrity, with a desire to be accountable and responsible
3. an ability and desire to constantly compete by learning and improving and helping others learn and improve
4. the ability to be focused and organized
5. the ability to empathize with customers, suppliers, competitors, employees and fellow managers; make all stakeholders feel understood, appreciated and receive fair value for their work
6. the ability to effectively deal with time
7. the ability to deal with change in an effective and positive manner
8. the ability to grasp the future and manage uncertainty
9. the ability to communicate with all parties involved in the business's value chain
10. the ability to build and lead teams
change management
the managerial trait that relates to a manager's ability to deal with change in an effective and positive manner; this involves the knowledge of understanding opportunities and challenges and knowing when to be flexible and when not to be
teamwork
what members of a team do to achieve their objective
how do managers form and motivate teams who create value?
1. pick team members who have the needed skills and the ability to work with other team members
2. find leaders to help the team reach its objective
managers vs. leaders
managers are authorized to run the business by owners or higher-level managers while leaders are people who are empowered by a team and motivate them to collectively achieve a goal
formal leaders
leaders that have formal authority based on the position they hold in the company, yet are still empowered by team members to act as leaders; managers are often formal leaders
informal leaders
leaders who do not have formal authority within the company, but are still empowered by team members to act as leaders
transactional leaders
a leader who helps a team reach a clearly defined, desired objective
transformational leaders
a leader who helps a team envision possibilities and the need to change
what 2 traits are viewed as crucial for leaders?
1. honesty and integrity
2. the ability to communicate
autocratic leaders
leaders who make decision without seeking the input of others
participative/democratic leaders
leaders who attempt to involve as many people as possible in decision making
laissez-faire leader
a leader who sets the overall direction and guidelines but permits others to make decisions about implementation
THIS SET IS OFTEN IN FOLDERS WITH...