MANAGING F

OR BUSIN

ESS

SUCCESS

CH

AP

TE

R 6

The Role of Management

• Managerial Functions

Henri Fayol’s 14 Principles of Management

1. Division of work2. Authority3. Discipline4. Unity of Command5. Unity of Direction6. Subordination of

interests to the general interest

7. Remuneration

8. Centralization 9. Scalar chain (line of authority)10. Order11. Equity12. Stability of tenure of personnel13. Initiative14. Esprit de corps

Source: Fayol 1916/1949

Managerial Functions

Planning

Planning

A process that managers use to identify and select the appropriate business model and goals for their company.

1.Choose a business model

Mission Statement: A short description of the organization’s purpose.

Part of Procter & Gamble’s Mission to

Improve the Lives of

Consumers

Crest

Planning

A process that managers use to identify and select the appropriate business model and goals for their company.

1.Choose a business model2.Allocate resources

Leverage

Problems

Strength Opportunity

Weakness Threat

SWOT Analysis

SWOT Analysis of Dell

Strengths Weaknesses

ThreatsOpportunities

#1 direct sale computerStrong in storage/server marketsLow-cost operating modelProfitable

Low R&D spendingWeak services positionSmall inventories

Low-end & mid-range segmentsNew marketsInternational expansionCyclical demandUpgrades/replacement demand

Strong competitionInterest/foreign currency ratesSlow growth in PC marketSlow growth in IT spending

Source: Datamonitor 2004

Planning

A process that managers use to identify and select the appropriate business model and goals for their company.

1.Choose a business model2.Allocate resources3.Set goals and objectives

Goals and Objectives

• To increase profits by 10% by 2009.• To decrease product defects by 2% in

2008.• To make the best peanut butter in the

world.

Managerial Functions

PlanningOrganizing

Organizing

A process managers use to create a company’s organizational structure.

Organizational Design

Creating a specific organizational structure and culture to profitably pursue the company’s business model profitably.

Functional Structures

Company President

or CEO

Manufacturing Marketing/SalesProduct

Development

Transportation/Materials

Management

Human Resources

Divisional Structures

• Product (e.g., GE)

Chief Executive

Officer

Light Bulbs

ManufacturingMarketing/

SalesProduct

DevelopmentMaterials

ManagementHuman

Resources

Washing Machines

Electric Turbines

…300+

Divisional Structures• Product• Market (Customer Type)

Chief Executive

Officer

Corporate

ManufacturingMarketing/

SalesProduct

DevelopmentMaterials

ManagementHuman

Resources

SmallBusiness

HomeUser

Government

Del Computing

Divisional Structures

• Product• Market (Customer Type)• Geography

Honda

Chief Executive

Officer

NorthAmerica

ManufacturingMarketing/

SalesProduct

DevelopmentMaterials

ManagementHuman

Resources

SouthAmerica

Europe Asia Japan

Matrix Structures

707

727

737

EngineeringSales/

MarketingManufacturing

MaterialsManagement

Accounting

CEO

Team

Pro

ject

Man

ager

Managerial Functions

PlanningOrganizing

Leading

Leading

The ability to develop a plan and motivate others to pursue it.

Contingency Theory of Leadership

• Directive• Supportive• Participative• Achievement-oriented

Managerial Functions

PlanningOrganizing

LeadingControlling

Controlling

Evaluating whether or not a company is achieving its goals and taking action if it is not.

The Role of Management

• Levels of Managers