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Management, Leadership, and the
Internal Organization
www.wileybusinessupdates.com
Copyright John Wiley & Sons, Inc.
Copyright © 2013 Pearson Education, Inc.
Publishing as Prentice Hall
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Chapter 7
Learning Objectives
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Contrast the types of business decisions and
list the steps in the decision-making process.
Define leadership and compare different styles
of leadership.
Discuss the meaning and importance of
corporate culture.
Identify the five major forms of
departmentalization and four main types of
organization structures.
Define management and the three types of skills
necessary for managerial success.
Explain the role of vision and ethical standards in
business success.
Summarize the benefits of planning and distinguish
strategic, tactical, and operational planning.
Describe the strategic planning process.
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Copyright 2015 John Wiley & Sons, Inc.
What is Management?
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Management is the process of achieving organizational objectives
through people and other resources
Copyright 2015 John Wiley & Sons, Inc.
Top Management
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Copyright 2015 John Wiley & Sons, Inc.
Develop long-range strategic
plans for the organization.
Inspire executives and
employees to achieve their
vision for the company’s
future.
Intense and demanding
Middle Management
Focus on specific operations,
products, or customer groups
within an organization
Responsible for developing
detailed plans and procedures
to implement the firm’s strategic
plans.
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Supervisory Management
Implement the plans
developed by middle
managers.
Responsible for non-
managerial employees.
Motivate workers to
accomplish daily, weekly, and
monthly goals.
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Copyright 2015 John Wiley & Sons, Inc.
Skills Needed for Management Success
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Technical Skills
Manager’s ability to understand and use the techniques, knowledge,
tools, and equipment of a specific discipline or department.
Human Skills
Interpersonal skills that enable a manager to work effectively with and
through people.
Conceptual Skills
Ability to see the organization as a unified whole and to understand
how each part of the overall organization interacts with other parts.
Copyright 2015 John Wiley & Sons, Inc.
Managerial Functions
Planning
Process of anticipating future events
and conditions and determining
courses of action for achieving
organizational objectives.
Organizing
Blending human and material
resources through a formal structure of
authority.
Directing
Guiding and motivating employees to
accomplish organizational objectives.
Controlling
Evaluating an organization’s
performance to determine whether it is
accomplishing its objectives.
Establish performance standards.
Monitor actual performance.
Compare actual performance with
established standards.
Take corrective action if required.
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Setting a Vision
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A vision is a founder’s perception of marketplace needs and the methods
an organization can use to satisfy them.
Vision serves as the target for a firm’s actions
Vision helps direct the company toward opportunities
Vision differentiates a company from its competitors
A vision must be focused yet adaptable to changes
in the business environment.
Copyright 2015 John Wiley & Sons, Inc.
Setting Ethical Standards
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Ethical standards are critical to a firm’s relationships with:
customers
suppliers
the general public
Ethical standards are set in compliance with:
industry regulations
federal regulations
New standards are set in response to unethical actions by managers
(Sarbanes-Oxley)
The ethical tone set by top management can encourage, motivate and
inspire employees
Most Ethical Companies FORTUNE Magazine
Copyright 2015 John Wiley & Sons, Inc.
Importance of Planning
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Planning is categorized by scope and breadth
long range
short range and very narrow
Planning can be divided into:
Strategic
Tactical
Operational
Contingency
Organizations should have a comprehensive planning framework
Plans outline the steps the company will take to meet outlined goals and objectives.
Copyright 2015 John Wiley & Sons, Inc.
Planning at Different
Management Levels 12
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The Strategic Planning Process
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Defining the Organization’s Mission
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The first step in strategic planning is to translate the firm’s vision into a
mission statement
A mission statement is a written explanation of an organization’s
business intentions and aims
A statement of a firm’s purpose
Highlighting scope of operations, markets served and differentiators
Guides actions of employees
Publicizes company’s reason for existence
Copyright 2015 John Wiley & Sons, Inc.
Assessing Competitive Position
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To determine the firm’s current or potential position in the
marketplace, a SWOT analysis is conducted.
By systematically evaluating:
Strengths
Weaknesses
Opportunities
Threats,
a company can develop the best strategies for gaining a
competitive advantage
Copyright 2015 John Wiley & Sons, Inc.
SWOT Analysis
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Setting Objectives for the Organization
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Objectives set guideposts by which managers define the
organization’s desired performance in the following areas:
New product development
Sales
Customer service
Growth
Environmental and social responsibility
Employee satisfaction
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Additional Steps in the Strategic
Planning Process
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Creating strategies for competitive
differentiation
Implementing the strategy
Monitoring and adapting strategic plans
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Managers as Decision Makers
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Decision making is the process of recognizing a problem or
opportunity, evaluating alternative solutions, selecting and
implementing an alternative, and assessing the results.
Programmed decision involves simple, common problems with
predetermined solutions.
Nonprogrammed decision involves a complex, unique problem or
opportunity with important consequences for the organization.
Copyright 2015 John Wiley & Sons, Inc.
How Managers Make Decisions
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Managers as Leaders
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Leadership is the ability to direct or inspire people to attain certain goals.
Three traits are common among many leaders:
Empathy
Self-awareness
Objectivity in dealing with others
Leadership involves the use of influence or power from the following
sources:
A leader’s position in the company
A leader’s experience and expertise
A leader’s personality
Copyright 2015 John Wiley & Sons, Inc.
Leadership Styles
Autocratic Leadership
Make decisions on own without consulting
employees
Democratic Leadership
Involve employees in decisions, delegate
assignments, and ask employees for
suggestions
Free-Rein Leadership
Leave most decisions to employees
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Corporate Culture
Corporate Culture : Organization’s
system of principles, beliefs, and
values.
Managers use symbols, rituals,
ceremonies, and stories to reinforce
corporate culture.
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Organizational Structures
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Organization: structured grouping of people working together to achieve
common goals.
Three key elements:
Human interaction
Goal-directed activities
Structure
Steps in the organizing process:
Copyright 2015 John Wiley & Sons, Inc.
Organization Chart
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Departmentalization
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Process of dividing work activities into units within the organization
Product departmentalization: organized based on the goods and services a company
offers.
Geographical departmentalization: organized by geographical regions within a
country or, for a multinational firm, by region throughout the world.
Customer departmentalization: organized by the different types of customers the
organization serves
Functional departmentalization: organized by business functions such as finance,
marketing, human resources, and production.
Process departmentalization: organized by work processes
necessary to complete production of goods or services
Copyright 2015 John Wiley & Sons, Inc.
Forms of Departmentalization
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Delegating Work Assignments
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Delegation - assigning work activities to subordinates
Providing employees with the responsibility and the necessary authority
Employees have accountability, or responsibility for the results of the way they perform
their assignments.
Authority and responsibility move down
Accountability moves up
Span of management is the number of subordinates, or direct reports, a supervisor
manages.
Centralization: decision making is retained at the top of the management
hierarchy.
Decentralization: decision making is located at the lower levels. Many firms
believe it enhances their flexibility and responsiveness to customer needs.
Copyright 2015 John Wiley & Sons, Inc.
Types of Organizational Structures
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Line Organization
Oldest and simplest form; direct flow of authority from CEO to subordinates
Chain of command indicates who directs which activities and who reports to
whom.
Line-and-Staff Organizations
Combines line departments and staff departments
Line departments participate directly in decisions that affect the core
operations of the organization
Staff departments lend specialized technical support
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Line-and-Staff Organizations
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Committee Organizations
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Authority and responsibility are in the hands of a group of
individuals.
Often part of a line-and-staff structure.
Often develop new products.
Tend to act slowly and conservatively.
Often make decisions by compromising conflicting interests
rather than choosing best alternative.
Copyright 2015 John Wiley & Sons, Inc.
Matrix Organizations
Advantages
Flexibility in adapting to changes
Focus on major problems or products
Outlet for employee’s creativity and
initiative
Disadvantages
Integrating skills of many
specialists into a coordinated team
Team members’ permanent
functional managers must adjust
the employees’ regular workloads
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A structure that links employees from different parts of the organization to work
together on specific projects
Employees report to a line manager and a project manager.
The Matrix Organization
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Copyright 2015 John Wiley & Sons, Inc.
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