Chapter 5
Managing the
Business
Enterprise
PowerPoint Presentation by Charlie Cook
Copyright © 2005 Prentice Hall, Inc.
All rights reserved.
MPC’s Deep Offerings
• Business 40 Principles of Management
 The role of the manager
 Planning
 Organizing/Staffing
 Directing
 Controlling
• Business 44 Business ownership/management
 Focusing on small business
 Create a business model and prepare a plan for it
 Get funding
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–2
“Some men see things as they are
and say why. I dream of things that
never were and say why not.”
—John F. Kennedy
“I can’t do any long range planning
because I have too many urgent
problems to take care of.”
—Managers I’ve heard a
million times
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–3
Key Topics
• The management process
• Setting goals and formulating strategies
• Types of managers by level and area
• The five basic management skills
• The development and importance of corporate
culture
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–4
The Management Process
• Planning – What are we going to do?
• Organizing – How are we going to do it?
• Directing – Get it done!
• Controlling – How well did we do?
• Balance – Doing the right amount of each step
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5–5
Management’s Real Responsibilities:
• Effectiveness and efficiency
• Accountable to all key stakeholders
• Drive the business forward, don’t just deal with
today’s urgent issues
 This takes planning
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5–6
Management:
without planning
• Just do it!
• Do what?
• How do we do it?
• We have a problem,
fix it. How?
• Customers aren’t
happy, fix it. How?
• Profits are down, fix
it. How?
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with planning
Set goals
Develop strategies
to achieve goals
Communicate the
plan.
Do it.
Check results
against your goals.
Celebrate!
5–7
The most overarching goals:
Mission Statement
• Mission Statement: How a business will
achieve its fundamental purpose
 Derive goals from it
 All activities should be traced to support the mission
 Unchanging over time
 The firm’s reason for being!
 More?
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–8
Brainstorm Your Mission:
The Vision Part:
• List 5-10 words or phrases that describe your business. Highlight
the three most important.
• List 3-5 words or phrases that describe the company's ideal image
from a customer's point-of-view.
• List 3-5 words or phrases that describe the company's ideal image
from a management and employee point-of-view.
Temper with your customer and business reality:
• List the market opportunities and/or customer needs that your
company intends to address (e.g., the business' value proposition).
• Who are your customers? List the company's primary and
secondary target markets (target markets are discussed in the
Market Analysis lesson).
• With your customers in mind, list each service or product your
business will provide.
• List 3-5 measures of your business' success.
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–9
Mission Statement:
A Professional Example
We create, market and distribute exciting bicycle products which blend
innovative design and creative engineering for the discerning customer.
We will be the supplier of choice for the full service bicycle dealer.
Goals:
#1 likely to buy as
measured by trade
association
consumer surveys
#1 supplier in total
dollars to 25% of
retail dealers
Earn at least 15%
return on equity
Strategies:
•Develop dealer
•Effectively turn new
market share
concepts into
measurement
marketable products
process
•Visibly differentiate
•Align support with
products
dealer needs
•Pull-through
•Create sales
consumer marketing
programs to increase
programs
share of dealer
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
market share
•Increase higher margin
products to 30 % of
sales
•Improve sales forecast
to minimize inventory
overstock costs
•Succeed on the other
two goals
5–10
Goal setting: the Starting Point of
Effective Management & Planning
• Goal: Objective that business hopes and plans to
achieve;
 Goals that work are: measurable, objective, attainable
• Goal-setting benefits:
 To provide direction for managers
 To communicate direction to workers
 To help allocate resources
 To define corporate culture
 To add objectivity to
performance evaluation
 Benchmark,
standard
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5–11
SMART Goal Setting – www.wikipedia.org
• Specific - Objective or goal can't be unclear; it should be
precisely defined
• Measurable - Define a method of measuring the
objective/goal
• Agreed-To/Achievable - All parties need to agree to the
objective/goal, and it also must be achievable
• Realistic/Rewarding/Relevant - It must be a realistic
objective/goal, and it must make sense to do it
• Time-related - to be completed within an agreed time
scale
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–12
The smallest strategies should also align
with most global strategies & goals.
• Strategy: The broad
set of action plans to
achieve company
goals
 Corporate Strategy
 Business Strategy
 Functional Strategy
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–13
Mission Statement:
A Professional Example
We create, market and distribute exciting bicycle products which blend
innovative design and creative engineering for the discerning customer.
We will be the supplier of choice for the full service bicycle dealer.
Goals:
#1 likely to buy as
measured by trade
association
consumer surveys
#1 supplier in total
dollars to 25% of
retail dealers
Earn at least 15%
return on equity
Strategies:
•Develop dealer
•Effectively turn new
market share
concepts into
measurement
marketable products
process
•Visibly differentiate
•Align support with
products
dealer needs
•Pull-through
•Create sales
consumer marketing
programs to increase
programs
share of dealer
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
market share
•Increase higher margin
products to 30 % of
sales
•Improve sales forecast
to minimize inventory
overstock costs
•Succeed on the other
two goals
5–14
Making Your Goals:
• Make three goals that if achieved will help you
achieve your mission:
 Try to create one in each category
 Customer
satisfaction
 Market share
 Financial performance
 Or something else if that is more important to you
 Make them SMART
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–15
Strategy Formulation
Alignment
Check!
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
Figure 5–2
5–17
SWOT Analysis in Tactical Planning
Environmental Scan
(SWOT Analysis)
Internal Analysis
(inside the company)
External Analysis
(Outside the company)
Strengths & Weaknesses
Opportunities & Threats
SWOT Matrix
Tactical Plan
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–18
SWOT Internal Analysis
• Strengths: Resources and capabilities which can
be used to form competitive advantage
 Brand, patents, customer relationships, distribution
network, technical know-how, access to specific
scarce resources
• Weaknesses: Shortfalls in resources and
capabilities that hamper pursuit of competitive
advantages
 High cost structure, old infrastructure, poor reputation,
tarnished brand, limited access to specific scarce
resources
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5–19
SWOT External Analysis
• Opportunities: Ways the market (input or output)
offer us to grow our profitability
 Unmet customer needs, retiring competitor, opening
international markets, new technology
• Threats: Market changes bringing the possibility
of declining growth or decreased profitability
 Changing customer needs we can’t meet, laws
limiting our product, concentration of competition,
barriers to entry diminishing
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5–20
SWOT Matrix: Tactical Planning
Strengths
Make really good
Use using
our strengths
pizza
Mama to
capture market
recipe
Opportunities Genovese’s
opportunities
Threats
Allow employees
freedom to entertain
Use
strengths
and
beour
real
people to
to
counter
market threats
ward
off corporate
stagnation.
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Weakness
Send valentines to
Fix ourour
weaknesses
build
new
to allow us to
relationships
and
pursue market
build
customer
opportunities
retention
Tenth pizza gets
you a free logo tFix a problem to
shirt.alleviate
Wear itanin
andexternal
get 10%
off.
threat
5–21
Strategy Tree
Company Name: __________________________________________________
Business Description:_______________________________________________
________________________________________________________________
________________________________________________________________
Mission Statement
Goal #1
Strategies from Goal #1
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Goal #2
Goal #3
Strategies from Goal #1
Strategies from Goal #2
5–22
Get to work!
• Who has a business idea already?
 Pick a familiar enough business that you can execute
this process here and now.
• The assignment:
 Select one of your group’s most familiar businesses
 Make a realistic mission statement
 Do your SWOT analysis
 Complete your SWOT matrix
 Write out your strategic planning tree
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–23
Strategy Tree
Company Name: __Pebble Beach Golf Club___
Business Description:__A really expensive global destination golfing paradise
________________________________________________________________
Mission Statement:
To provide the best recreational experience imaginable, involving a golfing
destination.
Goal #1
100% Customer
Goal #2
To be the #1 ranked
Goal #3
To increase earnings
Satisfaction
golfing destination by
By at least 10%
Conde Naste Travel
every year.
Magazine
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–25
Planning Notes:
• Planning
 Strategic – High level company priorities
 Tactical – Shorter range, to implement Strategic
plans
 Operational – Shortest range, implementing tactical
plans (the transition from planning to doing)
 Contingency – What if?
 Crisis – Planning for and reacting to unexpected
events
 Question:
What kind of planning is your company in
by default if it neglects the planning process?
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–26
The Management Process
• Planning – What are we going to do?
• Organizing – How are we going to do it?
 Personnel, structure, Resource allocation
 Chapter 6
• Directing/Leading – Get it done!
 Motivating, Rewarding, doing
 Chapters 8&9
• Controlling – How well did we do?
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–27
The Control Process uses the goals
from planning
Establish Standards
Which do workers think
you should do?
Which does your boss
want you to do?
Measure Performance
YES
Does measured
performance match
standards?
Continue (or
upgrade) Current
Activities
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NO
Adjust Performance
or Standards
5–28
5 - 28
Which do workers think
you should do?
The Control Process
Does measured
performance match
standards?
Which does your boss
want you to do?
NO
Adjust Performance
or Standards
• Standards Adjustment
• Performance Adjustment
 Benchmark competition
 Evaluate processes
 Benchmark comparable
industries
 Benchmark history or
peers
 Compare to historical
performance
 Communicate shortfalls
 Evaluate processes
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
 Train?
 Giving notice
5–29
5 - 29
Traditional Levels of Management
Top
Managers
Middle
Managers
First-Line
Managers
President, V.P.
Long Range
Middle
Managers
First-Line
Managers
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Division manager
Middle Range
First-Line
Managers
Line manager
Short Range
5–36
Chapter 5: Management Part 2
• Finish the management process
• Types of managers by level and area
• The five basic management skills
• The development and importance of corporate
culture
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–39
Areas of Management – Functional
• Traditional vertical career paths
• Departmentalization issues & options
Human
Resources
Marketing
Financial
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Operations
Information
Other
5–40
Chapter 5: Management Part 2
• Finish the management process
• Types of managers by level and area
• The five basic management skills
• The development and importance of corporate
culture
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–41
Basic Management Skills
Urgent vs.
Important:
Realizing Doing
what the
How you
is GET
important
important
your
Time
management
Management
job
Skills
Conceptual
Skills
Human
Relations
Skills
Relating with
the team that
gets it done
How you keep
your
management
job
DecisionMaking
Skills
Technical
Skills
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5–42
The Decision-Making Process
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Figure 5–4
5–43
Management Skills for the 21st Century
• Global Management
Skills
 Global opportunities
 Diversity management
• Information and
Technology Skills
 Old guard
 New guard
• Change and lots of it
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5–44
Management Is Tightly Linked to
Corporate Culture
• Corporate Culture
 The shared experiences, stories, beliefs, and norms
that characterize an organization
Communicating
the Culture
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Managing
Change
5–45
Chapter Review
• Explain the importance of setting goals and
formulating strategies.
• Describe the management process.
• Identify types of managers by level and area.
• Describe the basic management skills.
• Explain the development and importance of
corporate culture.
Copyright © 2005 Prentice Hall, Inc. All rights reserved.
5–46