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MANAGING BUSINESS MANAGING BUSINESS ENTERPRISEENTERPRISE

Lecture Note for Business IntroductionLecture Note for Business IntroductionFahmy RadhiFahmy Radhi

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Management ProcessManagement Process

The process of The process of planning, organizing, directingplanning, organizing, directing and and controllingcontrolling an organization’s resources to an organization’s resources to achieve its goalsachieve its goals

Management is needed to:Management is needed to:• achieve individual and organizational goalsachieve individual and organizational goals• prevent contradiction goalsprevent contradiction goals• achieve goals efficiently and effectivelyachieve goals efficiently and effectively

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PlanningPlanning

• The process of setting goals and deciding on the The process of setting goals and deciding on the strategy and tactic of achieving the firm’s strategy and tactic of achieving the firm’s objectivesobjectives

• Main component of Planning:Main component of Planning:– Determine the firm’s goalsDetermine the firm’s goals– Develop a comprehensive strategy for achieving goalsDevelop a comprehensive strategy for achieving goals– Design tactical and operational plans for Design tactical and operational plans for

implementing strategyimplementing strategy

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Setting Goals and Formulating Setting Goals and Formulating StrategyStrategy

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Setting Goals and Formulating Setting Goals and Formulating

StrategyStrategy MissionMission – broad organizational goal based on – broad organizational goal based on

planning premises which justifies an planning premises which justifies an organizational existenceorganizational existence

GoalGoal – objective that a business hopes and plans – objective that a business hopes and plans to achieve divided intoto achieve divided into– Long-term goalsLong-term goals – a period of five years or more – a period of five years or more– Intermediate goalsIntermediate goals – a period of one to five years – a period of one to five years– Short-term goalsShort-term goals - less than one year - less than one year

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VisionVision

• 3M: “Be innovative and satisfy our 3M: “Be innovative and satisfy our customers”customers”

• Microsoft: “Information at your fingertips”Microsoft: “Information at your fingertips”• GE: To be number one or two in every GE: To be number one or two in every

business”business”• Federal Express: “When it absolutely, Federal Express: “When it absolutely,

positively, must get there overnight, use positively, must get there overnight, use FedEx”FedEx”

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MissionMissionPolaroid Corp. (late 1970s)Polaroid Corp. (late 1970s)• Polaroid manufactures and sell photographic products based ion Polaroid manufactures and sell photographic products based ion

inventions of the inventions of the companycompany in the field of one-step instants in the field of one-step instants photography and light polarizing products, utilizing the company’s photography and light polarizing products, utilizing the company’s inventions in the field of polarized light. The company considers inventions in the field of polarized light. The company considers itself to be engaged in one line of businessitself to be engaged in one line of business

Polaroid Corp. (mid 1980s)Polaroid Corp. (mid 1980s)• Polaroid designs, manufactures, and markets worldwide a variety of Polaroid designs, manufactures, and markets worldwide a variety of

products based on inventions, primarily in the photographic field. products based on inventions, primarily in the photographic field. These include instant photographic cameras and films, light These include instant photographic cameras and films, light polarizing filters and lenses, and diversified chemical, optical, and polarizing filters and lenses, and diversified chemical, optical, and commercial products. The principal products of the company are commercial products. The principal products of the company are used in amateur and professional photography, industry, science, used in amateur and professional photography, industry, science, medic, and educationmedic, and education

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Setting Goals and Formulating Setting Goals and Formulating StrategyStrategy

StrategyStrategy – broad set of organizational – broad set of organizational plans for implementing the decisions mode plans for implementing the decisions mode for achieving organizational goalsfor achieving organizational goals

Types of Strategy:Types of Strategy:

• Corporate strategyCorporate strategy – firm level strategy – firm level strategy

• Business strategyBusiness strategy – business unit or – business unit or product-line levelproduct-line level

• Functional strategyFunctional strategy – functional area – functional area levellevel

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Setting Goals and Formulating Setting Goals and Formulating StrategyStrategy

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Setting Goals and Formulating Setting Goals and Formulating StrategyStrategy

Measurable criteria for performance

Deficient of Annual Objective

Reducing employees turnover, absenteeism, number of reject by 10 percent by December 2003Assumption: Morale is related to measurable outcome

To improve morale in the division

Conducting a public opinion poll on dimensions of corporate responsibility by October 2003

To improve the business’s image

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OrganizingOrganizing

• OrganizingOrganizing - the process of arranging - the process of arranging the resources of the firm and activities the resources of the firm and activities into a coherent organizational structureinto a coherent organizational structure

• Organizational StructureOrganizational Structure – – specification of the jobs and the way in specification of the jobs and the way in which an organization activities are which an organization activities are divided, organized and coordinateddivided, organized and coordinated

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OrganizingOrganizing

• Organization ChartOrganization Chart – diagram depicting – diagram depicting a firm’s structure that sa firm’s structure that shows the title of hows the title of each positions, the connecting lines and each positions, the connecting lines and responsibleresponsible

• Span of management controlSpan of management control – the – the number of subordinates reporting directly number of subordinates reporting directly to a given managerto a given manager

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Organizational StructureOrganizational Structure

• Line OrganizationLine Organization - an organization - an organization structure in which each manager is structure in which each manager is directly responsible for a crucial activities directly responsible for a crucial activities required to accomplish the organization required to accomplish the organization goalsgoals

• Departmental Organization - tDepartmental Organization - the he process through which a firm’s activities process through which a firm’s activities are grouped together and assigned to are grouped together and assigned to managersmanagers

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DepartmentalizationDepartmentalization

• FunctionalFunctional –divided into engaged in one –divided into engaged in one functional activity: Marketing, Productionfunctional activity: Marketing, Production

• ProductProduct – based on specific products – based on specific products

• Market Market – based on geographical market– based on geographical market

• CustomerCustomer – based on types of customers – based on types of customers

• Matrix StructureMatrix Structure –each employee report –each employee report to both functional and division managerto both functional and division manager

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Functional and Functional and DepartmentalizationDepartmentalization

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Matrix StructureMatrix Structure

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DirectingDirecting

Directing Directing – management process of – management process of leading and motivating employees to meet leading and motivating employees to meet an organization objectivean organization objective

• LeadershipLeadership – The process of directing – The process of directing and influencing the task related activities and influencing the task related activities of individualof individual

• MotivationMotivation – the factor that cause and – the factor that cause and sustain an individual’s behaviorsustain an individual’s behavior

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ControllingControlling

Controlling Controlling – the process of monitoring and – the process of monitoring and evaluation an organization’s performance to evaluation an organization’s performance to ensure that it is meeting its goals ensure that it is meeting its goals

Control is needed to Control is needed to

• cope with changes internally and externally, cope with changes internally and externally,

• faced more organizational, complexity, faced more organizational, complexity,

• facilitate delegation and teamwork, facilitate delegation and teamwork,

• create better quality and add valuecreate better quality and add value

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Steps in Control Process:Steps in Control Process:

• Establish standards: Physical, products Establish standards: Physical, products quantities, Monetary and time Time quantities, Monetary and time Time

• Establish methods for measuring Establish methods for measuring performance by determining: how often performance by determining: how often and what form in measuring, and who are and what form in measuring, and who are involvedinvolved

• Measure the performance through Measure the performance through observations, reporting analysis, inspection observations, reporting analysis, inspection and automatically methodsand automatically methods

• Determine whether performance matches Determine whether performance matches the standardthe standard

• Take correction actionsTake correction actions

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Level of ManagementLevel of Management

• Top managerTop manager – responsible to the board of – responsible to the board of director and stockholder for overall firm’s director and stockholder for overall firm’s performanceperformance

• Middle managerMiddle manager – responsible to top manager – responsible to top manager for implementing the strategies and policyfor implementing the strategies and policy

• First-line managerFirst-line manager – responsible to middle – responsible to middle manager for supervising the works of employeesmanager for supervising the works of employees

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Managerial SkillsManagerial Skills

• Technical SkillsTechnical Skills – needed to perform – needed to perform specialized tasksspecialized tasks

• Human relations SkillsHuman relations Skills – needed to – needed to understanding and getting along with peopleunderstanding and getting along with people

• Conceptual SkillsConceptual Skills – abilities to think in – abilities to think in abstract, diagnose and analyze different abstract, diagnose and analyze different situationssituations

• Decision Making SkillsDecision Making Skills - abilities in defining - abilities in defining problems and selecting the best problem solvingproblems and selecting the best problem solving

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Skills RequiredSkills Required

LowLowMediumHighFirst-line

MediumMediumMediumMediumMiddle

HighHighHighLowTOP

DecisionMaking

ConceptualHumanRelation

Technical

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