Chapter 7: Functions and Skills of Management

Functions and Skills

of Management

Learning Objectives
1. Define the four basic management functions
2. Outline the tasks involved in the strategic planning process
3. Explain the purpose of a mission statement
4. Discuss the benefits of conducting a SWOT analysis
5. List the benefits of setting long-term goals and objectives
6. Cite three leadership styles and explain why no one style is best
7. Identify and explain important types of managerial skills
8. Summarize the six steps involved in the decision-making process

Summary of Learning Objectives

1. Define the four basic management functions.
The four management functions are:
1. Planning—establishing objectives and goals for the organization and
translating them into action plans;
2. Organizing—arranging resources to car ryouttheor ganiz a
tion’ splans
3. Leading—influencing and motivating people to work effectively and
willingly toward company goals
4. Controlling—monitoring progress toward organizational goals,
resetting the course if goals or objectives change in response to
shifting conditions, and correcting deviations if goals or objectives are
not being attained.

2. Outline the tasks involved in the strategic planning process.

Thes t
r at
egicpl a nningpr oc essbe ginswi thac learvi si
onf orthec ompa ny’
s
future. This vision is then translated into a mission statement so it can be
shared with all members of the organization. Next, managers assess the
compa ny ’
ss treng t
hs ,we a kne sses,oppor tunities,andt hreats;theyde ve l
op
forecasts about future trends that affect their industry and products; and they
analyze the competition—paying close attention to their strengths and
weaknesses so they can use this information to gain a competitive edge.
Managers use this information to establish company goals and objectives.
Finally they translate these goals and objectives into action plans.

3. Explain the purpose of a mission statement.

A mission statement defines why the organization exists, what it does, what
it hopes to achieve, and the principles it will abide by to meet its goals. It is
used to bring clarity of focus to members of the organization and to provide
guidelines for the adoption of future projects.

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Part 3: Managing a Business

4. Discuss the benefits of conducting SWOT analysis.

An organization identifies its strength, weaknesses, opportunities, and
threats prior to establishing long-term goals. Identifying internal strengths
and weaknesses gives the firm insight into its current abilities. The
organization must then decide whether new abilities must be learned to meet
current or more ambitious g oals.I nter
nals trengthsbe c
omeaf i
rm’ score
competence if they are a bundle of skills and technologies that set the
compa nya pa r
tf romc ompe t i
tors
.I denti
fyingaf irm’ sext ernaloppor tunities
and threats helps prepare it for challenges that might interfere with its ability
to reach its goals.

5. List the benefits of setting long-term goals and objectives.

Goals and objectives establish long- and short-range targets that help
ma na gersful
fillthec ompa ny ’smi ssi
on.Se tt
inga ppropr i
ateg oalsinc r
eas
es
employee motivation, establishes standards by which individual and group
performance can be measured, guides employee activity, and clarifies
ma na geme nt
’se xpe c t
ations.

6. Cite three leadership styles and explain why no one style is best.
Three leadership styles are autocratic, democratic, and laissez-faire (also
called free rein). Each may work best in a different situation: autocratic
when quick decisions are needed, democratic when employee participation
in decision making is desirable, and laissez-faire when fostering creativity is
a priority. Good leaders are flexible enough to respond with the best
approach for the situation.

7. Identify and explain important types of managerial skills.

Managers use:
 Interpersonal skills to communicate with other people, work
effectively with them, and lead them
 Technical skills to perform the mechanics of a particular job;
 Administrative skills to manage an organization efficiently
 Conceptual skills to see the organization as a whole, to see it in the
context of its environment, and to understand how the various parts
interrelate
 Decision-making skills to ensure that the best decisions are made.

8. Summarize the six steps involved in a decision-making process.

The decision-making process begins by recognizing that a problem or
opportunity exists. Next managers identify and develop options using a
variety of brainstorming techniques. Once the options have been put forth,
they analyze the options using appropriate criteria. Then they select the best
option, implement the decision, and monitor the results, making changes as
needed.

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 Chapter 7: Functions and Skills of Management

Brief Chapter Outline

I. The Four Basic Management Functions
A. Planning, organizing, leading and controlling
B. While performing these four management functions, managers play a
number of roles, including:
1. Interpersonal roles
2. Informational roles –time spent gathering information from and
delivering information to various stakeholders
3. Decisional roles

II. Planning Function –the primary management function

A. Understanding the strategic planning process –out l
inet hef ir m’sl ong
-
range (two-five years) organizational goals and set a course of action
the firm will pursue to reach its goals.
B. Strategic planning consists of seven steps, including:
1. Develop a clear vision –a realistic, credible, and attainable view
of the future that grows our of and improves on the present
2. Translate the vision into a meaningful mission statement
3. As sesst hec ompa ny’
ss treng ths ,we akne sses,oppor t
uni t
iesa nd
threats
4. Develop forecasts
5. Analyze the competition –and establish one of three types of
competitive strategies:
a. Differentiation –developing a level of service, product
image, unique product feature, or new technologies that
distingui s
hac ompa ny ’spr oduc tfromac ompe ti
t or’s
product
b. Cost leadership –aim to become the low-cost leader in the
industry by producing or selling products more efficiently
and economically than competitors
c. Focus –companies concentrate on a specific regional
market or consumer group.
6. Establish company goals and objectives
7. Develop action plans
a. Tactical plans –lay out the actions and the allocation of
resources necessary to achieve specific, short-term
obj ect
ive st hatsuppor tthec ompa ny ’sbr oade rs t
r ategic
plan
b. Operational plans –designate the actions and resources
required to achieve the objectives of tactical plans
C. Planning for a crisis
1. Crisis management –a plan for handling unusual and serious
problems such as product failure, a breakdown in routine
operations (as a result of fire or other natural disaster), or an
environmental accident

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Part 3: Managing a Business

2. Goal of crisis management –keep the company functioning

smoothly both during and after the crisis
3. Successful crisis management requires comprehensive
contingency plans
4. Top management should communicate to employees that the
company will do whatever it can to control the situation, find the
cause, and prevent a future occurrence.

III. The Organizing Function

A. Organizing –the process of arranging resources to carry out the
or ga
nization’ s goals
B. During this stage, managers:
1. Think through all activities employees perform
2. Consider all the facilities and equipment needed
3. Give people the ability to work toward organizational goals
C. A particularly challenging stage
D. Levels of corporate hierarchy (management pyramid)
1. Top managers –upper-level managers who have the most power
and who take overall responsibility for the organization
2. Middle managers –are responsible for one division or unit
3. First-line managers (supervisory managers) –oversee the work
of operating employees

IV. The Leading Function

A. Leading –the process of influencing and motivating people to work
effectively and willingly
B. Suc cess f
ulma nage rsa regooda tinflue nc i
ngot hers ’opi nionsa nd
motivating others
C. Good leaders tend to have high emotional quotients (EQ)
D. Adopting an effective leadership style
1. Leadership style –the way a manager uses authority to lead
others
2. There are three broad categories of leadership, including:
a. Autocratic leaders –make decisions without consulting
others
b. Democratic leaders
 Delegate authority and involve employees in
decision-making
 Participative management (or open book) –focuses
on sharing information at all organizational levels
c. Laissez-faire leaders –take the role of consultant,
encouraging employees ideas
3. Contingency leadership
a. No single leadership style works all of the times
b. Effective leaders adapt their leadership style to current
business circumstances

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 Chapter 7: Functions and Skills of Management

E. Coaching and mentoring

1. Coaching –focuses on helping all members perform at their best
2. Mentoring –involves guiding employees through the corporate
maze, and acting as a role model
F. Managing change
G. Building a strong organizational culture

V. The Controlling Function

A. Controlling involves:
1. Moni toringaf irm’ sprogre sstowa rdme e t
ingi tsorga ni zat
ional
goals
2. Resetting the course if goals or objectives change in response to
shifting conditions
3. Correcting deviations if goals or objectives are not attained
B. Managers strive to maintain a high level of quality –a measure of how
closely goods or services conform to predetermined standards and
customer expectations

VI. Management Skills

A. Interpersonal skills –the personal skills required to communicate with
other people, work effectively with them, motivate them, and lead
them
B. Technical skills –the knowledge and ability to be able to perform the
mechanics of a particular job
C. Conceptual skills –the skills required to see the organization as a
whole, in the context of its environment, and to understand how the
various parts interrelate.

Detailed Chapter Outline:

Lecture Notes & Teaching Suggestions
I. The Four Basic Management Functions (PPT 7-1)
A. Planning, organizing, leading and controlling (PPT 7-2)
B. While performing these four management functions, managers play a
number of roles, including: (PPT 7-3)
1. Interpersonal Roles
a. Perform ceremonial obligations
b. Provide leadership to employees
c. Build a network of relationships with bosses, peers and
employees
d. Act as a liaison to groups and individuals both inside and
outside the company
2. Informational Roles –time spent gathering information from and
delivering information to various stakeholders
3. Decisional Roles –use gathered information to:
a. Encourage innovation
b. Resolve unexpected problems

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Part 3: Managing a Business

c. Decide how organizational resources will be used

d. Negotiate with many individuals and groups

II. Planning Function –the primary management function (PPT 7-4)

A. Understanding the strategic planning process
1. St r
ategicpl a nsout l
inet hef irm’ sl ong-range (two-five years)
organizational goals and set a course of action the firm will
pursue to reach its goals. (PPT 7-5)
a. Strategic plans deal with market standing, innovation,
human resources, financial resources, physical resources,
productivity, social responsibility, and financial
performance
b. A good strategic plan answers the following questions:
 Where are we going?
 What is the environment?
 How do we get there?
2. Strategic planning consists of seven steps, including: (PPT 7-6)
a. Develop clear vision –a realistic, credible, and attainable
view of the future that grows our of and improves on the
present (PPT 7-7)
b. Translate the vision into a meaningful mission statement
 Mission statement –a brief document that defines
why the organization exists, what it seeks to
accomplish, and the principles that the company will
adhere to as it tries to reach its goals (PPT 7-8)
 Typical components of a mission statement are as
follows:
- Compa ny ’spr oduc t
sors e r
vice s
- Primary market
- Fundamental concern for survival, growth, and
profitability
- Managerial philosophy
- Commitment to quality and social responsibility
- Should bring clarity and focus to members of
the organization
- Helps employees understand how their role is
tie
dt ot heor ga nizat
ion’ sg reaterpurpos e
- Mus tbec ongr uentwi tht heor g anizat
ion’sc or
e
values
c. As sesst hec ompa ny ’ss tre ngths,we aknes ses,oppor t
uniti
es
and threats
 SWOT Analysis (PPT 7-9)
 Strengths –positive internal factors that contribute to
ac ompa ny ’
ss uc cess

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 Chapter 7: Functions and Skills of Management

- Core competence –a bundle of skills and

technologies that enable a company to provide a
particular benefit to customers
- Sets the company apart from its competition
 Weaknesses –negative internal factors that inhibit a
c ompa ny ’ss ucc es s
 Opportunities –positive external factors that might
e nha nc eaf i
rm’ sa bilit
yt oa chievei tsobj ectives
 Threats –negative external factors that could inhibit a
firms ’abilityt oa chievei tsobj ectives
d. Develop forecasts (PPT 7-10)
 Managers must make a number of educated
assumptions about future trends and events and
modify those assumptions once new information
becomes available.
 Quantitative forecasts –typically based on historical
data or tests and which involve complex statistical
computations (example: statistically analyzing the
cycles of economic growth and recession over several
decades to predict when the economy will take a
downward turn)
 Qualitative forecasts –based on intuitive judgment or
consumer research (example: making predictions
about sales of a new product on the basis of
experience and consumer responses to a survey)
e. Analyze the competition (PPT 7-11)
 Analyzing the competition gives management a
re alisti
cvi e woft hema rket,thec ompa ny ’spos i
ti
on
in it, and its ability to attain certain goals.
 Process of competitive analysis
 Identify existing and potential competitors
 Determine the competencies, strengths, and
weaknesses of major competitors
 I de nt if
ywa ystoc a pitalizeonac ompe t
itor’ s
weaknesses or match or surpass their strengths to gain
a competitive edge
 Three competitive strategies:
- Differentiation –developing a level of service,
product image, unique product feature, or new
technol og ie stha tdi sti
ngui shac ompa ny ’
s
produc tfrom ac ompe titor’spr oduc t
- Cost leadership –aim to become the low-cost
leader in the industry by producing or selling
products more efficiently and economically than
competitors.

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Part 3: Managing a Business

- Focus –companies concentrate on a specific

regional market or consumer group.
f. Establish company goals and objectives (PPT 7-12)
 Goal –a broad, long-range accomplishment that the
organization wishes to attain in typically five or more
years
 Objective –a short-range target designed to help
reach the goal of an organization
 Organizational goals and objectives should be
specific, measurable, relevant, challenging, attainable,
and time limited in order to be effective
 Setting appropriate goals has many benefits:
- Increases employee motivation
- Established standards for measuring individual
and group performance
- Guides employee activity
- Cl arif
iesma na g
e me nt’se xpe ct
a t
ions
g. Develop action plans (PPT 7-13)
 Tactical plans lay out the actions and the allocation of
resources necessary to achieve specific, short-term
obj ect i
ve stha tsuppor tthec ompa ny ’sbr oader
strategic plan
- Focus on departmental issues
- Define short-term results necessary to achieve
strategic goals
 Operational plans designate the actions and resources
required to achieve the objectives of tactical plans
- Foc usona cc ompl i
shingaf ir
m’ ss pecific
objectives
- Define actions for less than one year
B. Planning for a crisis (PPT 7-14)
1. Crisis management –a plan for handling unusual and
serious problems such as product failure, a breakdown in
routine operations (as a result of fire or other natural
disaster), or an environmental accident
2. Goal of crisis management –keep the company functioning
smoothly both during and after the crisis
3. Successful crisis management requires comprehensive
contingency plans
4. Top management should communicate to employees that
the company would do whatever it can to control the
situation, find the cause, and prevent a future occurrence

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 Chapter 7: Functions and Skills of Management

III. The Organizing Function (PPT 7-15)

A. Organizing –the process of arranging resources to carry out the
or ga
niz a
tion’ sgoa ls
B. During this stage, managers:
1. Think through all activities employees perform
2. Consider all the facilities and equipment needed
3. Give people the ability to work toward organizational goals
by determining who has the authority to:
a. Make decisions
b. Perform or supervise activities
c. Distribute resources
C. A particularly challenging stage because:
1. Employees come and go
2. Equipment breaks down or needs upgrading
3. Cons ume rs’pr efe rencesa ndt ast
esc hange
4. Shifts in political and economic trends
5. Competitors actions affect markets
D. Levels of corporate hierarchy (management pyramid) (PPT 7-16)
1. Top managers –upper-level managers who have the most
power and who take overall responsibility for the
organization
a. Establish structure of organization
b. Select the people to fill upper-level positions
c. Make long-range plans
d. Establish major policies
e. Represent the company to the outside world at official
functions and fund-raisers
2. Middle managers: are responsible for one division or unit
a. Develop plans for implementing the broad goals se by
top managers coordinate the work of first-line
managers
B. Often serve as team leaders who are expected to
supervise and lead small groups of employees in a
variety of job functions
3. First-line managers (supervisory managers): oversee the
work of operating employees and put into action the plans
developed at higher levels

IV. The Leading Function (PPT 7-17)

A. Leading –the process of influencing and motivating people to work
effectively and willingly
B. Suc cessfulma nager saregoodatinfl
ue ncingothe rs’opini
onsa nd
motivating others
C. Good leaders tend to have high emotional quotients (EQ) (PPT 7-18)

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Part 3: Managing a Business

1. Self-awa r ene s
s:a bilit
yt or ecognizeone ’sownf eeli
ng s
2. Self-regulation: ability to control or reduce disruptive behaviors
3. Motivation: drive to achieve beyond expectations
4. Empa t hy:a bil
ityt oc ons i
de rot
he r
s’f eeli
ng s
5. Social skill: ability to find common ground with many people
D. Adopting an effective leadership style (PPT 7-19)
a. Leadership style –the way a manager uses authority to lead
others
b. There are three broad categories of leadership, including:
 Autocratic leaders –make decisions without consulting
others
 Democratic leaders
- Delegate authority and involve employees in
decision-making
- Participative management (or open book) –focuses
on sharing information at all organizational levels
 Laissez-faire leaders –take the role of consultant,
encouraging employees ideas

c. Contingency leadership (PPT 7-20)

1. No single leadership style works all of the times
2. Effective leaders adapt their leadership style to current
business circumstances
E. Coaching and Mentoring (PPT 7-21)
1. Coaching
a. Focuses on helping all members perform at their best
b. Involves taking the time to meet with employees, offering
suggestions and encouragement
c. Requires the ability to observe, judge sensibly, and take
appropriate action
2. Mentoring
a. Involves guiding employees through the corporate maze,
and acting as a role model
b. A mentor is usually an experienced manager or employee
who possess deep knowledge of the business and can
explain office politics and provide valuable advice about
how to succeed within the organization.
c. Mentoring offers benefits for both parties:
 The less-experienced employee gains from the
me ntor’sa dvic eandi de as
 The mentor gains new networking contacts, in
addition to personal satisfaction
F. Managing change
1. Managers must negotiate change at an accelerated pace as
competition increases
2. Effective leaders must create and react to change

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 Chapter 7: Functions and Skills of Management

3. Effective leaders must work effectively with employees to ensure

smooth change
4. Effective leaders must cultivate trust with employees long before
change happens
G. Building a strong organizational culture (PPT 7-22)
1. Organizational culture: values, norms, and practices shared by
fir
m( acompa ny’ swa yofdoi ngt hings)
2. Influences the way people treat and react to each other at work
3. Shapes the way employees feel about the company and the work
they do
4. Shapes the way employees interpret and perceive the actions
taken by others
5. Shapes employee expectations regarding changes in their work
or in the business
6. Shapes employee ability to lead, be productive, and choose the
best course of action

V. The Controlling Function

A. Controlling involves: (PPT 7-23)
1. Moni toringaf irm’spr ogre sstowa rdme etingi tsorga niza t
ional
goals
2. Resetting the course if goals or objectives change in response to
shifting conditions
3. Correcting deviations if goals or objectives are not attained
B. Managers strive to maintain a high level of quality –a measure of how
closely goods or services conform to predetermined standards and
customer expectations
1. Firms usually control quality through a four- step process that
involves all levels of management and all employees: (PPT 7-24)
a. First, top management set standards or criteria for
measuring performance of the organization as a whole;
simultaneously, middle and first-line managers set
department quality standards so they meet or exceed
company standards
b. Second, managers assess performance, using both
quantitative (specific, numerical) and qualitative
(subjective) performance measures.
c. Third, managers compare performance with the established
standards and search for the cause of any discrepancies.
d. Finally, if performance falls short of the standards, then
mangers need to take corrective action by either adjusting
performance or reevaluating the standards.

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Part 3: Managing a Business

VI. Management Skills (PPT 7-25)

A. Interpersonal skills –the personal skills required to communicate with
other people, work effectively with them, motivate them, and lead
them
1. Activities that require interpersonal skills are as follows:
a. Encouraging employees to work together toward common
goals
b. Interacting with employees and other managers
c. Negotiating with partners and suppliers
d. Developing employee trust and loyalty
e. Fostering innovation
2. Effective communication:
a. Increase sthema nag er’sandt heor ga nization’spr oduct
ivit
y
b. Shapes the impressions made on colleagues, employees,
supervisors, investors, and customers
c. Allows you to perceive the needs of these stakeholders and
helps you to respond to those needs
d. Shows consideration of the different needs, backgrounds,
and experiences of people in the workforce
B. Technical skills –the knowledge and ability to be able to perform the
mechanics of a particular job
1. Most important at lower organizational levels
2. Administrative skills –technical skills necessary to manage an
organization such as the abilities to make schedules, gather
information, analyze data, plan, and organize.
C. Conceptual skills –the skills required to see the organization as a
whole, in the context of its environment, and to understand how the
various parts interrelate.
1. Extremely important to top managers
2. A key managerial activity requiring conceptual skills is decision
making. (PPT 7-26)
a. Decision making –a process that has five distinct steps:
 Recognizing the need for a decision
 Identifying, analyzing, and defining the problem or
opportunity
 Generating alternatives
 Selecting an alternative and implementing it
 Evaluating the results

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