Notes on BUS102

Chapter 05
Management and Leadership
Prepared by Tania Akter
Lecturer
BBS
Brac University
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PREPARED BY TANIA AKTER

 Ch-05
Management and Leadership

Management is the process used to accomplish organizational goals through planning,

organizing, leading and controlling people and other organizational resources.
FOUR FUNCTIONS of MANAGEMENT
1. Planning
2. Organizing
3. Leading
4. Controlling

Vision -- More than a goal, it’s a broad explanation of why the organization exists and where it’s
trying to go. (future)
A mission statement outlines the organization’s fundamental purposes. (present)
Goals are the broad, long term accomplishments an organization wishes to attain.
Objectives are specific, short term statements detailing how to achieve the organization’s goals.

Until a business has determined what its mission is, planning cannot begin. Furthermore, one
plan cannot possibly encompass everything necessary to achieve the organization’s mission, so
managers are tasked with developing sets of plans that, together, guide the
organization’s activities.

PLANNING ANSWERS FUNDAMENTAL QUESTIONS

• What is the situation now?
SWOT Analysis -- Analyzes the organization’s Strengths, Weaknesses, Opportunities and Threats.
• How can we get to our goal from here?

- Strategic planning

- Tactical planning
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- Operational planning
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 - Contingency planning

Strategic Plans

Strategic plans translate the company mission into a set of long-term goals and short-term
objectives. In the process of determining a company’s strategic plan, top-level managers set out
to answer the following questions:

1. Where are we now?

2. Where do we want to be?
3. How do we get there?

Tactical Plans

Tactical plans translate high-level strategic plans into specific plans for actions that need to be
taken up and down the layers of an organization. They are short-range plans (usually spanning
less than one year) that emphasize the current operations of various parts of the organization.
As a company refines or alters its strategic plans, the tactics must also be adjusted to execute the
strategy effectively. A tactical plan answers the following questions:

1. What is to be done?
2. Who is going to do it?
3. How is it to be done?
Operational Plans

Operational plans establish detailed standards that guide the implementation of tactical plans
and establish the activities and budgets for each part of the organization. Operational plans may
go so far as to set schedules and standards for the day-to-day operations of the business and
name responsible supervisors, employees, or departments.

Contingency Plans

Unforeseen events or disasters can be especially harmful to a business. For example, a fire,
earthquake, or flood can make it impossible to continue normal business operations. A
contingency plan lays out the course of action a business will take in response to possible future
events.

Decision Making: Finding the Best Alternative –

Planning and all the other management functions require decision making. Decision making is
choosing among two or more alternatives, which sounds easier than it is. In fact, decision making
is the heart of all the management fucntions.
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 The rational decision-making model is a series of steps managers often follow to make logical,
intelligent, and well-founded decisions. Think of the steps as the seven Ds of decision making:
1. Define the situation.
2. Describe and collect needed information.
3. Develop alternatives.
4. Develop agreement among those involved.
5. Decide which alternative is best.
6. Do what is indicated (begin implementation).
7. Determine whether the decision was a good one, and follow up.

Porter’s Generic Strategies

According to Michael Porter, organizations may pursue a differentiation, overall cost leadership,
or focus strategy at the business level.11 Table 8.1 summarizes each of these strategies. An
organization that pursues a differentiation strategy seeks to distinguish itself from competitors
through the quality (broadly defined) of its products or services. Firms that successfully
implement a differentiation strategy are able to charge more than competitors because
customers are willing to pay more to obtain the extra value they perceive.12 Rolex pursues a
differentiation strategy. Rolex watches are handmade of precious metals like gold or platinum
and stainless steel, and they are subjected to strenuous tests of quality and reliability. The firm’s
reputation enables it to charge thousands of dollars for its watches. Coca-Cola and Pepsi compete
in the market for bottled water on the basis of differentiation. Coke touts its Dasani brand on the
basis of its fresh taste, whereas Pepsi promotes its Aquafina brand on the basis of its purity.13
Other firms that use differentiation strategies are Lexus, Godiva, Nikon, Mont Blanc, and Ralph
Lauren. During the economic meltdown in 2009, most youth-oriented retailers like American
Eagle Outfitters, Quicksilver, and Aeropostale slashed prices in order to generate sales. But
Abercrombie & Fitch decided to hold firm to standard pricing in an attempt to maintain a
differentiated image for its products.14 Similarly, other firms tried to provide strong
differentiation on the basis of outstanding customer service.
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 An organization implementing an overall cost leadership strategy attempts to gain a competitive
advantage by reducing its costs below the costs of competing firms. By keeping costs low, the
organization is able to sell its products at low prices and still make a profit. Timex uses an overall
cost leadership strategy. For decades, this firm has specialized in manufacturing relatively simple,
low-cost watches for the mass market. The price of Timex watches, starting around $39.95, is low
because of the company’s efficient high volume manufacturing capacity. Poland Springs and
Crystal Geyser bottled waters are also promoted on the basis of their low cost. Other firms that
implement overall cost leadership strategies are Hyundai, BIC, Old Navy, and Hershey. When the
economic recession hit in 2009, Hershey experienced a jump in sales—during hard times
consumers started cutting back on high-end chocolate products from Godiva but weren’t willing
to forgo chocolate altogether.16 Likewise, other low-cost producers also benefited as consumers
avoided higher priced name-brand products (that is, those with a differentiation strategy) in favor
of lower priced goods. For instance, both Proctor & Gamble and Colgate saw sales of products
such as Tide, Pampers, and Colgate toothpaste decline, while sales of lower-priced private-label
products jumped.17 A firm pursuing a focus strategy concentrates on a specific regional market,
product line, or group of buyers. This strategy may have either a differentiation focus, whereby
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the firm differentiates its products in the focus market, or an overall cost leadership focus,
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whereby the firm manufactures and sells its products at low cost in the focus market. In the watch

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 industry, Tag Heuer follows a focus differentiation strategy by selling only rugged waterproof
watches to active consumers. Fiat follows a focus cost leadership strategy by selling its
automobiles only in Italy and in selected regions of Europe; Alfa Romeo uses focus differentiation
to sell its high-performance cars in these same markets. Hasselblad makes expensive cameras
targeted at professional photographers. Fisher-Price uses focus differentiation to sell electronic
calculators with large, brightly colored buttons to the parents of preschoolers; stockbroker
Edward Jones focuses on small-town settings. General Mills focuses one part of its new-product
development on consumers who eat meals while driving—their watchword is “Can we make it
‘one-handed’?” so that drivers can safely eat or drink it. Two investors realized that most Las
Vegas casinos were targeting either high-end big spenders or the young hip market. So, they
bought the venerable old Tropicana casino, renovated it, and began marketing it to so-called
“Middle America”—middle aged or older gamblers who aren’t into big-dollar wagering. Their
occupancy rates have soared, as have their profits.

The Miles and Snow Typology

A second classification of strategic options was developed by Raymond Miles and Charles
Snow.19 These authors suggested that business-level strategies generally fall into one of four
categories: prospector, defender, analyzer, and reactor. Table 8.2 summarizes each of these
strategies. Of course, different businesses within the same company might pursue different
strategies. A firm that follows a prospector strategy is a highly innovative firm that is constantly
seeking out new markets and new opportunities and is oriented toward growth and risk taking.
Over the years, 3M has prided itself on being one of the most innovative major corporations in
the world. Employees at 3M are constantly encouraged to develop new products and ideas in a
creative and entrepreneurial way. This focus on innovation has led 3M to develop a wide range
of new products and markets, including invisible tape and anti-stain fabric treatments.
Amazon.com also follows a prospector strategy as it constantly seeks new market opportunities
for selling different kinds of products through its websites.20 Rather than seeking new growth
opportunities and innovation, a company that follows a defender strategy concentrates on
protecting its current markets, maintaining stable growth, and serving current customers,
generally by lowering its costs and improving the performance of its existing products. With the
maturity of the market for writing instruments, BIC has used this approach—it has adopted a less
aggressive, less entrepreneurial style of management and has chosen to defend its substantial
market share in the industry. It has done this by emphasizing efficient manufacturing and
customer satisfaction. Although eBay is expanding into foreign markets, the online auctioneer is
still pursuing what amounts to a defender strategy, in that it is keeping its focus primarily on the
auction business. Thus, while it is prospecting for new markets, it is defending its core business
focus. A business that uses an analyzer strategy, in which it attempts to maintain its current
businesses and to be somewhat innovative in new businesses, combines elements of prospectors
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and defenders. Most large companies use this approach because they want to both protect their

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 base of operations and create new market opportunities. IBM uses analyzer strategies. DuPont
is currently using an analyzer strategy; the firm is relying heavily on its existing chemical and fiber
operations to fuel its earnings for the foreseeable future. At the same time, though, DuPont is
moving systematically into new business areas such as biotech agriculture and pharmaceuticals.
Yahoo! is also using this strategy by keeping its primary focus on its role as an Internet portal
while simultaneously seeking to extend that portal into more and more applications.

The Elements of Organizing

Imagine asking a child to build a castle with a set of building blocks. She selects a few small blocks
and other larger ones. She uses some square ones, some round ones, and some triangular ones.
When she finishes, she has her own castle, unlike any other. Another child, presented with the
same task, constructs a different castle. He selects different blocks, for example, and combines
them in different ways. The children’s activities—choosing certain combinations of blocks and
then putting them together in unique ways—are in many ways analogous to the manager’s job
of organizing.
Organizing is deciding how best to group organizational elements. Just as children select
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different kinds of building blocks, managers can choose a variety of structural possibilities. And
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just as the children can assemble the blocks in any number of ways, so, too, can managers put

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 the organization together in many different ways. Understanding the nature of these building
blocks and the different ways in which they can be configured can have a powerful impact on a
firm’s competitiveness.
In this chapter, our focus is on the building blocks themselves—organization structure. In
Chapter 12 we focus on how the blocks can be put together—organization design. There are six
basic building blocks that managers can use in constructing an organization: designing jobs,
grouping jobs, establishing reporting relationships between jobs, distributing authority among
jobs, coordinating activities among jobs, and differentiating among positions. The logical starting
point is the first building block—designing jobs for people within the organization.
Organizing
After managers have planned a course of action, they must organize the firm to accomplish their
goals. That means allocating resources, (such as funds for various departments), assigning tasks,
establishing procedures.

Tasks and Skills at Different Levels of Management

Few people are trained to be good managers. usually, a person learns how to be a skilled
accountant or sales representative or production-line worker, and then-because of her or his
skill-is selected to be a manager. Such managers tend to become deeply involved in showing
others how to do things, helping them, supervising them, and generally being active in the
operating task. The further up the managerial ladder a person moves, the less important his or
her original job skills become. At the top of the ladder; the need is for people who are visionaries,
planners, organizers, coordinators, communicators, morale builders, and motivators.
Figure 7.6 shows that a manager must have three categories of skills:
1. Technical skills are the ability to perform tasks in a specific discipline (such as selling a product
or developing software) or department (such as marketing or information systems).
2. Human relations skills include communication and motivation; they enable managers to work
through and with people. Skills associated with leadership-coaching, morale building, delegating,
training and development, and supportiveness-are also human relations skills.
3. Conceptual skills let the manager picture the organization as a whole and see the relationships
among its various pads. They are needed in planning, organizing, controlling, systems
development, problem analysis, decision making, coordinating, and delegating.
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 Staffing: Getting and Keeping the Right People
To get the right kind of people to staff an organization, the firm has to offer the right kind of
incentives. For example, Google's gourmet chefs cook up free launches. dinners, and snacks for
employees. Would such an incentive appeal to you? How important to you is pay relative to other
incentives? Staffing is recruiting, hiring, motivating, and retaining the best people, available to
accomplish the company's objectives. Today, staffing is critical, especially in the Internet and
high-tech areas. At most high-tech companies like Google, Sony, and Microsoft, the primary
capital equipment is brain- power. A firm with innovative and creative workers can go from start-
up to major competitor in just a few years.
Many people are not willing to work at companies unless they are treated well and get fair pay.
They may leave to find a better balance between work and home. Staffing is becoming a greater
part of each manager's assignment, and all managers need to cooperate with human resource
management to win and keep good workers.

LEADERSHIP

• Leaders must:
• Communicate a vision and rally others around that vision.
• Establish corporate values.
• Promote corporate ethics.
• Embrace change.
• Stress accountability and responsibility
LEADERSHIP STYLES
1. Autocratic leadership means making managerial decisions without consulting others. This
style is effective in emergencies and when absolute followership is needed-for example, when
fighting fires. Autocratic leadership is also effective sometimes with new, relatively unskilled
workers who need clear direction and guidance. coach Phil Jackson used an autocratic leadership
style to take the Los Angeles Lakers to three consecutive National Basketball Association
championships in his first three seasons. By following his readership, a group of highly skilled
individuals became a winning team. How is the team doing now? what kind of leadership do you
see being used most successfully in baseball, football, and other areas?
2. Participative (democratic) leadership involves managers and employees working together to
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make decisions. Research has found that employee participation in decisions may not always
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 increase effectiveness, but it usually does increase job satisfaction. Many large organizations like
Wal-Mart, FedEx, IBM, Cisco, and AT&T and most smaller firms have been highly successful using
a democratic style of leadership that values traits such as flexibility, good listening skills, and
empathy. Employees meet to discuss and resolve management issues by giving everyone some
opportunity to contribute to decisions.
3. In free-rein leadership managers set objectives and employees are free to do whatever is
appropriate to accomplish those objectives. Free-rein leadership is often the most successful
leadership style in certain organizations, such as those in which managers supervise doctors,
professors, engineers, or other professionals. The traits managers need in such organizations
include warmth, friendliness, and understanding. More and more firms are adopting this style of
leadership with at least some of their employees.

Empowering Workers
Many leaders in the_ past gave explicit instructions to workers, telling them what to do to meet
the goals and objectives of the organization. The term for this process is directing. In tradition
organizations, directing includes giving assignments, explaining routines, clarifying policies, and
providing feedback on performance. Many organizations still follow this model especially fast-
food restaurants and small retail establishments where the employees don’t have the skill and
experience needed to work on their own, at least at first.

CONTROLLING: MAKING SURE IT WORKS –

The Control function measures performance relative to the planned objectives and standards,
rewards people for work well done, and takes corrective action when necessary. Thus, the control
process (see Figure below) provides the feedback that lets managers and workers adjust to
deviations from plans and to changes in the environment that have affected performance.
Controlling consists of five steps:
1. Establishing clear performance standards. This ties the planning function to the control
function. Without clear standards, control is impossible.
2. Monitoring and recording actual performance or results.
3. Comparing results against plans and standards.
4. Communicating results and deviations to the appropriate employees.
5. Taking corrective action when needed and providing positive feedback for work well
done
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