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 Bovee/Thill, Business in Action 6/e Instructor’s Manual

Chapter 7:
MANAGEMENT ROLES, FUNCTIONS AND
SKILLS

Chapter Overview

This chapter introduces the important business functional area of management. It

defines the four basic management functions, namely planning, organizing, leading
and controlling. It discusses the strategic planning process, and differentiates among
top, middle and first-line management. It also describes leadership style and
organizational culture, and addresses the four steps in the control cycle. Lastly, it
explains the four important types of managerial skills.

Chapter Outline

I. The Roles of Management

A. Management (p. 141) is the process of planning, organizing, leading and
controlling to meet organizational goals
B. Managerial roles are the behavioral patterns and activities involved in
carrying out the functions of management, and it includes thee major
categories:
1. Interpersonal roles – providing leadership to employees, building
relationships and acting as a liaison both inside and outside the company
2. Informational roles – gathering information from sources both inside and
outside the organization and disseminating information to employees,
other managers and other stakeholders
3. Decisional roles – making both routine and non-routine decisions that
affect the organization

II. The Planning Function

A. Planning (p. 143) involves establishing objectives and goals for an
organization and determining the best ways to accomplish them
B. Strategic plans establish the actions and resource allocation required to
accomplish the company’s strategic goals and encompass six steps:
1. Defining the company’s mission statement, vision statement and
values statement
a. The mission statement (p. 144) is a brief statement of why the
organization exists and what it aims to accomplish for customers,
investors and other stakeholders
b. The vision statement (p. 145) is a brief, inspirational expression
of what a company aspires to be
c. The values statement identifies the principles that guide the
company’s decisions and behaviors

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2. The company must also have a clear assessment of its strengths and
weaknesses relative to the opportunities and threats it faces. This is
accomplished through a SWOT analysis
a. Strengths are positive internal factors that contribute to the
company’s success
b. Weaknesses are negative internal factors that inhibit the
company’s success
c. Opportunities are positive situations that represent the possibility
of generating new revenue
d. Threats are negative forces that could inhibit a firm’s ability to
achieve its objectives
3. Managers need to develop quantitative and qualitative forecasts that
predict what will occur, when it will occur, and how it will affect the
business
4. In order to understand the company’s competitors, it should also
perform a SWOT analysis on each of its major competitors
5. The company then needs to establish goals and objectives
a. A goal (p. 147) is a broad, long-range target or aim
b. An objective is a specific, short-range target or aim
c. Goals should be SMART – specific, measurable, attainable,
relevant and time-limited
6. Once the strategic goals and objectives have been established,
management needs to develop action plans to reach them

III. The Organizing Function

A. Organizing (p. 148) is the process of arranging resources to carry out an
organization’s plans
B. There are three levels of management in a typical corporate hierarchy, known
as the management pyramid. The levels of management are:
1. Top managers (p. 149) are those at the highest level of the organization.
They are responsible for setting strategic goals and take overall
responsibility for an organization
2. Middle managers develop plans to implement the goals of top managers
and coordinate the work of first-line managers
3. First-line managers (also known as supervisory managers) are at the
lowest level of the management hierarchy. They supervise the work of
non-managerial (operational) employees and implement the plans set at
higher management levels

IV. The Leading Function

A. Leading (p. 150) is the process of guiding and motivating people to work
toward organizational goals
B. Effective leaders possess a balance of three types of intelligence:
1. Cognitive intelligence – reasoning, problem solving, memorization and
other rational skills
2. Emotional intelligence – a person’s awareness of and ability to manage
his or her own emotions
3. Social intelligence – an ability to understand the dynamics of social
situations and the emotions of other people
C. There are three basic leadership styles or types:

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1. Autocratic leaders (p. 151) control the decision making process in their
organizations and restrict the decision-making freedom of subordinates
2. Democratic leaders (p. 152) delegate authority and involve employees
in decision-making. This style is often called participative
management
3. Laissez-faire leaders leave most decisions up to employees, particularly
those concerning day-to-day matters and emphasize employee
empowerment – granting decision-making and problem-solving
authorities to employees so they can act without first obtaining approval
from management
D. Managers must also assume responsibility for education and encouragement.
This can take two forms:
1. Coaching involves helping employees reach their highest potential by
meeting with them, discussing problems that hinder their ability to work
effectively, and offering suggestions and encouragement
2. Mentoring is a process in which experienced managers guide less-
experienced managers by serving as role models
E. Additional leadership challenges for managers involve managing change and
establishing a productive organizational culture – the set of shared values
and norms that support the management system and guide management and
employee behavior

V. The Controlling Function

A. Controlling (p. 154) is the management function of measuring progress
against goals and objectives and correcting deviations if results are not as
expected.
B. The control cycle is a four-step process:
1. The first step is establishing standards (p. 155) (the criteria against
which performance will be measured).
a. One common approach to setting standards is benchmarking, in
which a company’s key performance attributes are compared with
industry leaders
b. One of the most important performance variables is quality – a
measure of how closely a product conforms to predetermined
standards and customer expectations
2. The second step of the control cycle involves assessing performance
using both quantitative and qualitative performance measures
a. A balanced scorecard (p. 156) monitors performance from multiple
perspectives, the growth and development of employees and
intellectual property
3. The third step is comparing performance with established standards
4. In the fourth step, managers need to take corrective action to improve
performance
C. Managers must also plan how the company can respond to possible events,
including crisis management – establishing procedures and systems for
minimizing harm that might result from unusually threatening situations
1. A crisis management plan should contain both contingency plans and
communication plans

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VI. Essential Management Skills

A. Managers should possess four types of skills to be effective in the
organization
1. Interpersonal skills (p. 157) – the ability to understand other people and
interact with them effectively
2. Technical skills (p. 158) – the knowledge and ability to perform the
tasks required in a particular job. This category includes administrative
skills, which are the technical skills in information gathering, data
analysis, planning and organizing
3. Conceptual skills – the ability to visualize organizations, systems,
markets and solutions both as complete entities and as interrelated pieces
of a whole
4. Decision-making skills – the ability to define problems and
opportunities, weigh the alternatives, choose an alternative, implement it,
and evaluate the results

Classroom Activities

Break-out Group Discussion: Three Leadership Styles.

Goal: Ask students to discuss the advantages and disadvantages of each of the three
leadership styles and when each style is most effective.

Time Limit: 15 minutes.

Details:
1. Break students into groups of four or five. (2 minutes)
2. Ask each group to come up with some pros and cons of each of the three
leadership styles, namely autocratic, democratic and laissez-faire. Then ask
students to summarize when each style is the most effective. (Hint: For
instance, autocratic leadership is most effective in helping a company stave
off collapse even though it generally has a bad reputation.) (10 minutes)
3. Ask representatives/speakers from each group to present their results to the
whole class, either verbally or written (on the blackboard). (3 minutes)

End-of-Chapter
Behind the Scenes
Customers Believe in Wegmans Because Wegmans Believes in Its
Employees

Critical Thinking Questions

1. Wegmans has always been managed by members of the Wegman family. Do
you think the company could continue its winning ways if the next
generation doesn’t want to take over, forcing the company to hire someone
from outside the family as CEO? Explain your answer.
The company could continue its winning ways even if it hires someone from
outside of the family as a CEO, as long as the outsider CEO continues the

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laissez-faire style of management and extends the company’s tradition of putting

employees first.

2. Would the Wegmans approach work for a car dealer? A bookstore? A

manufacturer of industrial goods? Explain your answers.
The Wegmans approach would conceivably work for a car dealer or a bookstore
since both are service oriented firms where there are substantial amount of
employee contact with customers. Empowered employees will contribute to the
bottom line of the firm through superior customer service. The same approach
may not work as effectively for a manufacturer of industrial goods since there is
the same amount of employee-customer interaction.

3. How does low employee turnover contribute to Wegmans’ distinct and

positive corporate culture?
Low employee turnover contributes to Wegmans’ distinct and positive corporate
culture since it encourages employees to build sustaining long term bonds with
each other and with the store. Such bonds will help improve employees’
productivity through teamwork, ultimately enhancing job satisfaction of
employees.

Learn More Online

Visit the Wegmans website at www.wegmans.com and click on “Careers.” Read the
information and watch the videos to learn more about working at Wegmans. Imagine
yourself as someone who wants to join the company. Does the information on this
website increase your interest in the company? Could you see yourself launching a
career at Wegmans?
Students’ answers will vary.

Test Your Knowledge

Questions for Review

1. What is management? Why is it so important?
Management is planning, organizing, leading, and controlling resources (land,
labor, and capital) to meet an organization’s goals. It is critical and universally
necessary in organizations because it is the force that holds the resources together
and sets all activity in motion.

2. What is forecasting, and how is it related to the planning function?

Forecasting is an attempt by mangers to make educated assumptions about future
trends and events so that their business is not adversely affected by these external
changes. This helps managers to fill in gaps in the information they use to carry
out the planning function.

3. What is the goal of crisis management?

The goal of crisis management is to keep the company functioning smoothly both
during and after a crisis such as a product failure, a fight for company control, an
environmental accident or a natural disaster. Successful crisis management
requires comprehensive contingency plans and excellent communication with all
affected by the crisis.

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4. How does leadership differ from management?

Leadership is the inspirational, visionary, and emotional side of guiding an
organization, while management is the rational, intellectual and practical side of it.

5. Why are interpersonal skills important to managers at all levels?

Interpersonal skills are important to managers at all levels because management’s
job is to get things done through people. Encouraging employees to work together
toward common goals, interacting with employees and other managers,
negotiating with partners and suppliers, developing employee trust and loyalty,
and fostering innovation all require interpersonal skills.

Questions for Analysis

6. Why is cognitive intelligence alone insufficient for effective leadership?
Because effective leadership also requires two additional types of intelligence,
namely emotional intelligence and social intelligence. In fact, various studies
suggest that in leadership (and life in general), emotional and social intelligence
play a far greater role in success than purely cognitive intelligence.

7. How do the three levels of management differ?

Although top managers take overall responsibility for the organization and set
strategic goals, middle managers implement the broad goals set by top
management. Middle managers set tactical objectives and coordinate the work of
first-line managers who in turn establish operational objectives and supervise the
work of operating employees.

8. How do autocratic, democratic, and laissez-faire leadership differ?

Autocratic leaders control the decision-making process in their organizations,
often reserving the right to make all major decisions by themselves and restricting
the decision-making freedom of subordinates. In contrast, democratic leaders
delegate authority and involve employees in decision making. Even though their
approach can lead to slower decisions, soliciting input from people familiar with
particular situations or issues can result in better decisions. Laissez-faire leaders
take the role of consultants, encouraging employees’ ideas and offering insights or
opinions when asked, and they emphasize employee empowerment, giving
employees the power to make decisions that apply to their specific aspects of
work.

9. Why are coaching and mentoring effective leadership techniques?

Coaching encourages employees to become more personally involved—and
committed—to their work. Although coaching may take more time than other
methods, it seeks to empower employees so that they may learn to overcome
problems, as well as reach their highest potential. Mentoring benefits both the
employee and the mentor. While the employee learns from the mentor’s advice
and insights, the mentor gains personal satisfaction as well as an additional
network contact.

10. Ethical considerations. When an organization learns about a threat that

could place the safety of its workers and its customers at risk, is management
obligated to immediately inform these parties of the threat? Explain your
answer.

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Management is obligated to inform workers and customers of safety threats for

several reasons. First, inattention to a safety risk can leave the company open to
future lawsuits should it be discovered that the organization knew about the
problems but did nothing to abate them. Second, the company risks a public
relations disaster should the public gain knowledge of something they would
consider a “cover-up.” Finally, the organization should alert its customers and
workers because it is simply the ethical thing to do.

Questions for Application

11. Which would be more difficult to forecast 10 years from now: the number of
60 year-old residents or their average disposable income? Why?
It would be easier to forecast the number of 60 year-old residents because you
could rely on demographic data such as census reports and make certain
assumptions about the population based on historic data. Disposable income
would be more difficult to determine because it depends on a variety of factors:
inflation, the current tax code, the state of the economy, etc.

12. What are your long-term goals? Develop a set of long-term career goals for
yourself and several short-term objectives that will help you reach those
goals. Make sure your goals are SMART (see page 147).
Students’ answers will vary. However, their answers should show an
understanding of the difference between a goal (a broad, long-range target or aim)
and an objective (a specific, short-range target or aim designed to help reach that
goal). To emphasize what is meant by “specific, measurable, and time-limited,”
instructors might want to reiterate the example given in the chapter: “[I]t is better
to state ‘increase our customer base by 10 percent over the next three years’ than
‘substantially increase our customer base.’”

13. Concept Integration. Using Welch Allyn’s mission statement on page 144 as
a model and the material you learned in Chapter 4, develop a mission
statement balances the pursuit of profit with responsibility to employees and
community. Choose either a manufacturer of musical instrument or a retailer
of children’s clothing as the company.
Students’ answers will vary depending on the firm they chose, but should combine
the elements of a mission statement (the organization’s purpose, basic goals, and
philosophies) with the types of socially responsible activities described in Chapter
4 (conducting social audits, engaging in cause-related marketing, and engaging in
philanthropy).

14. Concept Integration. What is the principal difference between a business

plan (as discussed in Chapter 6) and a strategic plan?
A business plan plays a principal role in the creation of a new business, and its
primary audience consists of potential investors. A strategic plan, on the other
hand, is typically developed by a company’s board of directors and key managers,
and is a tool for achieving strategic goals over a two- to five-year period.

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Expand Your Knowledge

Discovering Career Opportunities

If you become a manager, how much of your day will be spent performing each of
the four basic functions of management? This is your opportunity to find out.
Arrange to shadow a manager (such as a department head, a store manager, or a shift
supervisor) for a few hours. As you observe, categorize the manager’s activities in
terms of the four management functions and note how much time each activity takes.
If observation is not possible, interview a manager in order to complete this exercise.

1. How much of the manager’s time is spent on each of the four management
functions? Is this the allocation you expected?
Answers will vary depending on the manager selected.

2. Ask whether this is a typical workday for this manager. If it isn’t, what does
the manager usually do differently? During a typical day, does this manager
tend to spend most of the time on one particular function?
Answers will vary depending on the manager selected.

3. Of the four management functions, which does the manager believe is most
important for good organizational performance? Do you agree?
Answers will vary depending on the manager selected.

Improving Your Tech Insights: Business Intelligent Systems

One of the maddening ironies of contemporary business is that many decision
makers are awash in data but starved for true information and insights.
Business intelligence
(BI) systems, also called business analytics, aim to harness all that data and turn
it into the information and insights that managers need.

Explore the business intelligence or business analytics products offered by

several of the leading vendors, including Actuate (www.actuate.com), IBM
(www.ibm.com), SAP Business Objects (www.sap.com), Information Builders
(www.informationbuilders.com), Oracle (www.oracle.com) and SAS
(www.sas.com). Research a system offered by one of these vendors, and in a
brief email message to your instructor, summarize in your own words the
system’s benefits for managerial decision makers. (Business intelligence is a
broad term that describes a variety of approaches, technologies, and specific
products, so the field can be a bit confusing. Try several websites if needed to
find a BI system that you can summarize briefly.)

Students’ email messages will vary depending on the systems they end up choosing.

Practice Your Skills

Sharpening Your Communication Skills

Potential customers frequently visit your production facility before making purchase
decisions. You and the people who report to you in the sales department have

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received extensive training in etiquette issues because you deal with high-profile
clients. However, the rest of the workforce has not received such training, and you
worry that someone might inadvertently say or do something that would offend one
of these potential customers. In a two paragraph email message, explain to the
general manager why you think anyone who might come in contact with
customers should receive basic etiquette training.

Students’ email messages will vary.

Building Your Team Skills

With a team of fellow students, perform a SWOT analysis for your college or
university from the perspective of recruiting new students. Identify as many
significant strengths and weaknesses as you can think of, being as objective as
possible. Next, identify any important opportunities and threats you can find, such
as demographic shifts or changes in government funding. Summarize your findings
in a chart modeled after Exhibit 7.3. Finally, evaluate your college’s website and
other promotional materials if available according to how well they present the
school’s strengths to prospective students.

Students’ SWOT analyses will vary depending on the colleges and universities they
attend, however, they will need to follow the SWOT analysis framework on page
145.

Developing Your Research Skills

Find two articles in business journals or newspapers (print or online editions) that
profile two senior managers who lead a business organization.

1. What experience, skills, and business background do the two leaders have?
Do you see any striking similarities or differences in their backgrounds?
Students’ answers will vary depending on the articles selected.

2. What kinds of business challenges have these two leaders faced? What actions
did they take to deal with those challenges? Did they establish any long-term
goals or objectives for their company? Did the articles mention a new change
initiative?
Students’ answers will vary depending on the articles selected.

3. Describe the leadership strengths of each person as they are presented in the
articles you selected. Is either leader known as a team builder? Long-term
strategist? Shrewd negotiator? What are each leader’s greatest areas of
strength?
Students’ answers will vary depending on the articles selected.

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CHECKPOINTS

LEARNING OBJECTIVE 1: Explain the importance of management, and

identify the three vital management roles.

Critical thinking:
(1) How are social media changing the nature of the manager’s information role?
Social media such as blogs and wikis for both internal and external communications
allow information to flow both directions (between managers and employees) rather
than one direction. Social media also allow more people to participate and
communicate in a more immediate and less formal way. The smart use of social
media is helping managers lean more from employees and customers and
communicate back to these and other stakeholder groups more effectively.

(2) Would managers get more respect from employees if they “rolled up their
sleeves” and pitched in with the daily work more often? Why or why not?
Not necessarily. The most important part of a manager’s job is to delegate
responsibilities and motivate others to do their jobs, rather than to have the managers
do the jobs of the employees.

It’s your business:

(1) Review the process you went through to choose the college you are currently
attending. What lessons from your experience could someone apply to managerial
decision making?
Students’ responses will vary depending on personal experiences.

(2) Do you believe you have the right personality for management? If not, what areas
would you work on?
Students’ responses will vary depending on personal opinions.

LEARNING OBJECTIVE 2: Describe the planning function, and outline the

strategic planning process.

Critical thinking:
(1) Would Boeing and Old Navy develop strategic plans over the same time horizon?
Why or why not?
For the most part because companies in different industries tend to apply the same
long-range horizon when it comes to strategic planning and such horizon typically
ranges from two to five years.

(2) How does the vision statement guide the planning process?
The vision statement is a brief and inspirational expression of what a company
aspires to be. It provides the firm and its managers and employees with some focus
without getting into the specifics of a mission statement. It also inspires employees
with a clear sense of purpose.

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It’s your business:

(1) What is your personal vision statement for your career and your life? Have you
ever thought about your future in this way?
Students’ responses will vary depending on personal opinions and experiences.

(2) Consider a career path that you might pursue upon graduation, and perform a
quick SWOT analysis. What are some of your internal strengths and weaknesses and
external opportunities and threats?
Students’ responses will vary depending on personal experiences or opinions.

LEARNING OBJECTIVE 3: Describe the organizing function, and differentiate

among top, middle, and first-line management.

Critical thinking:
(1) Why might a manager need to de-emphasize skills honed in previous positions as
he or she rises through the organizational hierarchy?
Because as the manager rises through the organizational hierarchy, skills that were
important to her job success may no longer be as important. For instance, functional
area skills are not as important for a top manager compared to a first-line manager.

(2) Would top managers or first-line managers typically have more or less of the
information they’d like to have for the decisions they need to make? Why?
Top managers tend to have more information at the higher level, i.e. overall corporate
level information, while first-line managers tend to have more information at the
ground level, i.e. in the trenches, at the department level.

It’s your business:

(1) Have you ever supervised others on the job or in volunteer work? If so, how
would you rate your performance as a manager?
Students’ responses will vary depending on personal experiences or opinions.

(2) If you were suddenly promoted to manage the department you’ve been working
in, would you change your “work” personality? Why or why not?
Students’ responses will vary depending on personal opinions.

LEARNING OBJECTIVE 4: Describe the leading function, leadership style,

and organizational culture.

Critical thinking:
(1) Are management and leadership the same thing? If not, why not?
No. Management is the rational, intellectual, and practical side of guiding an
organization, while leadership is the inspirational, visionary, and emotional side.

(2) Can a single individual be an autocratic, a democratic, and a laissez-faire leader?

Why or why not?
Yes, because an effective leader often adapts her leadership style to match the
requirements of the particular situation. A normally democratic leader may adopt an
autocratic style in a crisis situation such as implementing staff reductions or layoffs.

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It’s your business:

(1) What is your natural inclination in terms of the three basic leadership styles –
autocratic, democratic, and laissez-faire? Think about times in school, at work, or in
social situations in which you played a leadership role. How did you lead?
Students’ responses will vary depending on personal experiences or opinions.

(2) Does leadership experience in school activities such as student government and
athletics help prepare you for business leadership? Why or why not?
Students’ responses will vary depending on personal experiences or opinions.

LEARNING OBJECTIVE 5: Describe the controlling function, and explain the

four steps in the control cycle.

Critical thinking:
(1) Why is it important to meet the needs of internal customers?
Because various internal customers need to work as a team and support each other in
ways that are best for the company.

(2) Is lowering performance standards in response to a failure to meet those standards

necessarily a sign of “giving up”? Why or why not?
Not necessarily. It is possible that performance standards were set at too high of a
level and needs to be adjusted.

It’s your business:

(1) Do you benchmark your performance in any aspect of your personal or academic
life? If yes, does it help you improve? If no, would it help you improve if you tried
it?
Students’ responses will vary depending on personal experiences or opinions.

(2) Think back over any crises you’ve faced in your life. How well did you respond?
What would you do differently in a future crisis?
Students’ responses will vary depending on personal experiences or opinions.

LEARNING OBJECTIVE 6: Identify and explain four important types of

managerial skills.

Critical thinking:
(1) Why is trust a vital aspect of a manager’s interpersonal skills?
Because without trust, the communications from a manager will not be well-received
by the employee, thus hampering the effectiveness of such communications.

(2) What are the risks of defining problems or opportunities poorly prior to making
decisions?
Without proper definition of problems or opportunities, managers may be using the
wrong information and arrive at the wrong decisions.

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It’s your business:

(1) Would you succeed as a manager if you started a company right out of college,
without having gained any experience as an employee in another company? Why or
why not?
Students’ responses will vary depending on personal opinions.

(2) How would you rate your conceptual skills? Does “seeing the big picture” come
easily to you? If not, how might you improve in this area?
Students’ responses will vary depending on personal experiences or opinions.

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