Chapter 7

Management and Leadership

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 Learning Objectives
LO 7-1 Describe the changes occurring today in the
management function.
LO 7-2 Describe the four functions of management.
LO 7-3 Relate the planning process and decision making to
the accomplishment of company goals.
LO 7-4 Describe the organizing function of management.
LO 7-5 Explain the differences between leaders and
managers, and describe the various leadership
styles.
LO 7-6 Summarize the five steps of the control function of
management.

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 The Four Functions of Management
WHAT IS THE MANAGEMENT?

Management Functions
• Planning
• Organizing
• Leading
• Controlling

LO 7-2
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 Figure 7.1 What Managers Do 1 of 2

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LO 7-2
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 Figure 7.1 What Managers Do 2 of 2

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LO 7-2
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 Planning and Decision Making 1 of 6
Vision —
More than a goal; an encompassing explanation of why
the organization exists and where it’s trying to go.
Mission statement —
An outline of the fundamental purposes of an
organization, including:
• The organization’s self-concept
• Its philosophy
• Long-term survival needs
• Customer needs
• Social responsibility
• Nature of the product or service LO 7-3
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 Planning and Decision Making 2 of 6
Goals —
The broad, long-term accomplishments an
organization wishes to attain.
Objectives —
Specific, short-term statements detailing how to
achieve the organization’s goals.

LO 7-3
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 Planning and Decision Making 3 of
6
Planning Answers Fundamental Questions:
1. What is the situation now?
• SWOT analysis —
A planning tool used to analyze an
organization’s strengths, weaknesses,
opportunities, and threats.
2. How can we get to our goal from here?
• Strategic planning
• Tactical planning
• Operational planning
• Contingency planning
LO 7-3
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 Figure 7.2 SWOT Matrix

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LO 7-3
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Planning and Decision Making 4 of 6
Strategic planning —
Determining the major goals of the organization and the policies and
strategies for obtaining and using resources to achieve those goals.

Tactical planning —
Developing detailed, short-term statements about what is to be done,
who is to do it, and how it is to be done.

Operational planning —
Setting work standards and schedules necessary to implement the
company’s tactical objectives.

Contingency planning —
Preparing alternative courses of action that may be used if the primary
plans don’t achieve the organization’s objectives.

LO 7-3
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 Figure 7.3 Planning Functions

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LO 7-3
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 Planning and Decision Making 5 of 6
Decision Making:
Finding the Best Alternative . Choosing among two or more
alternatives.
Rational decision-making model steps:
1. Define the situation.
2. Describe and collect needed information.
3. Develop alternatives.
4. Decide which alternative is best.
5. Do what is indicated.
6. Determine whether the decision was a good one and
follow up.
LO 7-3
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 Planning and Decision Making 6 of 6
Decision Making:
Finding the Best Alternative
Problem solving —
The process of solving the everyday
problems that occur; less formal
than decision making and usually
calls for quicker action.

LO 7-3
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 Organizing: Creating a Unified
System 1 of 4
Management Levels
• Top management —
• Highest level, consisting of the president and other key
company executives who develop strategic plans
• Middle management —
• Includes general managers, division managers, and
branch and plant managers who are responsible for
tactical planning and controlling
• Supervisory management —
• Those directly responsible for supervising workers and
evaluating their daily performance

LO 7-4
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 Figure 7.4 Levels of Management

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LO 7-4
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 Organizing: Creating a Unified
System 2 of 4
Top Management
• Chief executive officer (CEO) — Introduces
change into an organization.
• Chief operating officer (COO) — Implements
CEO’s changes.
• Chief financial officer (CFO) — Obtains
funds, plans budgets, collects funds, etc.
• Chief information officer (CIO) — Gets the
right information to the right people so
decisions can be made.

LO 7-4
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 Organizing: Creating a Unified System
Tasks and Skills at Different Levels of Management
• Technical skills
The ability to perform tasks in a specific discipline or
department.

• Human relations skills

Communication and motivation; they enable managers to
work through and with people.

• Conceptual skills
The ability to picture the organization as a whole and the
relationship among its various parts.

LO 7-4
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 Figure 7.5 Skills Needed at Various
Levels of Management

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LO 7-4
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 Organizing: Creating a Unified
System 4 of 4
Staffing: Getting and Keeping the Right People
• Staffing — Hiring, motivating, and
retaining the best people available to
accomplish the company’s objectives.
• Staffing is critical, especially in the
Internet and high-tech areas.
• Many people are not willing to work at
companies unless they are treated well
with fair pay.

LO 7-4
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 Leading: Providing Continuous
Vision and Values 1 of 4
Leaders must:
• Communicate a vision and rally others around that
vision.
• Establish corporate values.
• Promote corporate ethics.
• Embrace change. d
• Stress accountability and responsibility.

Transparency —
The presentation of the company’s facts and figures
clearly and apparent to all stakeholders.

LO 7-5
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 Leading: Providing Continuous Vision and
Values 2 of 4
Leadership Styles
• Autocratic leadership (EMERGINCIES)
Make managerial decisions without consulting
others.
• Participative or democratic leadership
(APPLE, IBM, GOOGLE) -
Managers and employees work together to make
decisions.
• Free-rein leadership
Managers set objectives and employees are
relatively free to do whatever it takes to
accomplish those objectives. LO 7-5
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 Figure 7.6 Various Leadership Styles

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LO 7-5
©McGraw-Hill Education. Source: Robert Tannenbaum and Warren Schmidt, “How to Choose a Leadership Pattern,” Harvard Business Review, May/June 1973.
 Leading: Providing Continuous Vision
and Values 3 of 4

Empowering Workers
• Progressive leaders give employees the
authority to make decisions on their own
without consulting a manager.
• Customer needs are handled quickly.
• Manager’s role becomes less of a boss and
more of a coach.
• Enabling — Giving workers the education
and tools they need to make decisions.

LO 7-5
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 Leading: Providing Continuous Vision and
Values 4 of 4

Managing Knowledge
EMPOWERING EMPLOYEES MEANS GIVE THEM
KNOWLEDGE
• Knowledge management
• Finding the right information, keeping
the information in a readily accessible
place, and making the information known
to everyone in the firm.
• This tries to keep people from
reinventing the wheel.

LO 7-5
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 Controlling: Making Sure It Works
• Control Function
Measures performance relative to planned objectives
Rewards people for work well done
Takes necessary corrective action
A Key Criterion for Measurement: Customer Satisfaction
Traditional forms of measuring success are financial.
Pleasing employees, stakeholders, and customers is
important.
External customers — Dealers, who buy products to sell to
others, and ultimate customers (or end users), who buy
products for their own use.
Internal customers — Individuals and units within the
firm that receive services from other individuals or units.
LO 7-6
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 Figure 7.7 The Control Process

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LO 7-6
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