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Business in a
Changing World
Chapter 7
Managerial Decision Making
2
McGraw-Hill/Irwin
Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights
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Vivace Espresso
All
things coffee
Local Seattle establishment – “espresso roasting
and preparation specialists”
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The Importance of Management
Management –
planning, organizing, staffing, directing, & controlling
Achieving objectives requires skilled
management
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The Importance of Management
Management
Process designed to achieve an organization’s
objectives by using its resources effectively &
efficiently in a changing environment.
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The Importance of Management
What Managers Do
Make decisions – utilization of resources – achieve objectives:
•Planning
•Organizing
•Staffing
•Directing
•Controlling
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The Importance of Management
New Product Development
•Boeing Airline’s 787 Dreamliner
•892 sold @ $169 million each
•$145 billion total sales
•57 global customers
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The Importance of Management
Resource acquisition & coordination
Resources
•People
•Raw materials
•Equipment
•Money
•Information
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Management Functions
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Management Functions
Planning –
Process of determining the organization’s
objectives and deciding how to accomplish them.
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Management Functions
Planning
Objectives – results desired by organization
Mission – organization’s purpose and philosophy
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Management Functions
Objectives
Common & Elaborate Organizational Objectives -•Profit, competitive advantage, efficiency, growth
•Service, ethics, community responsibility
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Management Functions
Plans
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Management Functions
Strategic Plans
Executive level managers
•Establish the long-range objectives & overall
strategy to fulfill firm’s mission
•2-10 years forward-looking
•Sustainability
•diversification, divestiture , mergers &
acquisitions,
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Management Functions
Tactical Plans
Short-range – strategy implementation
•1 year or less
•Environmental change
•Periodically reviewed & updated
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Management Functions
Operational Plans
Very short-term – actionable, specific
•Individuals, work groups, departments
•1 month, 1 week, 1 day
•Achieve tactical plans
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Management Functions
Crisis Management
Contingency Planning
Focus on potential disasters
•Product tampering
•Oil spills
•Fire, earthquake, terrorist attack
•Unethical/illegal employee activity
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Management Functions
Crisis/Contingency Planning
Crisis Management Teams
– Ashland Oil
– J.J. Heinz
– Johnson & Johnson
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Management Functions
Organizing –
Structuring of resources & activities to
accomplish objectives efficiently & effectively.
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Management Functions
Organizing
Importance –
–
–
–
–
Creates synergy
Establishes lines of authority
Improves communication
Improves competitiveness
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Management Functions
Staffing –
Hiring people to carry out the work of the
organization.
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Management Functions
Staffing
Importance –
–
–
–
–
Recruiting
Determine skills
Motivate & train
Compensation levels
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Management Functions
Downsizing –
Elimination of significant numbers of employees
(rightsizing, trimming the fat)
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Management Functions
Directing –
Motivating and leading employees to achieve
organizational objectives.
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