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Textbook Summary Chapter 6 A concise explanation on each of the topics covered in the textbook, just without all of the extra examples and stories.

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University of Toronto St. George
Rotman Commerce
John Oesch

RSM 100Y1 Chapter 6 The Management Process The process of planning, organizing, leading and controlling an enterprise’s financial, physical, human and information resources to achieve the organization’s goals of supplying various products and services. Efficiency: Achieving the greatest level of output with a given amount of input. Effectiveness: Achieving the organizational goals that have been set. 1. Planning The process of determining the firm’s goals and developing a strategy for achieving them. There are 5 steps: Step 1 – Goals are established for the organization Step 2 – Identify whether a gap exists between the company’s desire and actual position Step 3 – Develop plans to achieve desired goal Step 4 – Implement plans Step 5 – Assess effectiveness of plan Prediction markets help managers assess future possibilities. It’s a market where people can buy “shares” in various answers to important questions that need to be answered. Hierarchy of Plans Strategic Plans – Top management. Decisions about resource allocation and company priorities. Tactical Plans – Upper/Middle management. Short range plans regarding implementing specific aspects of the company’s strategic plans. Operational Plans – Middle/Lower management. Very short-term targets. 2. Organizing Mobilizing the resources that are required to complete a particular task. 3. Leading Involves the interactions between managers and their subordinates as they both work to meet the firm’s objectives. Leaders should guide and motivate employees to work in the best interests of the organization. 4. Controlling The process of monitoring a firm’s performance to make sure that it is meeting its goals. Types of Managers Levels of Management: 1. Top Managers The managers responsible for a firm’s overall performance and effectiveness and for developing long-range plans for the firm. Set policies, formulate strategies, oversee decisions and represent the company in its dealings with other businesses and government. CEO, CFO, COO 2. Middle Managers The managers responsible for implementing the strategies, policies and decisions of the top managers. Plant manager, operations manager, divisions manager 3. First-line Managers The managers responsible for supervising the work of employees. Supervisor, Office Manager, Group leader Areas of Management: 1. Human Resource Managers Provide assistance to other manages when they are hiring employees, training them, evaluating their performance and determining their compensation level. May be involved with negotiations with the union. 2. Operations Managers Responsible for the production systems that create goods and services. Watch through production control, inventory control, quality control. 3. Information Managers Responsible for designing and implementing systems that gather, process and disseminate information. 4. Marketing Managers Responsible for getting products and services to buyers. 5. Financial Managers Responsible for planning and overseeing its financial resources (investment and accounting functions). Basic Management Skills 1. Technical Skills Skills associated with performing specialized tasks within a company. Developed through education and experience. Top Middle First-line 2. Human Relations Skills Skills that enable managers to understand and get along with other people. Very important for middle managers who often act as a bridge between top and first- line managers. 3. Conceptual Skills A person’s ability to think abstract, to diagnose and analyze different situations, and to see beyond the present situation. It helps managers to recognize new market opportunities and threats. 4. Time Management Skills The productive use of time. Four causes of wasted time: PAPERWORK, TELEPHONE, MEETINGS, EMAIL. 5. Decision Making Skills Skills in defining problems and selecting the best courses of action to solve them. The Rational Decision-Making Process 1. Recognizing and Defining the Decision Situation Some stimulus indicates that a decision must be made. The stimulus may be positive or negative. 2. Identifying Alternatives Both obvious and creative alternatives are desired. In general, the more important the decision, the more alternatives should be generated. 3. Evaluating Alternatives Each alternative is evaluated to determine its FEASIBILITY, its SATISFACTORINESS, and its CONSEQUENCES. 4. Selecting the Best Alternative Consider all situational factors and choose the alternative that best fits the manager’s situation. 5. Implementing the Chosen Alternative The chosen alternative is implemented into the organizational system. 6. Following Up and Evaluating the Results At some time in the future, the manager should ascertain the extent to which the alternative chosen in step 4 and implemented in step 5 has worked. Behavioral Aspects of Decision Making Many managers tend to use “decision-based evidence making” rather than “evidence- based decision making”. This means that managers will decide what they want to have happen and then later conduct an analysis to support their decision. Factors that affect decision making are: 1. Organizational Politics: The actions that people take as they try to get what they want.
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