Introduction to Management- Rutgers Professor Jenkins

What is management?

Involves tasks such as planning, organizing, leading, and controlling.

Involves skills such as technical skills, interpersonal skills, and decision making skills.

Two Components of Management

The "what" and the "how".
1.) The "what" is about identifying the Right Work to be done by the manager and organization.
2.) The "how" is about understanding the way in which the manager gets that work "done well"

How do managers identify the "Right Work" to be done?

Involves developing a vision, mission statement, setting goals, selecting strategies, and putting plans to execute.

Two Drivers of Financial Value

Profitability and Growth

How do managers make sure work is "Done Well"?

Designing jobs, creating organizational structure, integrating and coordinating workflows, and creating a culture that supports the task to be done.

Human Resource Management

Activities include hiring, compensating, and motivating employees.

Employee Engagement

Pursuit of shared goals, leading to positive outcomes. Creating of a mutually beneficial partnership.

Performance Management

Involves managing the organization's activities effectively and efficiently. Jobs include visualizing the steps of the process, creating measures of the effectiveness and efficiency of the process, and using proven tools and techniques to improve the processes.

Limitations of Management Theory

Different from scientific disciplines, the material in the book is not based on rigorous research to demonstrate a cause/effect relationship. Also- INCORRECT to assume that if you follow everything in the textbook, you will become a successful manager.

4 Facets Causing Change

Political, Economic, Social, and Technological

Specialization of Labor

1700s Adam Smith identified the concept of a person focusing on a single component of the overall production to increase production.

- example could include instead of a farmer raising sheep, cutting wool, spinning thread, making coat-- these tasks could be separated

Systematic Management

During the earlier industrialization age, engineers(designed + set up machines + determined which machines to perform tasks) and economists(kept track of costs + set pay policies + determined prices).

** today specialization is more intense

Scientific Management

3 notable people

Frederick Taylor formalized the approach of using clocks to record the time required to to perform different tasks in the workplace and then different ways to perform

Glibreth created the time and motion studies.

Henry Gatt created visual charts to describe the elapsed time required to perform tasks, expanded on Taylor's work in laying foundation for lean manufacturing(focuses on removing waste from production, JIT- "just in time inventory planning")

Administrative Management

Henry Fayol: 14 principles of management

Max Weber: tenets of bureaucratic management

14 Principles of Management

Created by Henry Fayol.

1.) Division of work
2.) Authority
3.) Discipline
4.) Unity of Command
5.) Unity of Direction
6.) Subordination of Individual Interests to the General Interest
7.) Remuneration
8.) Centralization
9.) Scalar Chain
10.) Order
11.) Equity
12.) Stability of Tenure
13.) Initiative
14.) Esprit de corps

Main Tenets of Bureaucratic Management

Division of Labor- Labor is divided so that authority and responsibility are clearly defined

Managerial Hierarchy- Offices and positions are organized in a hierarchy of authority

Formal Selection- All employees are selected on the basis of technical qualifications demonstrated by formal examinations, education, or training

Career Orientation- Employees are "career professionals"- they work for fixed salaries and pursue "careers" within their respective fields

Formal Rules and Other Controls- all employees are subject to formal rules and other controls regarding the performance of their duties

Impersonality- rules and other controls are impersonal and uniformly applied in all cases

Vision

Organization's purpose for existence.

Mission

Describes the products and services an organization will provide, the constituents it intends to serve, and the reasons why those constituents should support the organization.

Goals

Identify the outcomes that an organization is trying to achieve.

Financial Goals

1) Return on capital employed
2) Sales or revenue earned
3) Profit
4) Net cash flow amount
5) Day sales outstanding
6) Days of inventory on hand

Operational Goals

1) Market share vs. competitors
2) Number of returning customers for a given period of time
3) Number of new customers for a given period
4) Service levels
5) Customer satisfaction levels
6) Production Levels
7) Error or Defect Levels

Differentiation Strategy

Distinguishing products/services from competitors in a way that makes offerings more attractive than rival products/services

Low-Cost Strategy

Developing the least expensive ways vs. competitors to produce and deliver products/services

Combination Strategy

Selects a few differentiation features for its product/services but is able to provide these with a lower cost structure than rivals.

Focus Strategy

Targets a market segment that the business is able to serve more effectively than rivals who focus on serving the needs of a broader market.

Steps to Strategy Development Process

1.) Develop the Vision, Mission, and Goals of the organization
2.) Conduct an external analysis of the business environment and the industry in which the business competes
3.) Conduct an internal analysis of products/services and capabilities vs. competitors and world class standards
4.) Based on the outcomes of steps 1-3, evaluate and select the best strategy for achieving the goals of the organization.
5.) Implement the strategy.

Porter's Five Forces (Step 2)

An analysis tool that looks at how the following factors influence the profitability in an industry.
1.) Intensity of rivalry.
2.) Bargaining power of buyers.
3.) Bargaining power of suppliers.
4.) Threat of new entrants.
5.) Threat of substitutes products/services

Industry Life Cycle Analysis(Step 2)

This tool looks at the evolution of industries.
- Embryonic: new product/service begins the formation of new industry
- Growth: new product/service becomes broadly accepted
- Shakeout: industry growth begins to flatten/decline + mergers
- Mature: when industry growth begins to slow
- Decline: when growth is negative with only a few participants

Factors to Consider (Step 2)

Macroeconomic Factors: includes economic growth, inflation, foreign exchange rates

Global Trends: the extent to which global markets are attractive for potential expansion or for sourcing factors of production, resources, technology, or know-how

Technology: the impact of technology on the industry

Demographics: evaluation of how trends/changes in demographics impact the industry

Social Values: How do the belief systems affect the industry?

Political/Legal Factors: How do governments impact the industry through regulation and other factors

Distinctive Competency vs. Core Competency

Distinctive Competence= allows organization to effectively differentiate its products from competitors in order to create superior value for customers and/or are the ability of the organization to achieve cost leadership in the industry.

Core Competencies= things that an organization can do well

Organization Structure

Designing meaningful jobs, retaining talent, delivering results required. Grouping jobs and delegating authority are also a part of it.

Monitoring and Control

Periodically review progress in implementing strategies, achieving goals, and providing feedback + guidance

Strategic Plans

Core strategies and initiatives an organization will undertake.

Business Plans

Key goals for organization, key initiatives, required resources, timeline

Marketing Plans

Includes key customers, customer segments, products, services, etc.

Operational Plans

Identifies the operational goals and requirements for producing the product

Functional Plans

Identifies the goals, steps, key initiatives, required resources

Financial Plans

Identifies the anticipated financial resources requirement for business units.

Research and Development Plans

Identifies various initiatives for growing organization

Technology Plans

Identifies the key technology resources necessary to support products

Human Resource Plans

Identifies key talent required: employee training and development programs, motivation, retention engagement programs, and performance appraisal.

National Labor Relations Act of 1935

Gave workers in private industries the legal right to organize, engage in collective bargaining, and strike.

Fair Labor Standards Act of 1938

Established the 40-hour work week and the requirement to pay overtime at one and one half the regular rate for any hours worked beyond 40 hours. Established minimum wage and child labor regulation.

Social Security Law of 1935

Provided retirement income for workers once they reached the age of 65 years or older.

Equal Pay Act of 1963

Made it illegal to have different pay rates for the same job based on gender.

Civil Rights Act of 1963

Made it illegal to discriminate in employment based on race, color, religion, sex, or national origin.

Occupational Safety and Health Act

Protected the safety and health of workers.

Commercial Code

Set of laws that regulate and facilitates commercial transactions

Publicly Traded Companies

List their stock ownership rights on stock exchanges for sale to investors

Oil and Gas Industry

Most states have regulation related to the exploration and production of oil and gas.

Financial Services

The Securities and Exchange Commission (SEC) and various bank regulations establish rules that apply to stock exchanges, investment banks, commercial banks, and insurance companies.

Professional Baseball

Exempt from application of a law that applies to all other industries. Sherman antitrust law did not apply to the MLB

When does unethical behavior occur? (Internal)

1) level of moral development of the individual
2) willingness to accept and obey authority of others
3) ability to control one's own behavior
4) relationships with others who have an influence on perpetrator's behavior

When does unethical behavior occur? (External)

1) culture of the organization
2) consequences for unethical behavior
3) ease of opportunity to act unethically
4) characteristics of work

Moral Awareness

Realize there is a moral issue or ethical problem

Moral Judgement

Figure out what you should do by applying moral standards in order to determine the appropriate moral course of action.

Moral Intention

Give priority to moral values above other personal values in order to intend to do what is morally right.

Action or Implementation

Implement a plan of actions based on having sufficient perseverance, strength of conviction, and implementation skills

Utilitarian Approach

Choose the option that produces the greatest good for the greatest number of people

Individualism Approach

Choose the option that promotes the individual's best long-term interests

Moral Rights Approach

Should choose the option that does not violate any fundamental rights of individuals (free consent, right to privacy, freedom of conscience, freedom of speech)

Impartial Opinion

To discuss the situation with an independent, objective, knowledgeable, and respected third party

Full Disclosure

To assume that whatever decision is made will be openly presented to the public and assess how the majority of the informed public are likely to judge.

Profitability

The ability of a business to generate long term positive net cash flows sufficient to provide an appropriate risk-adjusted rate of return on capital employed

Growth

The rate of increase in net cash flows in a business year over year

How to increase sales/growth?

1.) Sell more businesses' existing products/services to existing customers
2) Increase their usage of currently purchased products/services
3) Broaden the number of different products they routinely buy from the business
4) Upscale: buy more expensive versions of the product/service they were previously purchasing