CHAPTER 6: MANAGING THE BUSINESS ENTERPRISE WHO ARE MANAGERS  All organizations depend on effective management  No matter the type of organization, managers perform the same basic function; are responsible for many of the same tasks and have many of the same responsibilities  All managers plan, organize, direct, and control day-to-day operations  Principles of management apply to all kinds of organizations  Managers bring the same kind of skills; the ability to make decisions and to respond to a variety of challenges  Regardless of size of organization, managers are among its most important resources THE MANAGEMENT PROCESS  Management: the process of planning, organizing, leading, and controlling an enterprise’s financial, physical, human, and information resources to achieve the organization’s goal of supplying various products and services  Two important overall points to keep in mind when thinking about the “management process”  The planning, organizing, leading, and controlling aspects of a manager’s job are interrelated  It’s important to make the distinction between management efficiency – achieving the greatest level of output with a given amount of input – and management effectiveness – achieving the organizational goals that have been set  In other words, efficiency means doing things right, while effectiveness means doing the right things  A manager who focuses on being effective will likely also be efficient, but a manager who focuses on being efficient may or may not be effective Planning:  Planning: the process of determining the firm’s goals and developing a strategy for achieving them  Has five basic steps: Step 1: goals are established for the organization Step 2: managers identify whether a gap exists between the company’s desire and actual position Step 3: managers develop plans to achieve the desired goal Note that goals indicate WHAT results are required and plans indicate HOW these goals are to be achieved Step 4: the plans that have been decided upon are implemented Step 5: the effectiveness of the plan is assessed  One example of such planning is Yahoo  researched what search engine users want and tried to implement it through alliances with others when needed and making Yahoo search engine simple and versatile for almost all of people’s needs  It may be difficult to predict which plans will be successful  One tool that helps managers assure future possibilities is called prediction markets  Prediction Markets: creating a market where people can buy “shares” in various answers to important questions that need to be answered 1.        A Hierarchy of Plans Plans can be made on three general levels, with each level reflecting plans for which managers at that level are responsible These levels constitute a hierarchy because implementing plans is practical only when there is a logical flow from one level to the next Strategic Plans: set by top management; reflect decisions about resource allocations, company priorities, and the steps needed to meet strategic goals Example: General Electric’s plan to be number one or two in all the markets in which it competes Tactical Plans: shorter-range plans concerned with implementing specific aspects of the company’s strategic plans, typically involve upper and middle management Example: Coca Cola’s plan to increase sales in Europe by building European bottling facilities Operational Plans: plans developed by middle and lower-level managers that set short-term targets for daily, weekly, or monthly performance

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 Example: McDonald’s stipulates precisely how Big Macs are to be cooked, warmed, and served Organizing:  Organizing: mobilizing the resources that are required to complete a particular task  Very important for firms Leading:  Leading (or Directing): involves the interaction between managers and their subordinates as they both work to meet the firm’s objectives  By definition, managers have the power to give orders and demand