Expert answer:Management theory paper
Answer & Explanation:Prepare a 600-700 word paper in which you define the four functions of management
(planning, organizing, leading, and controlling).Please use the provided resource here Chapter 1.docx
chapter_1.docx
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Management: Leading and Collaborating in a Competitive World, 7e
Managing
ISBN: 9780072923308 Authors: Thomas S. Bateman, Scott A. Snell
Copyright © The McGraw-Hill Companies, Inc. (2007)
Managing
Management means, in the last analysis, the substitution of thought for brawn and muscle, of
knowledge for folklore and tradition, and of cooperation for force.
—Peter Drucker
CHAPTER OUTLINE
Managing in the New Competitive Landscape
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Globalization
Technological Change
Knowledge Management
Collaboration across “Boundaries”
Managing for Competitive Advantage
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Innovation
Quality
Speed
Cost Competitiveness
Delivering All Four
The Functions of Management
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Planning: Delivering Strategic Value
Organizing: Building a Dynamic Organization
Leading: Mobilizing People
Controlling: Learning and Changing
Performing All Four Management Functions
Management Levels and Skills
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Top-Level Managers
Middle-Level Managers
Frontline Managers
Working Leaders with Broad Responsibilities
Management Skills
You and Your Career
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Be Both a Specialist and a Generalist
Be Self-Reliant
Be Connected
Actively Manage Your Relationship with Your Organization
Survive and Thrive
LEARNING OBJECTIVES
After studying Chapter 1, you will know:
1. The major challenges of managing in the new competitive landscape.
2. The drivers of competitive advantage for your company.
3. The functions of management and how they are evolving in today’s business
environment.
4. The nature of management at different organizational levels.
5. The skills you need to be an effective manager.
6. What to strive for as you manage your career.
Prologue
ED CATMULL AND PIXAR
Pixar came out of the gates hitting five-for-five: Every film Pixar created, from Toy Story to The
Incredibles, was a blockbuster. Every one of its films was not just a commercial success; each
was extraordinary in its innovation and quality.
The founder and president of Pixar is Ed Catmull, Pixar’s unsung hero. Steve Jobs is Pixar’s
rock-star-famous CEO. Jobs (who actually spends most of his time with Apple), stated, “I’d trust
Ed with my life. He runs the company day to day, and he doesn’t get enough credit.”
Catmull started dreaming about making computer-animated films in his 20s. Since then, he has
created a new technology, turned it into a new art form, demonstrated impressive
entrepreneurialism, and built
one of the world’s most distinctive business enterprises. Fortune magazine describes Catmull as
a “geek’s geek” who is “so down-to-earth that you’d never know by talking to him that he
belongs in the ranks of Silicon Valley’s most creative company builders.”
Pixar doesn’t just create great movies; it invents its own technologies, continually develops new
production methods and organizational innovations, and is much more disciplined in its
execution than its rivals in the movie-making industry. John Lasseter, the pioneering animator
who directed Pixar’s first three films, describes Catmull as “Pixar’s heart and soul.”
Sources: B. Schlender, “Incredible: The Man Who Built Pixar’s Innovation Machine,” Fortune,
November 15, 2004, 206–12; P. Burrows, “Pixar’s Unsung Hero,” BusinessWeek, June 30, 2003,
p. 68.
Pixar is a great success story as described in the Prologue. In contrast, consider the founder of
the streaming media company Pseudo.com. During the height of the Internet gold rush, he
brashly told 60 Minutes and CBS, “Our business is to take you out. I’m in a race to take CBS out
of business … That’s why we’re going to make the big bucks.” 1 He said this before CBS was
embarrassed by its failure to authenticate some documents about President Bush’s years with the
National Guard, and before Dan Rather’s resignation. But CBS, of course, is still around,
whereas Pseudo.com, like many other dot-com startups, is not.
Companies, like individuals, succeed or fail for a variety of reasons. Some of these reasons are
circumstantial. Most are personal and human and include the decisions managers make and the
actions they take.
In business, there is no replacement for effective management. Companies may fly high for a
while, but they cannot do well for very long without good management. It’s the same for
individuals: BusinessWeek’s Managers of the Year succeed by focusing on fundamentals,
knowing what’s important, and managing well. The aim of this book is to help you succeed in
those pursuits.
Managing in the New Competitive Landscape
When this decade began, the economy was soaring. Business seemed easy. Turns out, it’s not
easy. Even though the high-tech “new economy” heated up for a while, profits proved hard to
come by, and many high-flying companies came crashing down.
Why did so many companies fall so far, so fast? In little more than one year, the business world
changed dramatically. The dot-com bubble burst, a recession came, September 11, 2001, brought
terrorist attacks, and economic uncertainties snowballed. But changing circumstances were only
part of the story. During the good times, managers made a lot of bad decisions. Many grew
arrogant, mistreated customers, didn’t worry about costs, and gave away valuable services
because profits didn’t seem to matter. They misapplied management principles, in part because
they lacked managerial experience and expertise. 2
According to BusinessWeek, “The Darwinian struggle of daily business will be won by the
people—and the organizations—that adapt most successfully to the new world that is unfolding.”
3
What defines this “new world,” and the competitive landscape of business? You will be reading
about many relevant issues in the coming chapters, but we begin here by highlighting four key
elements that make the current business landscape different from the past: globalization,
technological change, the importance of knowledge and ideas, and collaboration across
organizational “boundaries.”
Globalization
Far more than in the past, enterprises are global, with offices and production facilities in
countries all over the world. Corporations such as GE, Bertelsmann, ASEA Brown Boveri, and
Nestlé are “stateless”: They operate worldwide, transcending national borders. 4
Founded in the United States, MTV has been extremely successful expanding overseas, reaching
400 million households in 164 countries in 18 languages. CEO Judy Mc-Grath recently
announced MTV’s 100th channel: TV Base in Africa. 5 The movie industry also is grateful for
expanding overseas markets. 6 The 2004 films King Arthur, Troy, and The Terminal all did
poorly in the United States but did three times or more business internationally. Troy made more
than $21 million in South Korea, which had virtually no theaters a few years ago. Russian
companies are investing aggressively in theater building, and the third Harry Potter film opened
in Italy during the summer—timing that used to be unthinkable, until theaters recently added air
conditioning. Brad Pitt movies do particularly well in Japan, where women are the most frequent
moviegoers, often going with girlfriends to Wednesday openings and then with their boyfriends
on Saturdays.
Meg Whitman took a chance on eBay in Germany based on her hunch that the urge to
trade is human nature.
Top CEOs know that the change from a local to a global marketplace is gaining momentum and
is irreversible. 7 But some U.S. managers retain a U.S.-centric view of the business world. Some
people told CEO Meg Whitman that eBay was uniquely American—for it to succeed, they said,
buyers and sellers need optimism and mutual trust. 8 But Whitman suspected that the urge to
trade is human nature. She moved into Europe and Australia. The best eBay franchise
worldwide, she says, is Germany. And she entered China when the country had virtually no ecommerce. China is now eBay’s fastest growing market. Whitman is now placing a long-term bet
on India, where only about 2 percent of the population uses the Net.
Ideally, transnational companies have managers who specialize not only in particular businesses
and functions but also in particular countries. 9 Managers throughout the company need to be
enlightened to global realities. But the point isn’t simply that globalization is at the heart of huge
transnational companies. It affects small companies as well. Many small companies export their
goods. Many domestic firms assemble their products in other countries. And companies are
under pressure to improve their products in the face of intense competition from foreign
manufacturers. For example, Transmatic Manufacturing of Holland, Michigan, lost its most
profitable contract to a Chinese firm. 10 Firms today must ask themselves, “How can we be the
best in the world?”
For students, it’s not too early to think about the personal ramifications. As CEO Jim Goodnight
of SAS, the largest privately held software company in the world, put it, “The best thing business
schools can do to prepare their students is to encourage them to look beyond their own
backyards. Globalization has opened the world for many opportunities, and schools should
encourage their students to take advantage of them” (p. 19). 11
In a recent three-year period, foreign companies opened about 60,000 new factories in China.
Technological Change
You know how important technology is in life. It is, of course, vitally important in the business
world as well. Technology both complicates things and creates new opportunities. The
challenges come from the rapid rate at which communication, transportation, information, and
other technologies change. 12 For example, Robert Nardelli of Home Depot and Phil Knight of
Nike were named two of BusinessWeek’s Best Managers of the Year. 13 Both were named for a
variety of reasons, including good business results. But key decisions involved technology
change. Nardelli invested in new technologies including cordless scan guns and self-checkout
lanes. Knight not only changed some unpopular labor practices but also spent more time
developing excellent information systems, logistics, and supply chains. In early 2005, Nike was
in its strongest financial shape ever.
Later chapters will discuss technology further, but here we highlight the rise of the Internet and
its effects. Why is the Internet so important to business? 14 It is a marketplace, a means for
manufacturing goods and services, a distribution channel, an information service, and more. It
drives down costs and speeds up globalization. It provides access to information, allows more
informed decisions, and improves efficiency of decision making. It facilitates design of new
products, from pharmaceuticals to financial services. Managers can watch and learn what other
companies are doing, on the other side of the world. While these advantages create business
opportunities, they also create threats as competitors sometimes capitalize more than you do.
At the beginning of this decade, technology was dazzling people with returns that seemed
limitless. E-business (business conducted electronically) was all the rage. But when the
overheated market crashed, “profitable Internet company” became an oxy-moron. 15 The term ebusiness became discredited to the point where GM dropped it and started calling its e-business
efforts “digitization.”
But by mid-2002, 25 percent of the publicly held Internet companies had become profitable. 16 Etravel and e-finance (shining examples at the time: Expedia, Priceline, and Schwab) emerged as
big winners. The health services company WebMD, once branded a loser, began making money.
Even nonprofitable Net companies at least had potential as takeover targets for established
companies, because they could provide the Internet services those companies needed.
When the dot-com bubble burst, many Internet-only companies died, making it seem that mixing
the Internet with physical stores was the only way to make money online. But by 2002, most
profitable Web companies were selling information-based products that don’t require shipping,
and so they didn’t need physical stores 17 (as the jargon had it, “bricks” to go with their “clicks”).
At the same time, old economy types, written off for dead during the heyday of the dot-com
boom, have survived and are now using the Internet as a tool to solidify their future. Barnes &
Noble sells successfully via the Net, not solely but as a complement to its real stores—people
still like to browse the aisles, thumb through books, and have a cup of coffee. 18
Some observers compare e-commerce to the automobile industry in the era of the Model T,
Ford’s original all-black model in the early 1900s. 19 The Net clearly is a powerful tool for doing
and improving business. The industry may now be poised for a long, steady climb for decades. 20
The Internet revolution is definitely here, and the real wealth creation is yet to come. 21
Google search sites span the Internet in over 100 languages.
Will Wright of Electronic Arts helped develop the first Sims game in 2000, and also Sims2.
Knowledge Management
Companies and managers face a growing need for good, new ideas. Because companies in
advanced economies have become so efficient at producing physical goods, most workers have
been freed up to provide services or “abstract goods” like software, entertainment, data, and
advertising. Efficient factories with fewer workers produce the cereals and cell phones the
market demands; meanwhile, more and more workers create software and invent new products
and services. As top consultant Gary Hamel puts it, “We have moved from an economy of hands
to an economy of heads.” 22
Electronic Arts (EA) is a leader in a fad-driven, fast-moving business, and it has to work hard to
stay on top. The company can’t do that without utilizing the knowledge of world-class
developers. Good developers are scarce. They must be able to create interesting stories, have the
artistic talent to draw characters, and understand complex calculations to use cutting-edge
graphics. 23 Electronic Arts has 12 studios around the world, in large part to capitalize on the
knowledge held all over the globe.
Chief knowledge officer will be an important job in coming years. 24 Knowledge management is
the set of practices aimed at discovering and harnessing an organization’s intellectual resources—
fully utilizing the intellects of the organization’s people. Knowledge management is about
finding, unlocking, sharing, and altogether capitalizing on the most precious resources of an
organization: people’s expertise, skills, wisdom, and relationships. Knowledge managers find
these human assets, help people collaborate and learn, help people generate new ideas, and
harness those ideas into successful innovations.
knowledge management
Practices aimed at discovering and harnessing an organization’s intellectual resources.
Production of tangible goods remains an essential part of the economy and of effective
management, but companies like GE, Dell, Toyota, and ABB owe their success in large part to
intellectual capital. Whereas “capital” used to be a purely financial concept, it now has an
additional meaning. Intellectual capital is the collective knowledge and brainpower of the
organization. 25 Today, managers must create a work environment that attracts good people,
makes them want to stay, and inspires creative ideas from everyone. The goal is to turn the
brainpower of their people into profitable products.
Advantages of Collaboration
In business, you compete. Now more than ever, you must also collaborate to succeed. You
collaborate with others in your work unit, other units in your organization, customers, and other
companies including competitors. Because of the importance of collaboration in today’s business
world, we will highlight examples in every chapter so you don’t lose sight of how essential it is.
Collaboration across “Boundaries”
One of the most important processes of knowledge management is to ensure that people in
different parts of the organization collaborate effectively with one another. This requires
productive communications among different departments, divisions, or other subunits of the
organization. For example, British Petroleum tries to create “T-shaped” managers who break out
of the traditional corporate hierarchy to share knowledge freely across the organization (the
horizontal part of the T) while remaining fiercely committed to the bottom-line performance of
their individual business units (the vertical part). This emphasis on dual responsibilities for
performance and knowledge sharing occurs at GlaxoSmithKline (the pharmaceutical giant),
Siemens (the large German industrial company), and Ispat International (a London-based
steelmaker). 26
For example, a huge recent success for Procter & Gamble has been Prilosec—which is someone
else’s product. 27 Priolosec is AstraZeneca’s over-the-counter version of its prescription heartburn
medicine, and P& G sells it. Think also about the cross-company collaboration required for
Apple Computer to create the huge successes of the iPod portable music player and iTunes
online music store. 28 To build the iPod, Apple worked with Toshiba to come up with a new hard
disk, a little-known start-up to customize software, and contractors to assemble the product in
Taiwan. Apple also persuaded all the major record labels—known for their rivalries and
distrust—to make their music available for download. Apple’s ability to line up partners was key
to creating these runaway market leaders.
Collaboration across former “boundaries” occurs even between competing firms. For example,
competitors dovetail electronic systems to purchase jointly, ship on shared semis, and store
goods in commonly rented warehouses. 29 Companies today also must motivate and capitalize on
the ideas of people outside the traditional company boundaries. How can a company best use the
services of its consultants, ad agencies, and suppliers? What kinds of partnerships can it create
with other companies in the same industry? And how about customers? Companies today still
need to focus on delivering a product and making the numbers, but above all they must realize
that the need to serve the customer drives everything else.
Best serving the customer can start with involving the customer more in company decisions. For
example, companies like P& G are getting customers to think creatively and talk with one
another online to come up with new product and service ideas. 30 Jim Goodnight of SAS requires
that all customer suggestions for product improvements be recorded. 31 The suggestions are
placed in an annual survey for customers to rank, and the 10 top suggestions usually are followed
for the next product upgrade. This isn’t about the occasional comment from a customer; it’s about
a strategic, systematic, active approach to achieve better customer service through managing
relationships in such a way that customers contribute their best ideas.
Globalization, technological change, the monumental importance of new ideas, collaboration
across disappearing boundaries … what are the repercussions of this tidal wave of new forces?
The magazine Fast Company asked 17 business leaders to consider this question. Table 1.1
offers some of their comments.
TABLE 1.1 Comments on the Competitive Landscape of the 21st Century
Tom Peters, author and consultant: “Somebody once asked me what I wanted my epitaph to
say. I want it to say, ‘He was a player.’ It wouldn’t mean that I got rich … It would mean that I
participated fully in these fascinating times … whatever this ‘new economy’ thing is, it is
reinventing the world of commerce.”
Jonathan Hoenig, founder of capitalistpig asset management: “The most valuable commodity
isn’t soybeans but service … The human touch is what’s going to propel our ‘commodif …
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