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Chapter 07 - Management and Leadership
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The entrepreneurial leader’s genius lies in bringing things together in a combination that no one
has ever seen before. As an example of the entrepreneurial leader, they selected C. W. Post, who created
Post Cereals. Post began as an itinerant salesman until he developed a caffeine-free health drink, Postum.
Post differentiated his product by offering free samples to customers of general stores. He then developed
a breakfast cereal and pioneered one of the first major cereal companies. But Post’s real genius lay in his
ability to sense that a new, national consumer was emerging in America. He saw that in the developing
industrialized economy, time itself was becoming increasingly valuable. People were willing to pay for
convenience. He was also one of the first leaders to recognize the power of a national brand.
Whereas entrepreneurs were company creators and agents of change, managerial leaders are val-
ue maximizers. They make the most out of something that already exists. Nohria and Mayo use Louis B.
Neumiller as an example. Neumiller rose through the ranks of Caterpillar and became its chief executive
in 1941, two months before Japan attacked Pearl Harbor. He seized on the massive global event that was
World War II to build Caterpillar into a global organization. When the U.S. military approached Neumil-
ler about converting Caterpillar’s operation to artillery production, he convinced the Army that it was bet-
ter served by letting Caterpillar continue to manufacture bulldozers and tractors. It turned out that the
bulldozer was critical to clearing roads and building landing strips throughout the Pacific Islands. Neumil-
ler really didn’t build anything new. What he did was capitalize on the war effort to transform Caterpillar
into a global giant.
America’s fascination with the charismatic leader dates back to Lee Iacocca. When the 1970s
OPEC oil embargo and the energy crisis sent shock waves through the automotive industry, Japanese au-
tomobile producers seized the opportunity to introduce smaller, fuel-efficient cars into the American mar-
ket, eroding Detroit’s dominance. The biggest loser was Chrysler, which posted a then record loss of $1.7
billion. Iacocca then stepped in as a larger-than-life figure who successfully turned the auto company
around through the force of his personality. Iacocca persuaded the government to authorize a $1.5 billion
loan guarantee using taxpayers’ dollars. Then he reinvented the automobile company by changing its
technology, responding to changing demographics, and reinventing the union–labor relationship. Ulti-
mately Iacocca succeeded in turning Chrysler around and established the mold for the charismatic lead-
er.iv
lecture enhancer 7-5
DECISION-MAKING TIPS
Just as people are different, so are their styles of decision making. Each person is a result of all
the decisions made in their life to date. Recognizing this, here are some tips to enhance your decision-
making batting average.
• When making a decision you are simply choosing from among alternatives. You are not mak-
ing a choice between right and wrong.
• Avoid snap decisions. Move fast on the reversible ones and slowly on the nonreversible.
• Do your decision making on paper. Make notes and keep your ideas visible so you can con-
sider all the relevant information in making this decision.
• Be sure to choose based on what is right, not who is right.
• Write down the pros and cons of a line of action. It clarifies your thinking and makes for a
better decision.
• Make decisions as you go along. Do not let them accumulate. A backlog of many little deci-
sions could be harder to deal with than one big and complex decision.
• Consider those affected by your decision. Whenever feasible, get them involved to increase
their commitment.
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• Recognize that you cannot know with 100% certainty that your decision is correct because
the actions to implement it will take place in the future. So make it and don’t worry about it.
• Remember that not making a decision is a decision not to take action.
• Don’t waste your time making decisions that do not have to be made.
• As soon as you are aware that a decision will have to be made on a specific situation, review
the facts at hand then set it aside. Let this incubate in your subconscious mind until it is time
to finally make the decision.
• Once you have made the decision and have started what you are going to do, put the “what
if’s” aside and do it with commitment.v
lecture enhancer 7-6
THE 21ST-CENTURY CEO
Economic recovery began for big businesses in 2010 as weary returns slowly transformed into
relatively robust earnings. But for the most recognizable names in American business, accounting books
flush with black ink aren’t the only tools they’ll need to forge ahead into the future. For most, real change
starts at the top with a new crop of CEOs to replace the old guard.
During the recession, CEO turnover dropped from 12.7% in 2007 to just 9.4% in 2010. Boards
feared that investors would construe departing high-level executives as alarm bells sounding the imminent
end of the company. Now, though, big businesses are looking ahead instead of fretting about the achy
economy. More often than not, companies see their future overseas in emerging global markets that re-
quire knowledge not only of other cultures, but sometimes different industries altogether. Many sitting
CEOs have little experience abroad, let alone in fields other than that of their home company given the
habit of big businesses to promote from within.
The 21st-century CEO is well traveled and carries a wealth of experience in fields such as mar-
keting and sales rather than finance and manufacturing like the outgoing generation. Campbell Soup’s
new CEO, for instance, jumped into different positions at Procter & Gamble, Nestlé, and Kraft before
finally landing at Campbell eight years ago. Connections with high-level business leaders across the globe
are key as international sales start to account for more than half of some companies’ total revenue. Also,
studies show that executives who have lived abroad are more creative and entrepreneurial than their
“monocultural” peers. Ultimately, the business hierarchy of today is built differently than when alpha-
execs like General Electric CEO Jack Welch ruled the roost. Executives today are subjected to far more
corporate governance than in the past, requiring today’s CEOs to work closely with their boards.vi
lecture enhancer 7-7
LEARNING MANAGEMENT SKILLS
Now that you know some of the broad categories of skills needed by various levels of manage-
ment, we can look at the more specific skills an aspiring manager needs to learn. Remember that customer
satisfaction is the key to success in almost all businesses.
In general, it’s a good idea to take as many courses as are available in oral communication, writ-
ing, computers, and human relations. In all managerial jobs, these are the skills in greatest demand. Natu-
rally, it’s also important to develop technical skills in some selected area. There are at least six skills stu-
dents need to develop their managerial potential: verbal skills, writing skills, computer skills, human rela-
tions skills, time management skills, and other technical skills.
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Verbal Skills
The bulk of the duties as a manager involve communicating with others. Managers have to give
talks, conduct meetings, make presentations, and generally communicate their ideas to others. To prepare
for such tasks, students should take oral communication courses and become active in various student
groups. It helps to become an officer and assume responsibility for conducting meetings and giving
speeches. It also helps to join a choir or other group to become comfortable performing in front of others.
At least half of communication is skilled listening. A good manager mixes with other managers,
workers, clients, stockholders, and others outside the firm. He or she listens to recommendations and
complaints and acts on them. Active listening requires the asking of questions and feeding back what
you’ve heard to let others know you’re truly interested in what they say.
Writing Skills
Managers must also be able to write clearly and precisely. Much of what they want others to do
must be communicated through memos, reports, policies, and letters. Much of what was said in the past
by phone or letter is now communicated by e-mail or fax. While secretaries often wrote and/or corrected
letters in the past, the managers themselves send most e-mail and fax messages. Consequently, organiza-
tions everywhere are complaining about many college graduates’ inability to write clearly. If students de-
velop good writing skills, they will be miles ahead of the competition. That means taking courses in
grammar, composition, and keyboarding. To learn to write, people must practice writing! It helps to write
anything: a diary, letters, notes, and so on. With practice, people will develop the ability to write easily—
just as they speak. With this skill, they will be more ready for a career in management.
Computer Skills
The office of the future will be an office full of computers and related technology. As noted,
memos, charts, letters, e-mail and fax messages, and most other communication efforts will involve the
computer. The truly efficient manager of the future will be able to effectively use and take advantage of
the continuing developments in technology. That includes being able to surf the Internet to find needed
facts and figures quickly.
Human Relations Skills
A manager works with people, and that means that good managers know how to get along with
people, motivate them, and inspire them. People skills are learned by working with people. That means
aspiring managers should join student groups, volunteer to help at their church or temple and local chari-
ties, and get involved in political organizations. They should try to assume leadership positions where
they are responsible for contacting others, assigning them work, and motivating them. Good leaders begin
early by assuming leadership positions in sports, community groups, and so on.
Time Management Skills
One of the more important skills for new managers to learn is how to budget their time effective-
ly. There are many demands on managers’ time that they need to control: telephone interruptions, visits
from colleagues, questions from team members, meetings scheduled by top management, and such. Time
management courses or workshops will help you develop such skills as setting priorities, delegating work,
choosing activities that produce the most results, doing your work when you’re at your best, and dealing
with interruptions.
Technical Skills
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To rise through the ranks of accounting, marketing, finance, production, or any other functional
area, it is important to be proficient in that area. Therefore, students should choose some area of speciali-
zation. To rise to top management, it’s a good idea to supplement undergraduate studies with an MBA
(master of business administration) or some similar degree in government, economics, or hospital admin-
istration. More and more students are going on to take advanced degrees, so you too may need such a de-
gree to keep up with your colleagues.
(Critical Thinking Exercise 7-6, Rate Your Management Skills, on page 7.71 gives students an
opportunity to evaluate their skill level for these five important skills.
lecture enhancer 7-8
MANAGED TO DEATH: JAPAN’S ECONOMIC DECLINE
Today, the emerging markets of Brazil, Russia, India, and China command 10.4% of all revenues
on Fortune’s Global 500 list, up from 0.9% in 1995. Around that same time, Japanese companies boasted
35.2% of all global revenues with a whopping 141 firms placed on Fortune’s list. Japan’s salad days
didn’t last forever, of course, as the nation saw its share shrink to 11.2% in 2010, just a shade north of the
world’s emerging powers.
Japan once typified the ideal image of a burgeoning economic giant with its devotion to quality
products, strong corporate leadership, and seemingly unstoppable savvy for global commerce. Some-
where along the way, though, Japan’s export-led growth halted, replaced by a stagnation that has con-
tracted the nation’s role in the world economy ever since. Incidentally, many of the factors that contribut-
ed to Japan’s rapid rise also facilitated its fall. For instance, each of Japan’s corporations mapped out a
clearly defined “Way” deeply entrenched in Japanese cultural values to manage the company. When Jap-
anese businesses expanded overseas they actively sought to keep The Way in place by hiring either fellow
Japanese workers or foreigners who would conform exactly to the company’s whims. This led to a rash of
management catastrophes as executives sought to solve problems on foreign soil in the strict Japanese
manner they were taught.
In fact, 98% of corporate officers at Japan’s 68 largest global companies are Japanese. The major-
ity of them went to the same four universities and will inevitably spend their whole careers at the same
firm. Such homogeneous leadership is unsuitable for a global venture intent on succeeding in markets
with contrasting cultures. Ultimately, the unbending devotion of Japanese managers to the social mores
and methods of their home country led to their downfall. The same could happen to the world’s emerging
markets as they branch out of their own backyards and on to the global stage. After all, what works in
China won’t necessarily succeed in the United States. But Chinese business leaders could learn that fact
far too late if their corporate governors are all former classmates and current members of the same coun-
try club.vii
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critical
thinking exercises
Name: ___________________________
Date: ___________________________
critical thinking exercise 7-1
MANAGEMENT FUNCTIONS
Remember the four management functions? They are planning, organizing, leading, and control-
ling. Think of a job you have now or one you’ve had in the past. List the managerial activities you have
done or observed. If you have never had a paid job, remember that it takes management skills to manage a
home, run a baseball team, and lead a church group. Classify each activity of your job according to
whether it involved planning, organizing, leading, or controlling.
PLANNING
ORGANIZING
LEADING
CONTROLLING
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Name: ___________________________
Date: ___________________________
critical thinking exercise 7-2
CAREER SWOT ANALYSIS
SWOT analysis, the key tool in the strategic planning process, can also be applied to career plan-
ning. A SWOT analysis focuses on the internal and external environments, examining strengths and
weaknesses in the internal environment and opportunities and threats in the external environment.
Use Figure 7.3, SWOT Matrix, presented in the text and conduct an analysis of your career plan-
ning. (SWOT diagrams are also available at numerous websites such as
www.quintcareers.com/SWOT_Analysis.html.)viii
1. Strengths:
• What advantages do you have?
• What do you do well?
• What relevant resources do you have access to?
• What do other people see as your strengths?
2. Weaknesses:
• What could you improve?
• What do you do badly?
• What should you avoid?
3. Opportunities:
• Where are the good opportunities facing you?
• What are the interesting trends you are aware of?
• What changes in technology and markets are occurring on both a broad and narrow scale?
• What changes are occurring in social patterns, population profiles, lifestyle changes, and so
on?
4. Threats:
• What obstacles do you face?
• Are the required specifications for your career changing?
• Is changing technology threatening your plan?
• Do you have bad debt or cash-flow problems?
• Could any of your weaknesses seriously threaten your future?
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Name: ___________________________
Date: ___________________________
critical thinking exercise 7-3
CRISIS MANAGEMENT
This exercise explores management reaction to rapid, unexpected change. Divide the class into
groups of five or six. Each group will act as a management team for a large national company faced with
a crisis. Have the groups quickly analyze the situation (five or six minutes), decide on an appropriate
strategy for coping with the situation, and prepare a brief statement outlining how the company should
manage the crisis.
A. A national consumer foods company has discovered that several batches of its salad dressing have
been contaminated with toxic industrial solvent. One person has died and the media are demand-
ing a statement.
B. At the construction site for a new corporate headquarters, the top floors of the building have col-
lapsed, killing 16 people, including the head of the local union. The cause of the collapse has not
been determined, but a local television station has reported that substandard materials have been
used in construction.
C. A hurricane has come ashore near your largest distribution facility days before your marketing
department is scheduled to launch the new fall line of clothing. Communications have been cut
off to the area and you have not been able to contact anyone at the facility. News media are re-
porting large-scale damage and loss of life. Your retail managers across the country are worried
that the loss of this distribution facility will disrupt deliveries at this critical point.
D. There has been a massive explosion at a chemical plant, centered in the storage area. The result-
ing fire is threatening a building where dozens of workers have taken refuge. There are rumors
that a terrorist bomb was involved. Casualties and extent of damage are unknown.
E. A gunman has invaded a large metropolitan bank, killing 4 people and taking 20 employees hos-
tage. He has demanded that bank executives publicly apologize for “crimes against African
Americans” or he will blow up the bank. No one knows what weapons he has.
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Name: ___________________________
Date: ___________________________
critical thinking exercise 7-4
EVALUATING ALTERNATIVE COURSES
Monmouth Thermics, a subsidiary of General Standard, a large conglomerate, manufactures
thermometers. Your primary customers are large companies that purchase the thermometers to use for
specialty advertising. Over the last several years, however, low-cost overseas competitors have pulled
away many of the company’s longtime customers.
General Standard has become concerned about the loss of market share and declining profit. You,
as Monmouth general manager, have been asked to put together a recovery plan to present to the General
Standard board of directors. Your management team has pulled together the following options:
• Cut costs by imposing an across-the-board pay cut for all personnel. This would save enough
money to bring the company back to profitability.
• Expand operations into specialty printing. Currently the thermometers are sold to other com-
panies for printing. The additional printing cost would add 23¢ to the cost of each unit, but would
also add 40¢ to the unit sale price.
• Expand sales of the current thermometer line to retail outlets such as Walmart and Target.
• Manufacture and market a new product the R&D department has developed, a combination
thermometer–barometer housed in an oak case. The product would be marketed through specialty
stores. Two new production lines would have to be added for the barometer and for the wood
case. The “Thermbarometer” could be manufactured for about $30 per unit and sold for $100.
Use the seven-step decision-making process described in the chapter to decide which option man-
agement should present to the General Standard board of directors. Defend your choice.
Chapter 07 - Management and Leadership
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Name: ___________________________
Date: ___________________________
critical thinking exercise 7-5
THE MOST POWERFUL WOMEN IN BUSINESS
Each year Fortune magazine ranks the 50 most powerful women in business. Visit the Fortune
website (www.fortune.com)ix and use the listing for the current year to answer the questions below.
(Sometimes the Web address for a location changes. You might need to search to find the exact location
mentioned.)
1. List the top five most powerful women in business for the latest year. Also give the company for
which they work.
Name Company
a. ________________________________ _________________________________
b. ________________________________ _________________________________
c. ________________________________ _________________________________
d. ________________________________ _________________________________
e. ________________________________ _________________________________
2. Which of the women earns the highest pay? How much?
3. Choose 1 of the women in the top 10 to further research. Give a brief biography.
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Name: ___________________________
Date: ___________________________
critical thinking exercise 7-6
RATE YOUR MANAGEMENT SKILLS
Rate yourself on each of these key management skills.
SKILL NEEDED
PERSONAL EVALUATION
Excellent
Good
Fair
Need Work
Verbal skills
Writing skills
Computer skills
Human relations skills
Time management
skills
Technical skills
Chapter 07 - Management and Leadership
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Name: ___________________________
Date: ___________________________
critical thinking exercise 7-7
ARE LEADERS BORN OR CAN THEY BE TAUGHT?
There is considerable debate on the question, Are individuals born to be leaders or can they be
taught? To better understand the leadership equation, answer the questions below and be prepared to dis-
cuss the basic concepts that define leadership.
1. What is your initial reaction to the question, Are leaders born or can they be taught?
2. Now, use the Internet and find at least three articles or sites that discuss leadership. Based on your
work, how is leadership defined? What are some of the best practices of leaders?
3. Using the Internet, define successful leaders from the past 50 years, the past 25 years, and finally,
the leaders of today.
4. Based on your research, what are the general characteristics of leaders? What motivates individu-
als to become successful leaders?
5. Explain how individuals are taught to become good leaders.
6. Finally, are individuals mostly born or are they taught to become successful leaders? Explain.
Chapter 07 - Management and Leadership
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Name: ___________________________
Date: ___________________________
critical thinking exercise 7-8
TRAITS OF LEADERS
Leaders possess traits and skills that make them successful. They are effective communicators,
skillful planners, and successful motivators. Leaders can be villains or heroes. This exercise examines the
skills displayed by famous leaders and gives students the opportunity to use this knowledge to improve
their leadership skills.
Groups of five to six people brainstorm a list of famous leaders, and then pick two leaders to
compare and contrast. Then the groups profile them in terms of their skills and traits.
QUESTIONS FOR DISCUSSION
1. What criteria did your group use to determine which two leaders you would profile? Describe.
2. In what ways are the leadership styles of these leaders similar? In what ways are they different?
Explain.
3. Were you surprised at the similarity or dissimilarity between these leaders? Discuss.
4. Which one of these leaders would you want to work for? Explain your rationale.
Chapter 07 - Management and Leadership
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bonus
case
bonus case 7-1
EDUCATING EXECUTIVES ABOUT SOCIAL MEDIA
For millions of people around the world, social media is a vital tool for everyday life. However,
there are millions more who don’t have a Twitter handle or even a Facebook account. These mostly mid-
dle-aged or older absentees simply didn’t get swept in the social networking tide like so many others. To
retirees, remaining unfamiliar with the subtle workings of a service like Instagram is not a huge loss. But
for managers at many companies, social media skills are becoming a necessary part of the job.
In order to teach these skills to out-of-touch executives, a number of businesses have turned to
younger employees for instruction. These “reverse mentorships” pair up tech savvy up-and-comers with
older managers in unique working relationships that don’t always work out. After all, younger employees
can feel intimidated when working closely with high-powered managers. At the same time, executives
can also be embarrassed about their lack of knowledge, placing further strain on an already awkward pro-
cess.
But success can be achieved through clear communication, established goals, and an open-
minded attitude. At MasterCard more than 100 managers have taken part in social media mentoring since
2011. One 50-year-old participant received instruction from a 24-year-old with two years worth of digital
communication experience at the company. Though both were initially wary of working with each other,
the executive quickly saw the benefits of his young tutor’s teaching as he became more involved with
LinkedIn and Twitter. He then recommended the employee to two other managers for mentorship, ex-
panding the staffer’s profile with even more company bigwigs. So not only does this process help execu-
tives learn the ropes of social media, it also provides employees with a chance to network with people
they otherwise might have never met.x
Questions:
1. Is “reverse mentoring” likely to grow at many more companies?
With the growing importance of social media in both marketing and personal communication, it’s
2. What do senior managers need to remember when working with young “mentors”?
It’s important senior managers working with younger “mentors” remember that the association
Chapter 07 - Management and Leadership
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endnotes
i Sources: The Internet is a dynamic, changing information source. Links noted of this manual were checked at the
time of publication, but content may change over time. Please review the website before recommending it to your
students.
ii Source: Bill Breen, “The Three Ways of Great Leaders,” Fast Company, September 2005.
iii Source: Belinda Luscombe, “The Rise of the Sheconomy,” Time, November 22, 2010.
iv Source: Ibid.
v Source: “Decision Making Tips,” Managing a Small Business, www.liraz.com.
vi Sources: Jon Helyar, “The Recession Is Gone, and the CEO Could Be Next,” Bloomberg Businessweek, February
3, 2011; William W. Maddux, Adam D. Galinsky, and Carmit T. Tadmor, “Be a Better Manager: Live Abroad,”
Harvard Business Review, September 2010.
vii Source: J. Stewart Black and Allen J. Morrison, “A Cautionary Tale for Emerging Market Giants,” Harvard Busi-
ness Review, September 2010.
viii The Internet is a dynamic, changing information source. Links noted of this manual were checked at the time of
publication, but content may change over time. Please review the website before recommending it to your students.
ix The Internet is a dynamic, changing information source. Links noted of this manual were checked at the time of
publication, but content may change over time. Please review the website before recommending it to your students.
x Source: Sue Shellenbarger, “Pairing Up with a Younger Mentor,” The New York Times, May 28, 2014
