Chapter 1: Management P a g e | 1
Effective Management 7th Edition
Chapter 1: Management
Pedagogy Map
This chapter begins with the learning outcome summaries and terms covered in the chapter, followed by a
set of lesson plans for you to use to deliver the content in Chapter 1.
Lesson Plan for Lecture (for large sections)
Lesson Plan for Group Work (for smaller sections)
Assignments with Teaching Tips and Solutions
Highlighted Assignments Key Points
What Would You Do? After a period of phenomenal growth, Netflix faces several
challenges as it looks to develop new ways to deliver movies.
Management Team Decision Students must consider whether a beverage company should
change its labelling at the request of its biggest investor.
Practice Being a Manager
(Experiential Exercise)
Students explore the hiring process by role-playing
interviews for management positions they research in the
newspaper and online.
Chapter 1: Management P a g e | 2
Learning Outcomes
1-1 Describe what management is.
1-2 Explain the four functions of management.
Henri Fayols classic management functions are known today as planning, organizing, leading, and
1-3 Describe different kinds of managers.
There are four different kinds of managers. Top managers are responsible for creating a context for
change, developing attitudes of commitment and ownership, creating a positive organizational culture
1-4 Explain the major roles and subroles that managers perform in their jobs.
Managers perform interpersonal, informational, and decisional roles in their jobs. In fulfilling the
interpersonal role, managers act as figureheads by performing ceremonial duties, as leaders by motivating
and encouraging workers, and as liaisons by dealing with people outside their units. When managers
perform the informational role, they act as monitors by scanning their environment for information, as
disseminators by sharing information with others in the company, and as spokespersons by sharing
Chapter 1: Management P a g e | 3
1-5 Explain what companies look for in managers.
Companies do not want one-dimensional managers. They want managers with a balance of skills. They
1-6 Discuss the top mistakes that managers make in their jobs.
Another way to understand what it takes to be a manager is to look at the top mistakes managers make.
1-7 Describe the transition that employees go through when they are promoted to management.
Managers often begin their jobs by using more formal authority and fewer people management skills.
1-8 Explain how and why companies can create competitive advantage through people.
Why does management matter? Well-managed companies are competitive because their work forces are
smarter, better trained, more motivated, and more committed. Furthermore, companies that practice good
Key Terms
conceptual skills
controlling
disseminator role
disturbance handler role
effectiveness
human skills
leader role
leading
liaison role
management
negotiator role
organizing
planning
resource allocator role
spokesperson role
Chapter 1: Management P a g e | 4
Lesson Plan for Lecture
Pre-Class Prep for You: Pre-Class Prep for Your Students:
Prepare syllabus.
Bring PPT slides.
Buy book, read Chapter 1.
Warm Up Introduce self.
Hand out syllabus and go over details.
Begin Chapter 1 by asking students, What is management? (If a blackboard is
Topics PowerPoint Slides Activities
1-1 Management Is…
1-2 Management
Functions
1-2a Planning
1-2c Leading
1-2d Controlling
1: Management
2: What Would You Do?
6: Four Management
Functions
7: Planning
9: Leading
10: Controlling
Ask students who have been
or are currently managers to
management function).
Use the above discussion to
management functions.
1-3 Kinds of Managers
1-3a Top Managers
1-3c First-Line Managers
1-3d Team Leaders
13: Kinds of Managers
14: Jobs and
Kinds of Managers
15: Top Managers
Ask the class to give specific
examples of each of these
1-4 Managerial Roles
1-4a Interpersonal Roles
1-4c Decisional Roles
19: Mintzbergs
Managerial Roles and
20: Interpersonal Roles
1-5 What Companies
Look for in Managers
1-6 Mistakes Managers
Make
23: What Companies
Look For
24: Relative Importance
25: Top 10 Mistakes that
Managers Make
Ask the class or lecture about
the qualities that good
managers have.
Discuss common mistakes
that managers make.
Chapter 1: Management P a g e | 5
1-7 The Transition to
26: The First Year
Discuss your own experience
1-8 Competitive
Advantage through
People
27: Competitive
Advantage through
People
Ask the class how a company
could benefit from good
management.
Management
Workplace
28: Camp Bow Wow Launch video in slide 28.
Questions on slide can guide
discussion.
Special
Items
Spark a quick discussion by asking students to respond to the following statement:
The only way to learn how to manage is to manage.
Make sure students back up their answers.
Conclusion
and
Assignments:
1. Tell students to be ready at the next class meeting to discuss or answer questions
Chapter 1: Management P a g e | 6
Lesson Plan for Group Work
Pre-Class Prep for You: Pre-Class Prep for Your Students:
Prepare syllabus.
Set the classroom up so that small
groups of four to five students can sit
together.
Buy book.
Warm Up Introduce self.
Hand out syllabus and go over details.
Begin Chapter 1 by asking students, What is management? (If a whiteboard is available,
begin to write their ideas on it so that a cumulative definition can be derived.)
Content
Delivery
Lecture on What is Management (Sections 1-1 and 1-2).
Break for the following group activity:
“Management Functions”
Divide the class into small groups.
Have each group describe how they would use the four functions of management to
Before lecturing on the next section, do the following activity:
“Management Levels.”
Put the class back into small groups.
Give each group a sample organizational chart of a real or fictional company.
(Chapter 8 has numerous examples of org charts.) Try to use a company in an
industry familiar to your students.
Lecture on What Do Managers Do? (Sections 1-3 and 1-4).
Ask students, What does it take to be a manager?
Write responses on board or overhead.
Ask students, Does management matter? If they say no, suggest that they might consider
that management does matter.
Chapter 1: Management P a g e | 7
Conclusion
and
Preview
Assignments:
1. Have students research job listings for managers to determine what companies
look for in managers. Suggest they consult online sources like monster.com and
2. If you have finished covering Chapter 1, assign students to read Chapter 1 and the
next chapter on your syllabus.
Assignments with Teaching Tips and Solutions
What Would You Do Case Assignment
What Really Happened? Solution
NETFLIX
In the case, you learned that just a decade and a half after start-up, Netflix had pushed Wal-Mart,
Amazon, and Blockbuster Video, who once dominated the industry, out of the DVD rental business.
Netflixs expertise in shipping and distributing DVDs, however, provides no competitive advantage when
streaming files over the internet. And, with competition from Amazons Video on Demand, Apples
iTunes, Hulu Plus, and others, theres no guarantee that Netflixs success will continue. Let’s find out
what really happened by seeing what steps Netflix and its founder, Reed Hastings, took to be competitive
under different circumstances and to successfully manage the companys growth.
Planning involves determining organizational goals and a means for achieving them. So, how can Netflix
generate the cash it needs to pay the studios? How can it convince them it’s not a competitor so they will
agree to license their content?
Planning, which is one of the functions of management, involves determining organizational goals and a
means for achieving them. As students will learn in Chapter 4, planning is one of the best ways to
improve performance. It encourages people to work harder, to work hard for extended periods, to engage
Netflix had been spending about $240 million a year to buy the DVDs that it rented to its subscribers.
But, unlike DVDs which can be bought and then rented without studio approval, U.S. copyright laws
require streaming rights to be purchased from TV and movie studios before downloading content into
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peoples homes. That means that Netflix not only has to come up with more money to stream video
content, it also means they have to come up with more money than their competitors, such as Apple,
Amazon, Hulu, Time-Warner Cable, and DirecTV. So, where can Netflix come up with the extra money
without cutting into its profits? Well, consider that it costs roughly $1 to ship and return a DVD to a
customer. The first time that Netflix tried streaming video in 2000, it took 16 hours and cost $10 to
The key question, however, is whether Netflix can convince the studios that its not a competitor. And,
that may depend on the strategy Netflix uses and the kind of business it wants to be. Netflixs strategy
hasnt changed. Its still all about growth. According to CEO Reed Hastings, Our focus is on getting to
How is Netflix enticing the studios to give it streaming rights? Well, besides huge payouts, nearly every
deal includes delayed access to movie content. Typically, Netflix cant stream video content until its
been available for consumer purchase for at least 28 days, and sometimes as long as 3 months. That way,
the studios can still harvest consumer DVD sales, which are the most profitable part of movie sales, and
then pickup additional revenue through Netflix. How persuasive has Netflix been? Well, Warner Brothers
movie studio, which is owned by Time-Warner Cable, wanted to force Netflix to take the same deal that it
With blazing growth on one hand and the strategic challenge of obtaining studio content on the other,
how much time should Reed Hastings and his executive team devote directly to hiring? Deciding where
decisions will be made is a key part of the management function of organizing. So, should he and his
executive team be directly involved, or is this something that he should delegate?
Management, at its essence, is getting work done through others. When you‘re promoted from employee
to manager, you stop being a doer and start helping doers succeed at their jobs. Indeed, as we learned in
With this knowledge, its no triviality to ask whether CEO Reed Hastings and his top executive team
should be directly involved in hiring, or whether he should delegate this task to others.
Because of its blazing growth, hiring top talent is a top priority at Netflix. But, it doesnt hire the same
people that other leading edge Silicon Valley companies do. Patricia McCord, Netflixs chief talent
officer, says, Google, for example, wants to reorganize the world’s information. You do that by hiring as
So, should Netflixs top executives spend significant direct time hiring employees or should they delegate
that responsibility. From the perspective of managers not being doers, it seems that except for the
people who report directly to top managers, hiring should be done by managers at lower levels in the
company. And, for a more mature company thats been in business for much longer, that makes perfect
sense.
Netflix, however, despite being the industry leader, is only a decade and a half old, so its culture, that is,
the beliefs and attitudes held by those in the company, is still malleable and changeable. Moreover, rapid
For those critical reasons, Netflixs top executives devote 2 3 hours a day to making sure that they hire
the right people who fit into its mature adults culture (see more below). Allison Hopkins, vice president
for human resources, said, Most people at our levels don’t do it, but for us it’s a priority; we have
Finally, located near Silicon Valley which is home to some of the most attractive employers in the world,
what can Netflix provide in the way of pay, perks, and company culture that will attract, inspire, and
motivate top talent to achieve organizational goals?
Chapter 1: Management P a g e | 10
1) What could this person get elsewhere?
2) What would we pay for a replacement?
3) What would we pay to keep this person if they had a more lucrative offer elsewhere?
Then, once the salary is determined, the person can take it in salary, or in salary plus stock options.
While its aggressive salaries help attract top talent, Netflix believes that its mature adults culture helps
keep them at the company. Theres no dress code, no security badges or checkpoints, no required hours,
and no tracking of vacation time, save for anything beyond 30 days which requires approval. Patricia
McCord, Netflixs chief talent officer, says: We focus on what people get done, not how many hours or
days they worked. Have I ever fired a $100,000 employee for being tardy or late? Creative people come
up with ideas outside of work. Allison Hopkins, vice president for human resources, said, [company]
policies are written for the lowest common denominator. Here, we don’t have to do that. You don’t have to
write things down. When someone does something wrong, we tell them it was wrong. After that, either
they get it or they‘re out.
Finally, Netflix gives its employees a tremendous amount of freedom. For example, the travel and
entertainment spending policy has five words, Act in Netflixs best interests. No lengthy rules. No
spelling out what the company will and wont pay for. Just, Act in Netflixs best interests. CEO Reed
Hastings says, that the creative employee we compete for thrives on freedom. We’re more focused on the
absence of procedure managing through talented people rather than a rule book.
But, the aggressive pay, the mature adult culture, and the freedom come with strict accountability. CEO
Hastings summarizes the company attitude this way, We are a performance culture based on intellectual
prowess. We try to be fair, but [the length of an employee’s Netflix career] is not our primary concern. If
someone is not extraordinary, we let them go. It sounds harsh, but Allison Hopkins, vice president for
Chapter 1: Management P a g e | 11
Management Team Decision
Purpose
Making decisions is part of every managers job. To give you practice at managerial decision making,
each chapter contains a Management Team Decision assignment focused on a particular decision. Youll
need to decide what to do in the given situation and then answer several questions to explain your
choices.
SAYING NO TO AN INVESTOR
From sports to school to work to civic involvement, working in teams is increasingly part of our
experience. But although working in teams is more and more common, making decisions as teams is not
necessarily any easier. You will learn more about managing teams in Chapter 9, but to give you more
experience with teamwork, a Management Team Decision exercise designed for a group of three to five
students is included in each chapter. As a group, you must come to a mutually agreeable decision on the
scenario presented. Each Management Team Decision will focus on a management topic presented in the
chapter. For Chapter 1, youll work with the management function of planning and organizing as you
decide how to interact with a large investor.
You never thought much about soft drinks before, but since your kids started going to junior high school
and ordering their own lunches, youve become more and more concerned about how much sugary,
calorie-loaded drinks they consume every day. You wanted to find a way to help kids and parents find
Although the label is a small, but very public, part of the companys overall strategy of highlighting the
companys commitment to quality ingredients, its caused a serious conflict with a huge investor. A few
years ago, Coca-Cola bought a 40 percent stake in Honest Tea for $43 million. The cash infusion was
great for the company, but what was even better was Honest gained access, nearly overnight, to a
nationwide distribution network.
But the investment from Coca-Cola had its downside, as well. Coca-Cola executives were quite disturbed
by the No High-Fructose Corn Syrup label, which they saw as an implicit criticism of Coca-Colas own