1 Instructor’s Manual – Chapter 6 | Ferrell / Hirt / Ferrell: Business © 2016 by McGraw-Hill Education.
Ferrell / Hirt / Ferrell:
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Instructor’s Manual – Chapter 6
Chapter 6: The Nature of Management
Use this Instructor’s Manual to facilitate class discussion and incorporate the unique features of the text’s
highlights. Follow-up via the Connect exercises is then encouraged to provide a holistic understanding of the
chapter.
C H A P T E R F O R E C A S T
For any organization—small or large, for profit or nonprofit—to achieve its objectives, it must have equipment
and raw materials to turn into products to market, employees to make and sell the products, and financial
L E A R N I N G O B J E C T I V E S
LO 6-1 Define management, and explain its role in the achievement of organizational objectives.
LO 6-3 Distinguish among three levels of management and the concerns of managers at each level.
LO 6-5 Summarize the systematic approach to decision making used by many business managers.
LO 6-6 Recommend a new strategy to revive a struggling business.
L E A R N T H E T E R M S
agenda (p. 195)
analytical skills (p. 188)
conceptual skills (p. 188)
191)
first-line managers (p. 185)
human relations skills (p.
188)
leadership (p. 188)
operational plans (p. 178)
organizing (p. 179)
planning (p. 175)
staffing (p. 179)
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Instructor’s Manual – Chapter 6
K E Y T E R M S A N D D E F I N I T I O N S
agenda
A calendar, containing both specific and vague items, that covers short-
term goals and long-term objectives.
analytical skills
The ability to identify relevant issues, recognize their importance,
understand the relationships between them, and perceive the
underlying causes of a situation.
conceptual skills
The ability to think in abstract terms and to see how parts fit together to
form a whole.
controlling
The process of evaluating and correcting activities to keep the
organization on course.
crisis management
(contingency planning)
An element in planning that deals with potential disasters such as
product tampering, oil spills, fire, earthquake, computer virus, or
airplane crash.
directing
employee empowerment
Motivating and leading employees to achieve organizational objectives.
When employees are provided with the ability to take on responsibilities
and make decisions about their job.
downsizing
The elimination of a significant number of employees from an
organization.
first-line managers
Those who supervise both workers and the daily operations of an
organization.
human relations skills
The ability to deal with people, both inside and outside the organization.
leadership
The ability to influence employees to work toward organizational goals.
management
A process designed to achieve an organization’s objectives by using its
resources effectively and efficiently in a changing environment.
managers
Those individuals in organizations who make decisions about the use of
resources and who are concerned with planning, organizing, staffing,
directing, and controlling the organization’s activities to reach its
objectives.
middle managers
Those members of an organization responsible for the tactical planning
that implements the general guidelines established by top management.
3 Instructor’s Manual – Chapter 6 | Ferrell / Hirt / Ferrell: Business © 2016 by McGraw-Hill Education.
Ferrell / Hirt / Ferrell:
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Instructor’s Manual – Chapter 6
mission
The statement of an organization’s fundamental purpose and basic
philosophy.
networking
The building of relationships and sharing of information with colleagues
who can help managers achieve the items on their agendas.
operational plans
Very short-term plans that specify what actions individuals, work groups,
or departments need to accomplish in order to achieve the tactical plan
and ultimately the strategic plan.
organizing
The structuring of resources and activities to accomplish objectives in an
efficient and effective manner.
planning
The process of determining the organization’s objectives and deciding
how to accomplish them; the first function of management.
staffing
The hiring of people to carry out the work of the organization.
strategic plans
Those plans that establish the long-range objectives and overall strategy
or course of action by which a firm fulfills its mission.
tactical plans
Short-range plans designed to implement the activities and objectives
specified in the strategic plan.
technical expertise
The specialized knowledge and training needed to perform jobs that are
related to particular areas of management.
top managers
The president and other top executives of a business, such as the chief
executive officer (CEO), chief financial officer (CFO), chief operating
officer (COO), who have overall responsibility for the organization.
Ferrell / Hirt / Ferrell:
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Instructor’s Manual – Chapter 6
C O N T E N T O U T L I N E
The following section provides the flow of information using the LEARNING OBJECTIVES as a guide, KEY TERMS
learners will need to take away from the course and a notation of when to use POWERPOINT SLIDES with
LECTURE NOTES to drive home teaching points. There is also a reminder on when CONNECT activities can be
used. This is created so that you can facilitate in–class or online discussion effectively.
LO 6-1
Define management, and explain its role in the achievement of
organizational objectives.
• Introduction
• The Importance of Management
Key Terms:
• Management
• Managers
•
Lecture Outline and Notes:
I. The Importance of Management
A. Any organization, small or large, public or private, needs managers to
plan, organize, staff, direct, and control the work that goes on.
1. In short, managers help organizations achieve their objectives.
B. Management is a process designed to achieve an organization’s
objectives by using its resources effectively and efficiently in a changing
environment.
1. Effectively means having the intended result.
2. Efficiently means accomplishing the objectives with a minimum of
resources.
C. Managers make decisions about the use of the organization’s resources,
and are concerned with planning, organizing, leading, and controlling the
organization’s activities so as to reach its objectives. (Figure 6.1)
their use to turn out a final good or service.
1. Employees are one of the most important resources, and successful
companies foster employee loyalty.
2. Suppliers are another important consideration because a good
supplier maximizes efficiencies and reduces costs.
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Instructor’s Manual – Chapter 6
3. Financial resources pay for essential activities.
a. Primary funding comes from owners and shareholders, banks,
4. Managers must carefully coordinate and control all of these
resources in order for the organization to meet its objectives.
E. Management is universal. It takes place not only in business, but also in
government, the military, labor unions, hospitals, schools, and religious
groups – any organization requiring the coordination of resources.
from bankruptcy and, after acquiring Chrysler, saved them as well.
LO 6-2
Describe the major functions of management.
• Management Functions
o Planning
o Controlling
Key Terms:
• Planning
• Mission
• Strategic plans
(contingency planning)
• Organizing
• Staffing
• Downsizing
PPT 6.7
II. Management Functions
I. To harmonize the use of resources so that businesses can develop,
produce, and sell products, managers engage in a series of activities:
II. Planning
1. Planning is the process of determining the organization’s objectives
and deciding how to accomplish them.
a. Designs the map that is the groundwork for all other functions
b. Involves forecasting events and determining the best course of
6 Instructor’s Manual – Chapter 6 | Ferrell / Hirt / Ferrell: Business © 2016 by McGraw-Hill Education.
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Instructor’s Manual – Chapter 6
PPT 6.10
2. An organization’s mission is the statement of an organization’s
fundamental purpose and basic philosophy.
1. Answers the question: What business are we in?
3. A goal is the result that a firm wishes to achieve.
a. Companies usually have multiple goals
b. A goal has three key components: An attribute sought, a target
a. Objectives, the ends or results desired by the organization,
derive from the organization’s mission.
b. Can be simple or elaborate. Profit, competitive advantage,
5. There are three general types of plans for meeting objectives.
business, issue stock, and/or move into new markets.
2) Strategic plans must take into account the firm’s capabilities
and resources, the changing business environment, and
organizational objectives.
a. For example, Southwest Airline’s strategic plan was to
activities and objectives specified in the strategic plan.
plan.
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1) Because tactical plans allow the organization to react to
changes in the environment while continuing to focus on the
company’s overall strategy, management must periodically
review and update them.
2) Because of their short-term nature, tactical plans are easier
to adjust or abandon if changes in the environment or the
firm’s performance so warrant.
c. Operational plans are very short term and specify what actions
the strategic plan.
1) They apply to details in executing activities in one month,
week, or even day.
lack such planning.
2) Many businesses do not have updated contingency plans to
a) A recent study reveals that more than 85 percent of
small or midsized businesses have ineffective or
3) Crisis management plans cover two elements: maintaining
business throughout a crisis and communicating with the
public, employees, and officials about the problem and the
accomplish objectives in an efficient and effective manner.
a. Structure helps organizations accomplish goals. Rarely are
individuals in an organization able to achieve common goals
2. Managers organize by reviewing plans and determining what
activities are necessary to implement them.
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Instructor’s Manual – Chapter 6
PPT 6.13
3. Managers divide the work into small units and assign it to specific
individuals, groups, or departments.
a. As companies reorganize for efficiency, they are organizing work
into teams to handle core processes such as new product
development instead of the more traditional departments.
b. Organizing is continuous because change is inevitable.
4. Organizing is important for the following reasons.
a. Helps create synergy.
e. Improves effectiveness by speeding up decision making
IV. Staffing
1. Staffing is hiring people to carry out the work of the organization.
a. Recruiting people for positions within the firm
b. Determining what skills are needed for specific jobs
e. What benefits to provide
f. How to prepare employees for higher-level jobs in the firm at a
later date
countries with lower labor costs.
b. Staffing itself can be outsourced to companies who focus on
9 Instructor’s Manual – Chapter 6 | Ferrell / Hirt / Ferrell: Business © 2016 by McGraw-Hill Education.
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PPT 6.16
PPT 6.17
PPT 1.26
c. Can help firms reduce costs quickly and become more profitable
in a short period of time.
e. Effective managers will promote optimism and positive thinking
and minimize criticism and fault-finding after downsizing occurs.
V. Directing
2. All managers are involved in directing, but it is especially important
to lower-level managers.
3. Directing also involves determining and administering rewards and
VI. Controlling
1. Controlling is the process of evaluating and correcting activities to
keep the organization on course.
a. Measuring performance.
b. Comparing present performance with standards or objectives.
c. Identifying deviations from the standards.
d. Investigating the causes of deviations.
e. Taking corrective action when necessary.
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Instructor’s Manual – Chapter 6
LO 6-3
Distinguish among three levels of management and the concerns
of managers at each level.
• Types of Management
o Levels of Management
o Areas of Management
Key Terms:
• Top managers
• Middle managers
• First-line managers
PPT 6.18
PPT 6.22
PPT 6.21
III. Types of Management
A. Levels of Management (Figure 6.2)
1. There are usually three levels of management, which form a
pyramid—top management, middle management, and front-line or
supervisory management. (Figure 6.3)
a. Managers at all three levels perform all five management
functions, but the amount of time they spend on each function
varies.
b. For top managers, the most important management function is
planning.
c. For middle managers, the most consuming function is
organizing.
directors.
b. Top managers also represent their company to the public and to
government regulators.
c. Top managers generally have many years of experience and
command top salaries. In addition to top salaries, top
management typically gets bonuses, long-term incentive awards,
stock, and stock options. (Table 6.1)
1) Executive compensation has been criticized
2) Compensation committees and boards of directors are now
seeking ways to keep compensation commensurate with
performance.
a) Not all managers receive high compensation. In 2012
Facebook CEO Mark Zuckerberg announced he would go
from his current salary of $600,000 to $1 per year.
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PPT 6.23
connect
Need help
Managers? Visit
your Connect ebook
video tab for a brief
animated
explanation.
PPT 6.27
d. Workforce diversity is also an important issue in today’s
corporations, and effective managers have found that diversity is
good for workers and for the bottom line.
1) A diverse workforce is better at making decisions regarding
issues related to consumer diversity.
2) The five rules of successful diversity recruiting include get
everyone involved, showcase your diversity, work with
diversity groups within your community, spend money, and
sell, sell, sell—and measure your return on investment.
organization and spend more time organizing than other
managers.
c. The ranks of middle managers have been shrinking as more
companies downsize to be more productive.
B. Areas of Management (Table 6.3)
1. At each level of management, managers specialize in the areas of
finance, production and operations, human resources, marketing,
successful operation of the organization and using those funds to
further organizational goals.
3. Production and operations manager develops and administers the
activities involved in transforming resources into goods, services, and
ideas ready for the marketplace.
4. Human resources manager handles the staffing function and deals
with employees in a formalized manner.
5. Marketing manager is responsible for planning, pricing, and
6. Information technology (IT) manager is responsible for
implementing, maintaining, and controlling technology applications
in business, such as computer networks.
7. Administrative manager manages an entire business or a major
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Instructor’s Manual – Chapter 6
LO 6-4
Specify the skills managers need in order to be successful.
• Skills Needed by Managers
o Technical Expertise
o Conceptual Skills
o Analytical Skills
o Human Relations Skills
• Leadership
o Employee Empowerment
Key Terms:
• Technical expertise
• Conceptual skills
• Analytical skills
• Human relations skills
• Leadership
PPT 6.28
PPT 6.29
PPT 6.31
IV. Skills Needed by Managers (Table 6.4)
A. Managers are typically evaluated using the metrics of how effective and
efficient they are. Necessary skills include technical expertise,
conceptual skills, analytical skills, and human relations skills.
B. Technical expertise, the specialized knowledge and training needed to
perform jobs that are related to particular areas of management.
1. Technical skills are most needed by first-line managers and are
least critical to top-level managers.
parts fit together to form the whole.
the company will be in the future.
D. Analytical skills refer to the ability to identify relevant issues, recognize
their importance, understand the relationship between them, and
perceive the underlying causes of a situation.
E. People skills, or human relations skills, are the ability to deal with
people, both inside and outside the organization.
1. People skills are especially important in hospitals, airline
companies, banks, and other organizations that provide service.
13 Instructor’s Manual – Chapter 6 | Ferrell / Hirt / Ferrell: Business © 2016 by McGraw-Hill Education.
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PPT 6.32
PPT 6.33
PPT 6.34
V. Leadership is the ability to influence employees to work toward
organizational goals.
A. There are three basic styles of leadership.
1. Autocratic leaders make all the decisions and then tell employees
what must be done and how to do it.
2. Democratic leaders allow their employees to get involved in
decisions. Employees involved in decision making generally require
less supervision.
3. Free-rein leaders let their employees work without much
B. The effectiveness of each leadership style depends on several factors.
to democratic or free-rein leaders.
3. Other considerations are the manager’s abilities and the situation
itself.
a. When a situation requires a quick decision, for example, an
autocratic style of leadership may be best because the manager
4. The “best” style depends on specific circumstances, and effective
managers strive to adapt their style as warranted.
C. Tips for successful leadership (Table 6.5)
1. A bit different from the other three leadership styles because it is not
exclusive
leaders
3. Passionate about the goals and mission of the company, display
corporate values in the workplace, and form long-term relationships
with stakeholders
4. Kim Jordan of New Belgium Brewing is an authentic leader
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PPT 6.36
E. Employee empowerment occurs when employees are provided with the
ability to take on responsibilities and make decisions about their jobs
1. Participative corporate culture has been found to be beneficial
because employees feel like they are taking an active role in the
firm’s success
2. Leaders must adopt systems that support an employee’s ability to
provide input and feedback on company decisions
3. Manager should be trained in ways to empower employees to make
decisions even in challenging situations in which the right decision
1. In today’s business world, decisions made by teams are becoming the
norm
3. Decision making in teams is collective
a. Most effective teams are when all employees are encouraged to
4. Common for more outspoken employees to dominate the team and
engage in groupthink, in which team members go with the majority
rather than what they think is the right decision
a. Training employees how to listen to one another and provide
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LO 6-5
Summarize the systematic approach to decision making used by
many business managers.
• Decision Making
o Recognizing and Defining the Decision Situation
o Developing Options
o Analyzing Options
o Selecting the Best Option
o Implementing the Decision
o Monitoring the Consequences
• Management in Practice
Key Terms:
• Agenda
• Networking
PPT 6.38
PPT 6.39
PPT 6.41
VI. Decision Making: Decision making is important in all management functions
and all levels, whether the decisions are on a strategic, tactical, or
operational level. A systematic approach includes a six-step process. (Figure
6.4)
A. Recognizing and Defining the Decision Situation
1. The first step in decision making is recognizing and defining the
situation—whether the situation is positive or negative.
after some warning signals.
3. Once a situation has been recognized, managers must define it.
1. The next step is to develop a list of possible courses of action.
C. Analyzing Options
1. Next, managers should analyze the practicality and appropriateness
of each option.
D. Selecting the Best Option
1. Selection is often a subjective procedure because many situations do
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PPT 6.46
E. Implementing the Decision
1. Implementation can be fairly simple or very complex, depending on
the action.
2. Managers should be ready to deal with unexpected consequences.
F. Monitoring the Consequences
1. Without proper monitoring, the consequences of decisions may not
though the desired result has not yet shown up, or that
implementation was flawed.
VII. Management in Practice
enormous amount of potentially relevant information.
2. Getting things done by a large and diverse set of people without
having direct control over most of them.
C. Managers spend as much as 75 percent of their time working with
others.
2. Managers also spend a lot of time networking—building
relationships and sharing information with colleagues.
1. Networks are not limited to immediate subordinates and bosses;
they include other people in the company as well as customers,
2. Networking helps managers carry out their responsibilities.
3. Websites like LinkedIn are helping managers and employees
network with one another to achieve their professional goals.
best use of time
E. It is only through creativity and imagination that managers can make
effective decisions that benefit their organizations.