Managers and Entrepreneurs

Chapter 1

1. Formally defined, management is the process of working with and through others to achieve organizational objectives in a changing environment. Central to this process is the effective and efficient use of limited resources. An inability to work with people, not a lack of technical skills, is the main reason why some managers fail to reach their full potential. A manager is effective if he or she reaches a stated objective and efficient if limited resources are not wasted in the process.

2. Five overarching sources of change affecting the way management is practiced today are globalization (increased global commerce; controversy over offshoring of jobs to low-wage countries; greater need for global managers who can work effectively across cultures), the evolution of product quality (moving away from fix-it and inspect-it-in approaches; moving toward build-it-in and design-it-in approaches; emphasis on continuous improvement), environmentalism (greater emphasis on making money without destroying the natural environment; many profit opportunities in cleaning up the environment), an ethical reawakening

(the public’s low opinion of managers’ ethical conduct is spurring renewed emphasis on honesty and ethical behavior), and e-business on the Internet (thanks to the Internet and the Web, e- commerce—buying and selling things over the Web—has evolved into e-business—using the

Web to run the entire business).

3. Two ways to answer the question “What do managers do?” are the functional approach and the skills approach. Managerial functions generally describe what managers do, whereas managerial skills state in specific behavioral terms how they carry out those functions. This text is organized around eight managerial functions: planning, decision making, organizing, staffing, communicating, motivating, leading, and controlling.

4. Clark Wilson’s three managerial skill categories are technical, teambuilding, and drive. His 30 years of research have uncovered an imbalance in managerial skills. About one-third of managers at all levels attempt to exercise control without first applying their technical and teambuilding skills. Thus, managers need to strive for an effective balance of skills.

5. Honeywell researchers found that managers learned 50 percent of what they know about managing from job assignments (“the school of hard knocks”). The remaining 50 percent of their management knowledge came from relationships (30 percent) and formal training and education

(20 percent). A good foundation in management theory can give management students a running start and help them avoid foolish mistakes.

6. Small businesses (independently owned and managed profit-seeking companies with fewer than 100 employees) are central to a healthy economy. Contrary to conventional wisdom, 80 percent of new businesses do not fail within five years. In fact, one large study found only an 18 percent failure rate during the first eight years. The belief that small businesses create only low- wage jobs also has been shown to be a myth. Five career opportunities in the small-business sector are (1) becoming an independent contractor/consultant; (2) going to work for a small business; (3) joining or buying your family’s business; (4) buying a franchise; and (5) starting your own business. Compared with general administrators, entrepreneurs tend to be high achievers who are more future-oriented, externally focused, ready to take risks, and comfortable with ambiguity.