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Chapter Review

Key Takeaways

  1. The four functions of management—planning, organizing, leading and controlling—serve as the pillars that allow organizations to meet their goals.
  2. Efficiency is using the least possible amount of resources to get work done, whereas effectiveness is the ability to produce a desired result.
  3. Planning is the function of management that involves setting objectives and determining a course of action for achieving those objectives.
  4. There are three levels of management: top managers, middle managers, and first-line managers. Top-level managers set objectives, scan the business environment, and plan and make decisions that affect the overall health of the organization. Middle-level managers allocate resources, oversee first-line managers, report to top-level managers and develop and implement activities. First-line managers (also referred to as customer-facing or front-line) coordinate activities, supervise employees, report to middle managers, and are involved in day-to-day operations.
  5. Decision-making is the action or process of thinking through possible options and selecting one.
  6. Managerial skills include technical skills, interpersonal skills, conceptual skills, communication skills, time-management skills, and decision-making skills.
  7. Strategic planning involves analyzing competitive opportunities and threats, as well as the strengths and weaknesses of the organization, and then determining how to position the organization to compete effectively in its environment.
  8. Understanding of the four stages of the industry life cycle, which includes expansion, peak, contraction, and trough and industry dynamics, informs management’s investment decisions and risk management strategies. External factors that affect a business are often analyzed through a PEST analysis.
  9. The strategic planning process begins by identifying the purpose of the company. After that comes the mission statement. Followed by identifying core values; assessing the company’s strengths, weaknesses, opportunities, and threats; establishing goals and objectives; and developing and implementing tactical and operational plans to achieve goals and objectives.
  10. SMART Goals are specific, measurable, attainable, relevant, and time-based.
  11. Tactical planning is intermediate-range (one to three years) planning that is designed to develop relatively concrete and specific means to implement the strategic plan. Middle-level managers often engage in tactical planning.
  12. Operational planning generally assumes the existence of organization-wide or sub-unit goals and objectives and specifies ways to achieve them. Operational planning is short-range (less than a year) planning designed to develop specific action steps that support strategic and tactical plans. First-level managers engage in operational planning.
  13. Contingency and Crisis Planning are plans for what actions to take when things go wrong. Perhaps your plans were flawed, or maybe something in the environment shifted unexpectedly. Successful managers anticipate and plan for the unexpected.
  14. A business environment analysis is a systematic process that evaluates the internal and external factors impacting a business.
  15. PEST is the term used for an external environment scan, whereby a business collects and analyzes data on the political, economic, social, and technological aspects of the business environment in which it operates.
  16. A SWOT analysis is an examination of the internal and external factors that impact the organization and its strategies. Generally, the internal factors are strengths and weaknesses; the external factors are opportunities and threats.
  17. A competitor analysis in business involves examining similar brands in the same industry to gain insight into other companies’ offerings, brands, sales, and marketing approaches.
  18. Organizing is the process of coordinating and allocating a firm’s resources in order to carry out its plans. Organizing includes developing a structure for the people, positions, departments, and activities within the firm.
  19. Businesses use organizational charts to depict the reporting structure within the organization. Building an organizational structure engages managers in two activities: job specialization (dividing tasks into jobs) and departmentalization (grouping jobs into units).
  20. A divisional organizational structure is a type of organizational structure where a company is divided into independent divisions that operate like their own companies within the larger organization. Each division has its own resources, teams, and responsibilities. Product divisions structure a company based on its product lines. Customer divisions structure the company based on the needs of the customers. Process divisions structure the company based on the processes needed to create the product or service. Geographical divisions structure the company to enable more effective responses to customers in each region.
  21. Leaders provide focus and direction to others and motivate them to achieve organizational goals. Regardless of position, a leader can be anyone in an organization who can influence others to act or follow, often by their own choice.
  22. Managers are designated leaders according to the organizational structure, but may need to use negative consequences or coercion to achieve change.
  23. There are four basic leadership styles: Autocratic, Democratic, Transformational, and Free-rein.
  24. Autocratic leaders are directive leaders, allowing for very little input from subordinates.
  25. A democratic style of leadership encompasses a more participative style where leaders use a consensual, consultative style. Democratic leaders solicit input from all members of the group and then allow the group members to make the final decision through a voting process. Consensual leaders encourage discussion about issues and then require that all parties involved agree to the final decision. Consultative leaders confer with subordinates before making a decision, but retain the final decision-making authority.
  26. Transformational leadership is a leadership style that can inspire positive changes in those who follow.
  27. Free-rein or laissez-faire (French for “leave it alone”) leadership include managers who turn over all authority and control to subordinates.
  28. Effective leaders recognize employee growth and use situational leadership, selecting a leadership style that matches the maturity and competency levels of those completing the tasks.
  29. Intrinsic motivation is when motivation comes from within; in other words, a person has it within themselves to be, stay, or become motivated.
  30. Extrinsic motivation is when motivation comes from external factors; in other words, a person needs an incentive to be, stay, or become motivated.
  31. Maslow’s Hierarchy of Needs Theory is the idea that we need to satisfy lower-level needs before we move to the other levels; once we have satisfied the need(s) at the more basic level, we move on to the next level as the previous one no longer satisfies us. There are five levels of needs (from lowest to highest): Physiological, Safety, Social, Esteem, and Self-Actualization.
  32. Herzberg’s Two-factor Theory includes motivation factors and hygiene factors. Motivation factors are strong contributors to job satisfaction whereas hygiene factors are factors that are not strong contributors to satisfaction but that must be present to meet a worker’s expectations and prevent job dissatisfaction.
  33. Expectancy Theory of motivation, developed by Victor Vroom, argues that an employee will be motivated to exert a high level of effort to obtain a reward under three conditions: the employee (1) believes that his or her efforts will result in acceptable performance, (2) believes that acceptable performance will lead to the desired reward, and (3) values the reward.
  34. The Equity Theory of motivation is the idea that what an individual receives for their work directly affects their motivation.
  35. Controlling involves ensuring that performance does not deviate from standards. The control function has five steps: 1) Set performance standards and goals, 2) Measure performance, 3) Compare, 4) Take corrective action if needed, and 5) Use information gained. Through the control process, managers can catch up when things don’t go as planned and quickly correct course to keep the project on track.
  36. The process of benchmarking involves comparisons to other organizations’ practices and processes with the objective of learning and improvement in both efficiency and effectiveness.

Download the “Chapter in Review” for
Chapter 7: Management and Leadership [PDF].

End-of-Chapter Exercises

  1. Your Leadership Style. What’s your leadership style? Try this Leadership Style Quiz to find out.  Consider past experiences where you have had an opportunity to lead a project or lead a group of people on a specific task.  Did the quiz results align with your past experiences? Did you learn something new about yourself?
  2. Famous CEOs. Use the Internet to research one of these famous leaders: Bill Gates, Elon Musk, or Steve Jobs (or another if assigned by your professor). What leadership style were they known for? How did they motivate their teams? What type of power did they have? Share your findings with your class and/or professor.
  3. Mission, Values, Strategy. Use the Internet to research a company, for example, X Corp (formerly Twitter), Google, Amazon, or others and locate the company’s mission statement. What values does this company share with the public? What strategy does it use to reach its goals and objectives? Share your findings with your class and/or professor.
  4. Manager Wanted. Use the Internet to search for a job advertisement for a management role. What sort of skills and qualifications is the company looking for? What sort of leadership skills does the position require? Share your findings with your class and/or professor.
  5. Management Trends. Use the Internet to research trends that are happening today that affect managers and leaders. Locate a specific story or article and summarize it. Which management skills would you need to address this trend? Which management function is most affected by this trend? Share your findings with the class and/or professor.
  6. Create an Organizational Chart. Try using a software tool that provides you with free templates, such as SmartDraw (PowerPoint has these too), to create an organizational chart for your college or university. You may need to conduct research on your institution’s website first. How did you do? Did you depict most of the reporting structure? What type of organizational structure does your school have? Share your chart with a partner and/or professor.
  7. Conduct a SWOT Analysis. Conduct a SWOT Analysis for your college or university (or other company as assigned by your professor). Use a free software tool such as SmartDraw (or another) to help you do this task. Try to have at least four points under each of the SWOT parts. What opportunities did you identify? What threats did you identify? Was there anything that surprised you? Suggest various ways by which your school could take advantage of these opportunities by using its strengths, and various ways by which your school could protect itself from threats and overcome its weaknesses. Share your results with a partner and/or your professor.
  8. Conduct a PEST Analysis. Conduct a PEST, PESTEL, or PESTLE Analysis for your college or university (or other company as assigned by your professor). Use a free software tool such as Lucidspark (or another) to help you do this task. Try to have at least two points under each of the PEST, PESTEL, and PESTLE categories. What economic changes are happening that might affect your institution? What political or legal changes are happening that might affect your institution? Was there anything that surprised you? Share your results with a partner and/or your professor.
  9. Managerial Skills Assessment. Search the Internet to find a free quiz or assessment that will assess your managerial skills. You may wish to complete a time-management, communication, or interpersonal skills assessment. Managers also need a strong emotional intelligence (EQ) and they should have some understanding of cultural intelligence (CQ). Your professor may assign a specific quiz for you to complete, or you can locate one on your own. Identify the skills you have now and the skills you need to develop. Then you can make a plan for learning in the areas you need to strengthen.
  10. Research a Leader. Use the Internet to research a specific leader you admire or respect.  What type of power does this leader have?  What is their leadership style?  What accomplishments is this leader known for? Share your findings with the class and/or professor.
  11. SMART Goals. Use this online AI SMART Goals Generator (or another). Assume you operate a pet store, and you want to generate some SMART goals for your business. You need more customers, so how will you go about getting them?  Set some goals. Your professor may expand upon the scenario or provide you with a different scenario. Share your SMART business goals with your class and/or professor.
  12. Contingency Plans. Research the contingency plans your college or university have in place (or other business as assigned by your professor). Consider a few different scenarios that the institution would need to have contingency plans for. What did you discover? How would these plans differ, if at all, from those of a local business in your area? Share your findings with your class and/or professor.
  13. Company Research. Choose a Global 500 company (or a specific company as assigned by your professor) to research. Locate the name of the current CEO. How much money did this CEO make last year? How long have they been in this position? Where did they work before they came to this company? What leadership style does this CEO seem to have? How does this company motivate its employees? Share your findings with your class and/or professor.
  14. Controlling Function. Conduct some research about your college or university to find out what controls are in place to ensure curriculum is of a high standard? How does the institution ensure that students learn the skills and gain the knowledge they need to get a job and be successful in their careers? Share your findings with the class and/or professor.

Self-Check Exercise: Management and Leadership Quiz

Check your understanding of this chapter’s concepts by completing this short self-check quiz.

Additional Resources

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