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CHAPTER 18 STRATEGY AND THE GENERAL MANAGER

CHAPTER 18 STRATEGY AND THE GENERAL MANAGER. MUHAMMAD SYUHADA SJOBIRIN HASAN MMUGM AP5 SURABAYA 2009. INTRODUCTION. We believe that a successful manager must be both.

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CHAPTER 18 STRATEGY AND THE GENERAL MANAGER

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  1. CHAPTER 18STRATEGY AND THE GENERAL MANAGER MUHAMMAD SYUHADA SJOBIRIN HASAN MMUGM AP5 SURABAYA 2009

  2. INTRODUCTION We believe that a successful manager must be both. Managers must manage a firm's internal and external relations, nut must also establish a profitable and defensible position in fierce markets What The Role Of The CEO? Is The CEO A Problem Solver Or A Visionary?

  3. A Historical Perspective On The General Manager As managers became more important, interest in them grew among observers, students, and even critics of business. General management classes in leadership and business policy have figured prominently in MBA curricula since the first MBA programs were developed shortly after 1900. Classic essays on the important role of the general manager, by such authors as Chester Barnard, Philip Selznick, Mary Parker Follett, Alfred Sloan, remain in print today. Critics of the large corporation have focused on the increasing power of managers, coupled with their lack of accountability to sharehoulders, as threats to social and economic stability. The link berween the general manager and the firm's strategy has persisted in current research. This is due in part to the enormous influence of the business policy group at the harvard business school, which developed the concept of strategy as a "simple practitioner's theory" of general management (i.e., Strategy is synonymous with what general managers do).

  4. WHAT DO GENERAL MANAGER DO? In discussing GMs, we assume that general managers control their firms and business units. We do so for analytical simplicity. In reality, top management teams often perform most of the tasks we ascribe to individual GMs. Employing a top man­agement team allows for a full delineation of top management roles without placing all complex top management decisions in a single individual. Concentrating all decision authority for a complex firm in the hands of a single individual would be highly stress­ful for the individual and inefficient for the firm, whose complexity would overwhelm the abilities of even the most capable managers taken singly. Research on top manage­ment teams has been growing, and its findings parallel those of studies of general managers.10 in addition, understanding top management teams requires understand­ing the behavioral processes by which these teams operate, such as dividing up man­agerial responsibilities among team members, communicating team results, settling disputes, and avoiding negative groups dynamics (i.E., "Groupthink").

  5. THE ROLES OF THE GENERAL MANAGER The General Manager as EntrepreneurThe managerial role of defining how the firm creates and sustains value is analogous to the entrepreneurial function of management. Just as entrepreneurs choose where to commit the capital of their investors and how best to manage those investments, so GMs choose how best to commit the capital of owners and to position the firm in its product markets to create value on a sustainable basis. The sheer size of large firms ensures that GMs will make many of these important decisions. The large amount of fixed strategy-specific assets that these decisions require ensures that the decisions made by GMs will commit the firm to a strategic position with long-term implications for its performance.

  6. THE ROLES OF THE GENERAL MANAGER The General Manager as Organizer/ImplementorChandler's dictum that structure follows strategy (discussed in Chapter 16) implies that GMs organize their firms to best implement their strategic choices. As we dis­cussed in Chapter 11, for example, a choice of a competitive position highlighting cost advantage will be associated with such implementation choices as standardized products, mass-production facilities, and a traditional management style. A position favoring benefit advantage, however, will be associated with customized products and tradeoffs between scale and flexibility in production.

  7. THE ROLES OF THE GENERAL MANAGER The General Manager as Contractor Managers are contractors, both inside and outside the firm. The importance of external contracting, such as with supply chain partners, is clear. As the transactions costs of securing activities through the market increase, it becomes increasingly worthwhile to internalize these activities inside the firm.

  8. THE ROLES OF THE GENERAL MANAGER The General Manager as Powerholder As we discussed in Chapter 17, important activities occur within the firm for which cost-effective contracts cannot be easily developed. In these situations, GMs can use their power to complement their formal authority so as to secure the cooperation of all the parties necessary for an activity to succeed.

  9. THE ROLES OF THE GENERAL MANAGER The General Manager as Facilitator GMs often need the cooperation of others, yet they can neither contract for that cooperation nor bring their power and influence to bear to obtain it. One example would occur when one manager needs the cooperation of another manager with com-parable authority in the firm. Other examples would occur when the success of an activity depends on efforts by crucial employees, but where the manager cannot monitor what the employees actually do, where the employees can legitimately refuse to provide such effort, and where the manager cannot provide sufficient tangible incentives to the employees. In these situations, the GMs role is to persuade and shape the impressions and preferences of others to increase the chances of obtaining their cooperation.

  10. THE ROLES OF THE GENERAL MANAGER The General Manager as Competitor As the manager of a business unit that competes in a market, the GM must take into account the activities of competitors who are trying to gain a competitive advantage. GMs must understand the nature of competition in their served markets. They must gather and analyze information about competitors, anticipate their reactions to possi­ble moves, and determine how best to modify their unit's strategic activities on the basis of expected interactions.

  11. THE ROLES OF THE GENERAL MANAGER The General Manager as Adapter Managers' decisions are often specific to the business conditions in hand. Significant changes in the business environment may lead GMs to reassess their basic decisions regarding the horizontal and vertical boundaries of the firm and their strategic position. For example, this could occur as managers in basic metals industries, such as steel and aluminum, discover that the market conditions that made extensive vertical inte­gration reasonable during the early history of these industries have changed. Vertically integrated firms may now be inertial and unresponsive to conditions in world metals markets that have become more competitive.

  12. THE ROLES OF THE GENERAL MANAGER The General Manager as Agent As general managers perform all of the aforementioned roles, they are doing so on behalf of someone else. Unit and subunit managers report to an overall GM. That GM in turn reports to a division or group GM. At the top of the firm's hierarchy, the CEO and his or her management team are responsible to the board of directors and shareholders.

  13. THE ROLES OF THE GENERAL MANAGER The General Manager as EntrepreneurThe General Manager as Organizer/ImplementorThe General Manager as ContractorThe General Manager as PowerholderThe General Manager as FacilitatorThe General Manager as CompetitorThe General Manager as AdapterThe General Manager as Agent

  14. THE TENSIONS OF MANAGERIAL WORK Corporate-level GMs face their own variant of this tension with their subsidiary managers. On the one hand, if they fail to intervene with divisions, they risk being seen as unnecessary and ineffective. If divisions do not need corporate guidance, then what purpose does corporate management serve? On the other hand, intervening with div­ision management may harm corporate performance by hurting the ability of divisions to respond to markets. Corporate GMs also face their own integration problems in getting staff units to work together for the firm rather than to justify particular pro­jects or groups.The problem with the tension caused by GMs performing multiple tasks to differ­ent constituencies is that, without careful management and design in advance, the effort the GM provides will likely be a function of the relative costs and benefits for the GM of attending to particular tasks.

  15. CHANGING DEFINITIONS OF MANAGERIAL WORK The nature of managerial work is defined by the nature of the firms in which managers work. Since the nature of the firm has changed greatly over the last century, it is not surprising that the nature of the GM's job has also changed, no doubt frustrating the efforts of observers who seek to neatly characterize it. As conditions changed again in the 1990s, with the global expansion of firms, the general increase in rivalry in many industries, and changes in telecommunications and data processing that have made it possible to communicate more quickly with more people, the tasks of managers have changed further. Christopher Bartlett and SumantraGhoshal see these changes in terms of a shift from corporate strategy to corporate pur­pose

  16. CHAPTER SUMMARY The general manager (GM) fulfills an integrative role in making strategic decisions for his or her firm. The GM balances the various decision needs of the firm to decide how a set of decisions should be made together.The general manager is both a problem solver and a visionary. As a problem solver, the GM defines and manages the boundaries of the firm, sets a competitive strategy, and oversees the firm's internal incentives, culture, and structure. As a visionary, the GM identifies a sus­tainable position for long-term success.GMs use both formal and informal means to accomplish objectives. While relying on qualitative analyses as much as or more than quantitative analyses, they also rely on formal agendas and information networks.GMs may play one or more of several roles: entrepreneurial, organizer/implementor, contractor, facilitator, competitor, and adapter. Tensions arise when these roles require conflicting actions.General managers have had to change their roles in response to changing technological, regulatory, and competitive conditions.Regardless of their changing and varied roles, GMs remain agents of shareholders, accoun­table to them and to other stakeholders for the conduct of the firm's business.

  17. THANK YOU

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