The Planning Cycle Analysis of current Situation Where are we now? (Base Line Data) Forecasting Where is the world moving to? Develop Objectives Where do we want to be within a given period of time? Action Plan (Work Plan) What must I do to get where I want to go? Implementation of Work Plan Do it! Monitor Progress by comparing current data with Baseline Data Taking into consideration policies, strategies and national development plans Start of a new planning cycle Detect weaknesses, strengths, opportunities and risks
The activities and information requirements of the three major levels of management Regular internal reports Detailed transaction reports Procedures manuals Current historical data Programmed decisions Production scheduling Inventory control Credit management Directions Commands Actions and other operational decisions Direct the utilization of resources and the performance of tasks in conformance with established rules Operational Management Forecasts and historical data Regular Internal Reports Exception reports Simulations Inquiries Personnel practices Capital Budgeting Marketing Mix Budgets Procedures Rules and other tactical decisions Allocate assigned resources to specific tasks Make rules Measure performance Exert control Tactical Management Forecasts Simulations Inquiries External Reports One-time reports Condensed internal reports Policy on industry and product diversification Social responsibility policy Major capital expenditure policy Goals and strategic objectives Company policies Long range plans and other strategic decisions Long range planning and goal setting Determine organizational resource requirements and allocations Strategic Management Information Requirements Activity Examples Activity Results Primary Activities Management Levels
Four basic types of analytical modeling activities with a DSS
the study of the effect that changes in one or more parts of a model have on other parts of the model
Example: Let’s cut advertising by $100 repeatedly so we can see its relationship to sales.
checks the impact of a change in the assumptions or other input data on the proposed solution
Example: What if we cut advertising by 10%? What would happen to sales?
find the value of the inputs necessary to achieve a desired level of output
Example: Let’s try increases in advertising until sales reach $1 million.
Find the optimum value for one or more target variables, given certain constraints.
Example: What’s the best amount of advertising to have, given out budget and choice of media?
ISs to support decisions Information produced by analytical modeling of business data Information produced by extraction and manipulation of business data Information processing methodology Ad hoc, flexible, and adaptable format Prespecified, fixed format Information format Interactive inquiries and responses Periodic, exception, demand, and push reports and responses Information form and frequency Provide information and techniques to analyze specific problems Provide information about the performance of the organization Decision support provided Decision Support Systems Management Information Systems
Executive Support Systems (ESS) in Perspective Tailored to individual executives Easy to use- colour and graphic Drill down capabilities Support need for external data Can help when uncertainty is high Future-oriented Linked to value-added processes
Managerial Decisions in the Control Process Exhibit 18.7
PERT (Programmed Evaluation and Review Technique and CPM (Critical Path Method) are important network techniques useful in planning are especially useful for planning.
1. The project is divided into a number of clearly identifiable activities which are then arranged in al logical sequence.
2. A network diagram is prepared to show the sequence of activities, the starting point and the termination of the project.
3. Time estimates are prepared for each activity. PERT requires the preparation of three time estimates optimistic.
4. The longest path in the network is identified as the critical path. It represents the sequence of those activates which are important for timely completion of the project and where no delays can be allowed without delaying the entire project.
Managers control activities by comparing plans to results.
Table 1.1 A Categorization of Decision Characteristics Category I Decisions Category II Decisions Classifications Programmable; routine; Nonprogrammable; unique; generic; computational; judgmental; creative; negotiated; compromise adaptive; innovative; inspirational Structure Procedural; predictable; Novel, unstructured, certainty regarding consequential, elusive, and cause/effect relationships; complex; uncertain cause/ recurring; within existing effect relationships; non- technologies; well-defined recurring; information information channels; channels undefined, incom- definite decision criteria; plete information; decision outcome preferences may criteria may be unknown; be certain or uncertain outcome preferences may be certain or uncertain Strategy Reliance upon rules and Reliance on judgment, principles; habitual intuition, and creativity; reactions; prefabricated individual processing; response; uniform heuristic problem-solving processing; computational techniques; rules of thumb; techniques; accepted general problem-solving methods for handling processes
Strategic Planning is a long-term, future-oriented process of assessment, goal-setting, and decision-making that maps an explicit path between the present and a vision of the future. It relies on careful consideration of an organization's capabilities and environment, and leads to priority-based resource allocation and other decisions.
Strategic Planning = Align organization with its environment to promote stability and survival Traditional Planning = Set goals then develop steps to achieve those goals