Planning and decision making


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Planning and decision making

  1. 1. Planning and Decision making <ul><li>Planning- Definition and Importance </li></ul><ul><li>Features of a good plan </li></ul><ul><li>Steps in planning </li></ul><ul><li>Advantages and Limitations of planning </li></ul><ul><li>Types of plans, Strategic and Tactical planning </li></ul><ul><li>Components of planning </li></ul><ul><li>MBO </li></ul><ul><li>Process of MBO </li></ul><ul><li>Decision making – Concept and Importance </li></ul><ul><li>Characteristics of Decision making </li></ul><ul><li>Process of Decision Making </li></ul><ul><li>Modern Techniques of Decision Making </li></ul>
  2. 2. Planning- the concept <ul><li>Plan is a commitment to a particular course of action necessary to achieve specific results </li></ul><ul><li>Planning is determination of future course of action </li></ul><ul><li>It occupies the first position in the management process </li></ul><ul><li>Without a plan- </li></ul><ul><li>there can be nothing to organise, </li></ul><ul><li>managers can’t lead with confidence </li></ul><ul><li>no way to see if they stray from the path of achieving objectives </li></ul><ul><li>Planning is deciding in the present, what to do in the future. It is a process by where companies reconcile their resources with their objectives and opportunities </li></ul><ul><li>- Philip Kotler </li></ul>Principles of Management
  3. 3. Features of Planning <ul><li>Process rather than just a behaviour- decides future course of action </li></ul><ul><li>Needs forecasting </li></ul><ul><li>Involves selection of suitable course of action </li></ul><ul><li>Undertaken at all levels of management- role increases at higher levels </li></ul><ul><li>Flexible principle- since it is based on future, which is dynamic </li></ul><ul><li>A continuous management function- involves perception, analysis, communication, decision and action </li></ul>Principles of Management
  4. 4. Features of a good plan <ul><li>Linked to long term objectives </li></ul><ul><li>Provide clear and specific direction (for future course of action) </li></ul><ul><li>Consistency- Alignment with the behaviour of external and internal factors </li></ul><ul><li>Feasible- Not too ambitious, not set too low </li></ul><ul><li>Simplicity- to understand by all, encourages least communication between 2 groups of personnel </li></ul><ul><li>Flexible </li></ul>Principles of Management
  5. 5. Steps in Planning Process Principles of Management Perception of opportunities Establishing objectives Planning Premises Identification of alternatives Evaluation of alternatives Choice of alternative plans Formulation of supporting plans Establishing sequence of activities
  6. 6. Advantages of Planning <ul><li>Quick achievement of objectives </li></ul><ul><li>Unity in purpose and direction </li></ul><ul><li>Optimum utilisation of resources </li></ul><ul><li>Increases efficiency of managers </li></ul><ul><li>Assists in controlling organisational activities/functions </li></ul><ul><li>Reduces chances of inconsistency </li></ul><ul><li>Reduces wrong decision making </li></ul>Principles of Management
  7. 7. Limitations of planning <ul><li>Time consuming and costly </li></ul><ul><li>Change in situation makes planning ineffective </li></ul><ul><li>Internal inflexibility-Psychological, Policy, capital </li></ul><ul><li>External inflexibilities- Political Climate, Trade Unions, Technological changes </li></ul>Principles of Management
  8. 8. Types of plans <ul><li>Short term plans </li></ul><ul><li>Medium term plans </li></ul><ul><li>Long term plans </li></ul><ul><li>Formal and Informal plans </li></ul><ul><li>Specific and Routine plans </li></ul><ul><li>Strategic planning </li></ul><ul><li>Functional plans </li></ul><ul><li>Operational plans </li></ul>Principles of Management
  9. 9. Strategic Planning <ul><li>It sets the long term direction of the organisation in which it wants to proceed in future </li></ul><ul><li>Generally, the period for strategic plan is 3 to 5 years </li></ul><ul><li>It affects a part or whole of the organisation </li></ul><ul><li>It is based on long term forecasts </li></ul><ul><li>E.g.: Planned growth in sales, diversification of business, new product development </li></ul>Principles of Management
  10. 10. Tactical Planning <ul><li>It decides the detailed use of resources to achieve business goals </li></ul><ul><li>The lower level management is responsible for the same </li></ul><ul><li>It is a short term plan, based on past performances </li></ul><ul><li>Involves day to day operations of business </li></ul>Principles of Management
  11. 11. Components of Planning <ul><li>For Repetitive/Standing Plans: </li></ul><ul><li>Mission </li></ul><ul><li>Objectives </li></ul><ul><li>Policies </li></ul><ul><li>Procedures </li></ul><ul><li>Rules </li></ul><ul><li>Strategies </li></ul><ul><li>Forecasting </li></ul><ul><li>For Single Use Plans: </li></ul><ul><li>Programmes </li></ul><ul><li>Projects </li></ul><ul><li>Schedules </li></ul><ul><li>Budgets </li></ul>Principles of Management
  12. 12. MBO <ul><li>It is a way of managing where </li></ul><ul><li>1) the objectives of individuals, groups, departments, divisions and the organisation identified </li></ul><ul><li>2) managerial strategies to achieve the goals are formulated </li></ul><ul><li>Features of MBO </li></ul><ul><li>Superior and the subordinate, both need to participate </li></ul><ul><li>Joint goal setting </li></ul><ul><li>Joint decision on method to achieve the objectives </li></ul><ul><li>Focus on goals to achieve maximum results </li></ul>Principles of Management
  13. 13. Process of MBO <ul><li>The sub ordinate defines the job and the tasks to be done. He ranks them according to priority </li></ul><ul><li>The objectives are set: The important areas in terms of organisation’s success are identified (Production increase); performance measures in every area will be set (Cost effective production); then standards for each performance are determined (Produce 100 units in Rs. ??) </li></ul><ul><li>Develop POA: It gives an idea about steps taken or activities to be done, to reach the goal </li></ul><ul><li>Conducting periodic review: A feedback is given to the management regularly, on the progress of POA and achievement of objectives </li></ul><ul><li>Performance appraisal: Done by superiors with their sub ordinates. They measure actual result against decided standards. Also give guidance. </li></ul><ul><li>Achievement of objectives </li></ul>Principles of Management
  14. 14. Improving effectiveness of MBO <ul><li>Support from all </li></ul><ul><li>Acceptance by managers </li></ul><ul><li>Training of managers (on MBO philosophy) </li></ul><ul><li>Organisational commitment </li></ul><ul><li>Allocation of time and resources </li></ul><ul><li>Uninterrupted feedback </li></ul>Principles of Management