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Chapter 5 planning and decision making
 

Chapter 5 planning and decision making

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    Chapter 5 planning and decision making Chapter 5 planning and decision making Presentation Transcript

    • Chapter 5 Planning and Decision Making
    • Planning After reading these sections, you should be able to:
      • discuss the benefits and pitfalls of planning.
      • describe how to make a plan that works.
      • discuss how companies can use plans at all management levels, from top to bottom.
    • Planning 1 Planning Choosing a goal and developing a method of strategy to achieve that goal
    • Benefits of Planning 1.1 Benefits of Planning Creation of Task Strategies Intensified Effort Direction Persistence
    • Pitfalls of Planning 1.2 Pitfalls of Planning Detachment of Planners Impedes Change and Adaptation False Sense of Certainty
    • How to Make a Plan That Works 2 Set Goals Develop Commitment Develop Effective Action Plans Track Progress Toward Goal Achievement Maintain Flexibility Revise existing plan or Begin new planning process
    • Setting Goals 2.1 S.M.A.R.T. S pecific
          • M easurable
          • A ttainable
          • R ealistic
          • T imely
    • Developing Commitment to Goals
      • The determination to achieve a goal is increased by:
        • Setting goals participatively
        • Making goals reasonable
        • Making goals public
        • Obtaining top management support
      2.2
    • Developing Effective Action Plans An Action Plan Lists… 2.3 Specific Steps People Resources Time Period
    • Tracking Progress Set… Proximal Goals Distal Goals Gather and provide… Performance Feedback 2.4
    • Maintaining Flexibility
      • Option-based planning
        • keep options open by making simultaneous investments
          • invest more in promising options
          • maintains slack resources
      • Learning-based planning
        • plans need to be continuously adjusted
      2.5
    • Planning from Top to Bottom Adapted from Exhibit 5.5 First-Level Managers Middle Top Managers 3 Purpose Strategic Objectives Tactical Plans, MBO Operational, Standing, Single-Use Standing Plans Operational Plans Single-Use Plans Tactical Plans, MBO Strategic Objectives Purpose
    • Starting at the Top 3.1 Strategic Plans Clarify how the company will serve customers and position itself against competitors (2-5 years) Purpose Statement a statement of a company’s purpose or reason for existing Strategic Objective A more specific goal that unifies company-wide efforts, stretches and challenges the organization, and possesses a finish line and a time frame
    • Planning Time Lines 3.1 Years 0 1 2 3 4 5 6 Plans Strategic Tactical Operational 5 Years 2 years 30 days 6 months 6 months 2 Years
    • Avon’s Vision and Values Exhibit 5.7 3.1
    • Bending in the Middle Tactical Plans Specify how a company will use resources, budgets, and people to accomplish goals within its mission. (6 months to 2 years) Management by Objectives Develop and carry out tactical plans
      • Discuss possible goals
      • Participatively select goals consistent with overall goals
      • Jointly develop tactical plans
      • Meet to review progress
      3.2
    • Finishing at the Bottom Operational Plans Day-to-day plans for producing or delivering products and services over a 30-day to six-month period 3.3
    • Kinds of Operational Plans 3.3 Single-Use Plans Plans that cover unique, one-time-only events Standing Plans Plans used repeatedly to handle frequently recurring events. Three kinds are: policies, procedures, and rules and regulations. Budgets Quantitative planning to decide how to allocate money to accomplish company goals
    • What Is Rational Decision Making? After reading these sections, you should be able to:
      • explain the steps and limits to rational decision making.
      • explain the advantageous and disadvantageous of group decision-making.
    • What Is Rational Decision Making? 4 Decision Making The process of choosing a solution from available alternatives. Rational Decision Making A systematic process of defining problems, evaluating alternatives, and choosing optimal solutions.
    • Steps to Rational Decision Making 4 Define the problem Identify decision criteria Weight the criteria Generate alternative courses of action Evaluate each alternative Compute the optimal decision 1 2 3 4 5 6
    • Steps to Rational Decision Making
      • Problem exists when there is a gap between a desired state and an existing state
      • To make decisions about problems, managers must:
        • be aware of the gap
        • be motivated to reduce the gap
        • have the knowledge, skills, abilities, and resources to fix the problem
      Define the problem 1 4.1
    • Steps to Rational Decision Making
      • Standards used to guide judgments and decisions
      • The more criteria a potential solution meets, the better that solution should be
      Identify decision criteria 2 4.2
    • Steps to Rational Decision Making
      • Absolute comparisons
        • each criterion is compared to a standard or ranked on its own merits
      • Relative comparisons
        • each criterion is compared directly to every other criterion
      Weight the criteria 3 4.3
    • Steps to Rational Decision Making Absolute Weighting of Decision Criteria 4.3
    • Steps to Rational Decision Making Relative Weighting of Decision Criteria 4.3
    • Steps to Rational Decision Making Generate alternative courses of action 4
      • The idea is to generate as many alternatives as possible
      4.4
    • Steps to Rational Decision Making Evaluate each alternative 5
      • This step can take much longer and be more expensive than other steps in the process
      4.5
    • Steps to Rational Decision Making
      • Multiply the rating for each criterion by the weight for that criterion
      • Sum the scores for each alternative course of action
      Compute the optimal decision 6 4.6
    • PLUS—A Process for Ethical Decision Making DOING THE RIGHT THING 4 Policies Legal Universal Self P L U S
    • Limits to Rational Decision Making 4.7 Bounded Rationality A decision-making process restricted in the real world by:
      • limited resources
      • incomplete and imperfect information
      • managers’ limited decision-making capabilities
    • Limits to Rational Decision Making 4.7 Maximize Satisfice
    • Group Decision Making
      • View problems from multiple perspectives
      • Find and access more information
      • Generate more alternative solutions
      • More committed to making chosen solutions work
      Advantages 5.1
    • Group Decision Making 5.1
      • Susceptible to groupthink and to considering a limited number of solutions
      • Takes considerable time
      • One or two people can dominate group discussion
      • Members don’t feel personally accountable for decisions and actions
      Disadvantages
    • Groupthink 5.1
      • The group is insulated from others with different perspectives
      • The group leader expresses a strong preference for a particular decision
      • There is no established procedure for defining problems and exploring alternatives
      • Group members have similar backgrounds
      Groupthink is likely to occur when…