Limitations of managerial planning and decision planning

1. Limitations of
Managerial
planning and
Decision Planning

2. Lack of reliable data
 Planning loses its value if reliable information is not
available or if the planner fails to utilize the reliable
information

3. Lack of initiative
 Planning is a forward-looking process
 If a manager has a tendency to follow rather than
lead, he will not be able to make good plans
Manager should be an active planner & should take
adequate follow-up measures

4. Costly process
 Time consuming and expensive process—which
may delay action in certain cases

5. Rigidity in organizational
working
 Internal flexibility in the organization may compel
the planners to make rigid plans---which may deter
the managers from taking initiatives & being
innovative

6. Non-acceptability of change
 Resistance to change is another factor ,which puts
limits on planning

7. External limitations
 Because of external factors which are beyond the
control of the planners

8. Psychological Barriers
 Some managers consider the present more
important than the future because present is
certain…such persons are psychologically opposed
to planning

9. Decision Making
 The process by which managers respond to
opportunities and threats that confront them by
analyzing options and making determinations about
specific organizational
goals and courses of action

10. The Nature of Managerial
Decision Making
• Decisions in response to opportunities
 occurs when managers respond to ways to improve organizational
performance to benefit customers, employees, and other
stakeholder groups
• Decisions in response to threats
 events inside or outside the organization are adversely affecting
organizational performance

11. Decision Making
Programmed Decision
 Routine, virtually automatic decision making that
follows established rules or guidelines.
 Managers have made the same decision many times
before
 Little ambiguity involved

12. The Nature of Managerial
Decision Making
Non-Programmed Decisions
 Non routine decision made in response to unusual or
novel opportunities and threats.
 The are no rules to follow since the decision is new.
 Decisions are made based on information, and a
manager’s intuition, and judgment.

13. The Nature of Managerial
Decision Making
 Intuition
 feelings, beliefs, and hunches that come readily to
mind, require little effort and information gathering and
result in on-the-spot decisions

14. The Nature of Managerial
Decision Making
 Reasoned judgment
 decisions that take time and effort to make and result
from careful information gathering, generation of
alternatives, and evaluation of
alternatives

15. The Classical Model of decision
making
• A prescriptive model of decision
making that assumes the decision
maker can identify and evaluate all
possible alternatives and their
consequences and rationally choose
the most appropriate course of action.

16. The Classical Model of
decision making
 Optimum decision
 The most appropriate decision in light of what managers
believe to be the most desirable future consequences for
their organization.

17. The Classical Model of Decision
Making

18. The Administrative Model of
decision making
• An approach to decision making that explains why
decision making is inherently uncertain and risky and why
managers can rarely make decisions in the manner
prescribed by the classical model

19. Administrative Model of Decision
Making
 Bounded rationality
 There is a large number of alternatives and available
information can be so extensive that managers cannot
consider it all.
 Decisions are limited by people’s cognitive limitations.

20. Administrative Model of Decision
Making
 Incomplete information
 Because of risk and uncertainty, ambiguity, and time
constraints

21. Causes of Incomplete
Information
 Risk
 Present when managers know the possible outcomes of
a particular course of action and can assign
probabilities to them.
 Uncertainty
 Probabilities cannot be given for outcomes and the
future is unknown.

22. Causes of Incomplete
Information
Ambiguous Information
 Information whose meaning is not clear allowing it to
be interpreted in multiple or conflicting ways.
 Time constraints and information costs
 managers have neither the time nor money to search
for all possible alternatives and evaluate potential
consequences

23. Causes of Incomplete
Information
 Satisfying
 Searching for and choosing an acceptable, or
satisfactory response to problems and opportunities,
rather than trying to make the best decision.

24. Causes of Incomplete
Information
 Managers explore a limited number of options and
choose an acceptable decision rather than the
optimum decision.
 This is the typical response of managers when
dealing with incomplete information.

25. Six Steps in Decision Making

26. Decision Making Steps
Step 1. Recognize Need for a
Decision
Sparked by an event such as
environment changes.
 Managers must first realize that a decision must be made.

27. Decision Making Steps
Step 2. Generate Alternatives
Managers must develop feasible
alternative courses of action.
 If good alternatives are missed, the resulting decision is poor.
 It is hard to develop creative alternatives, so managers
need to look for new ideas.

28. Decision Making Steps
Step 3. Evaluate Alternatives
 What are the advantages and disadvantages of each
alternative?
 Managers should specify criteria, then evaluate.

29. Decision Making Steps
 Step 4. Choose Among Alternatives
 Rank the various alternatives and make a decision
 Managers must be sure all the information available is
brought to bear on the problem or issue at hand

30. Decision Making Steps
Step 5. Implement Chosen
Alternative
 Managers must now carry out the
alternative.
 Often a decision is made and not
implemented

31. Decision Making Steps
Step 6. Learn From Feedback
 Managers should consider what
went right and wrong with the
decision and learn for the future.
 Without feedback, managers do not
learn from experience and will
repeat the same mistake over.