Ch. 2 Basic Planing and Decison making.ppt

Slide content created by Joseph B. Mosca, Monmouth University.
Copyright © Houghton Mifflin Company. All rights reserved.
7
Ready Notes
Basic Elements of
Planning and
Decision Making

Copyright © Houghton Mifflin Company. All rights reserved. 7 - 2
Setting the goals

Purposes of goals:
• Purposes of goals:
– Provide guidance.
– Promote good
planning.
– Serve as sources of
motivation.
– Mechanism for
evaluation and
control (reward &
punishment).

Why Is Planning Important?
A task can not be
accomplished if the
manager is not
aware of:
How is
it to be
done
What
has to
be done
When is
it to be
done

Planning steps
• Understanding the environment
• & the organization mission.
• Then set the goals.

The Organization’s Environments
• External environment:
everything outside an
organization’s
boundaries that might
affect it. The
uncontrollable
environment.
• Internal environment:
the conditions and
forces within an
organization. The
controllable
environment.

The
Organization
and Its
Environments

McDonald’s
General
Environment

McDonald’s
Task
Environment

Mission
• A statement of an organization’s
fundamental purpose. like humanity
service is Edhi’s mission, Changing life
L.G mission, connecting people is
Nokia’s mission & so on

Kinds of Goals
• Goals vary by level, area, and time
frame.
• By Level
1. Strategic goal: a goal set by and for
top management of the organization.
2. Tactical goal: set by and for middle
managers of the organization.
3. Operational goal: set by and for lower
managers of the organization.

Kinds of Goals
• By Area:
organizations also
set goals for
different areas.
• By Time frame:
organizations also
set goals across
different time
frames.

Responsibilities for Setting Goals
Who sets goals?
– All managers should
be involved in the goal
setting process.
– Each manager has
responsibilities for
setting goals that
correspond to their
level.

Managing Multiple Goals
• When setting goals
organizations sometimes
experience conflicts or
contradictions among
goals.
• Conflicts are addressed
through the use of the
Optimizing concept:
– Optimizing: balancing and
reconciling possible conflicts
among goals.

Organizational Planning
Kinds of organizational
plans:
1. Strategic plan: a
general plan outlining
decisions to achieve
strategic goals.

Organizational Planning
2. Tactical Plans: a
tactical goals (specific
parts of a strategic
plan).
3. Operational plan: a
operational goals.
4. Consistency plan
5. Management by
objective (MBO)

Using SWOT Analysis for Strategic planning
• SWOT: An abbreviation that stands for
strengths, weaknesses, opportunities,
and threats.
• Organizational strength: a skill or
capability that enables an organization
to set goals for it.
• Organizational weakness: a
shortcoming that hinder in achieving
goal.

Using SWOT Analysis for Strategic planning
• Organizational
opportunity: an area in
the environment that, if
exploited, may generate
higher performance.
• Organizational threats:
an area in the
environment that
increases the difficulty
of an organization
performing at a high
level.

Types of Operational Planning
Single-use plan:
• Developed to carry out a course of action
not likely to be repeated in the future.
1. Program: a plan for a large set of activities
like introducing new product line, opening a
facility or changing the organization’s
mission. For example the program to
upgrade Mangla dam water & power
capacity.
2. Project: a plan of less scope and complexity
than a program like introducing a new
product within an existing product line. e.g.
the installation of new turbine at Mangla
dam during the up gradation

Types of Operational Planning
Standing Plan
• Developed for activities that recur regularly over a
period of time:
1. Policy: a standing plan specifying the organization’s
general response to a designated problem or situation like
admission policy of university.
2. Standard operating procedure: a standing plan outlining
steps to be followed in particular circumstances. e.g Mc
Donald's SOP of Big Mac how they are cooked & how
long must they stay in oven.
3. Rules and regulations: standing plans describing exactly
how specific activities are to be carried out. E.g. telephone
use is prohibited in Mc Donald.

Contingency Planning
• The determination of
alternative courses
of action to be taken
if an intended plan
fails.

Management by Objective (MBO)
• “A method of management whereby
managers and employees collectively
set the goals”.
• STEPS
1. Set Goals
2. Develop action plans
3. Review progress
4. Appraise overall performance

Time Frames for Plans
• Long-range plan: covers many years,
perhaps even decades; common long-
range plans are for five years or more.
• Intermediate plan: usually covers
periods from one to five years.
• Short-range plan: generally covers a
span of one year or less.

Responsibilities for Planning
• Planning staff: some large organizations
develop a professional planning staff.
• Planning task force: often comprised of
line managers with special interest in
the relevant area of planning.
• Board of directors: establish the
corporate mission and strategy, and in
some companies take part in the
planning process.

Barriers to
Goal Setting and Planning
Major Barriers
– Inappropriate goals.
– Improper reward
system.
– Dynamic and complex
environment.
– Reluctance to
establish goals.
– Resistance to change.
– Constraints.
Overcoming Barriers
– Understanding the
purposes of goals and
planning.
– Communication and
participation.
– Consistency, revision,
and updating.
– Effective reward
system.

“Decision making” the catalyst
• Decision making is the catalyst that
drives the planning process. An
organization goals follow from decisions
made by various managers.
• Likewise deciding on the best plan for
achieving particular goal also reflects a
decision to adopt one course of action
as opposed to others

The Nature of Decision Making
Decision making:
– The act of choosing
one alternative from
among a set of
alternatives.

Types of Decisions
Programmed decision:
– A decision that is fairly
structured or recurs with some
frequency (or both). E.g. the
cordinator decision to allocate
subjects, class rooms & timings
at the start of semester .
Non-programmed decision:
– A decision that is relatively
unstructured and occurs much
less often than a
PROGRAMMED DECISION.
E.g. if the teacher quits during
semester then the cordinater has
to make decision to whom to
allocate his subject

A View of Decision-Making Conditions
Certainty Risk Uncertainty
Level of ambiguity and chances of making a bad decision
Lower Moderate Higher
The decision
maker faces
conditions of:

Decision-Making Conditions
State of certainty:
– If, at the time a decisions is
made, only a single outcome
is likely, the decisions is
certain. Certain decisions are
"sure things". for example buying
electronics you know that L.G, Sony &
General will be the best choice.
State of risk:
– If, at the time a decision is
made, the probabilities of
several alternative outcomes
are known, the decision is
risky. For risky decisions,
several different outcomes are
possible and the probability of
each outcome's actually
occurring is known. . e.g. the
decision to buy second hand
electronics has got certain probability
of failure

Decision-Making Conditions
• State of Uncertainty: If,
at the time a decision is
made, the range of
possible outcomes is
not known and the
probability of these
different outcomes'
occurring is not known,
the decision is
uncertain. . E.g. deciding
to buy a new electronics
company’s products with no
market

Obtain complete and
perfect information.
Eliminate uncertainty.
Evaluate everything
The Classical Model of Decision Making
When faced with a
decision situation,
managers
should…
…and end up with a
decision that best
serves the interests
of the organization.

Steps in Decision Making
STEP
– Recognize and define
situation.
– Identify alternatives.
– Evaluate alternatives.
– Select alternative.
– Implement alternative.
– Follow up and evaluate
results.
DETAIL
– Stimulus may be
positive or negative.
– Alternatives must be
generated.
– Feasibility check.
– Choose best fit
alternative.
– Implementation.
– Does it work?

Advantages and Disadvantages of Group and
Team Decision Making
ADVANTAGES
– More information
and knowledge
available.
– More alternatives
generated.
– More acceptance.
– Enhanced
communication.
– Better discussions.
DISADVANTAGES
– The process takes
longer.
– Compromised
decisions result from
indecisiveness.
– One person may
dominate.

Ch. 2 Basic Planing and Decison making.ppt

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