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Limitations of managerial planning and decision planning
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- 2. Lack of reliabledata 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 Timeconsuming 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 Becauseof external factors which are beyond the control of the planners
- 8. Psychological Barriers Somemanagers consider the present more important than the future because present is certain…such persons are psychologically opposed to planning
- 9. Decision Making Theprocess 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 ofManagerial 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 ofManagerial 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 ofManagerial 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 ofManagerial 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 Modelof 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 Modelof 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 Modelof Decision Making
- 18. The Administrative Modelof 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 ofDecision 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 ofDecision 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 AmbiguousInformation 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 inDecision Making
- 26. Decision Making Steps Step1. 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 Step2. 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 Step3. 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 Step5. Implement Chosen Alternative Managers must now carry out the alternative. Often a decision is made and not implemented
- 31. Decision Making Steps Step6. 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.