© Emily & Jian, MGTO120 Summer 2006, HKUST 1 We finally enter P OLC now! Part III Planning Ch.6 Decision Making: the Essence of the Manager’s Job Ch. 7

© Emily & Jian, MGTO120 Summer 2006, HKU© Emily & Jian, MGTO120 Summer 2006, HKUSTST

11

We finally enter We finally enter PPOLC now!OLC now!

Part III Part III

Planning Planning

Ch.6 Ch.6 Decision Making: the Decision Making: the

Essence of the Manager’s JobEssence of the Manager’s Job

Ch. 7 Ch. 7 Foundations of PlanningFoundations of Planning


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Today’s AgendaToday’s Agenda

Short review – context of Short review – context of ManagementManagement (Ch3-5)(Ch3-5)

Ch.6 – managerial decision Ch.6 – managerial decision makingmaking

Ch.7 – Ch.7 – Foundations of PlanningFoundations of Planning Tutorial – video, group Tutorial – video, group

discussiondiscussion


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Ch.6 Ch.6 Decision Making: the Decision Making: the Essence of the Manager’s JobEssence of the Manager’s Job Learning objectives:Learning objectives:

1.1. Describe the decision-making process Describe the decision-making process (8(8 stepssteps))..

2.2. Describe the concepts of rationality, Describe the concepts of rationality, bounded rationality, satisficing, and bounded rationality, satisficing, and intuitionintuition

3.3. DescribeDescribe different types of problems, different types of problems, decisions, and conditionsdecisions, and conditions

4.4. Discuss decision-making styles (ABCD)Discuss decision-making styles (ABCD)5.5. Understand biases and errors in Understand biases and errors in

decision-making decision-making 6.6. Explain the Explain the overall overall managerial decision-managerial decision-

making modelmaking model

© Emily & Jian, MGTO120 Summer 2006, HKUST

4

Where We Are TodayWhere We Are Today

Management (Robbins & Coulter)

Part 1Basic

Concepts(Ch1)

Part 2

Context(ch3-5)

Part 1

Retrospect(ch2)

Part 3

Planning(ch6-9)

Part 4

Organizing(Ch10-13)

Part 5

Leading (Ch 14-17)

Part 6

Controlling(Ch 18,19)

Ch 6Decision making

Ch 7Foundation

Ch 8Strategic

management

Ch 7P tools

and tech.


5

What kind of decisions do you make everyday? What are the

impacts?What was the most important

decision(s) that you have made up till now? What was the impact?


6

What is the “essence” of the manager’s job?

What makes manager’s job different from non-manager’s jobs?

What has the greatest impact on the success and failure of an organization?

......


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The Decision-Making ProcessThe Decision-Making Process

A too simplistic definition of “Decision”A too simplistic definition of “Decision”

“ “Making a choice from two or more Making a choice from two or more alternatives.alternatives.””

The Decision-Making ProcessThe Decision-Making Process Identifying a problem and decision criteria Identifying a problem and decision criteria

and allocating weights to the criteria.and allocating weights to the criteria.

Developing, analyzing, and selecting an Developing, analyzing, and selecting an alternative that can resolve the problem.alternative that can resolve the problem.

Implementing the selected alternative.Implementing the selected alternative.

Evaluating the decision’s effectiveness.Evaluating the decision’s effectiveness.


8Exhibit 6.1Exhibit 6.1

8 steps in the

Decision-Making Process

1

2

3

4

5

6

7

8


9

• Problem

– A discrepancy between an existing and desired state of affairs.

• Characteristics of Problems

– A problem becomes a problem when a manager becomes aware of it.

– There is pressure to solve the problem.

– The manager must have the authority, information, or resources needed to solve the problem.

Identifying the Problem?1

Problems are everywhere? Easy to identify?


10

• Decision criteria are factors that are important (relevant) to resolving the problem.– Costs that will be incurred (investments required)

– Risks likely to be encountered (chance of failure)

– Outcomes that are desired (growth of the firm)

Allocating Weights to the Criteria ?

• Decision criteria are not of equal importance:– Assigning a weight to each item places the items in the

correct priority order of their importance in the decision making process.

Identifying Decision Criteria ?2

3



e.g., Criteria and Weights for Franchise Decision

Criterion Weight

Start-up costs 10

Franchisor support 8

Financial qualifications 6

Open geographical locations 4

Franchisor history 3


12

Developing Alternatives ?

• Identifying viable alternatives– Alternatives are listed (without evaluation) that can

resolve the problem.

Analyzing Alternatives ?• Appraising each alternative’s strengths and

weaknesses– An alternative’s appraisal is based on its ability

to resolve the issues identified in steps 2 and 3.

4

5


13

Selecting an Alternative• Choosing the best alternative

– The alternative with the highest total weight is chosen.

Implementing the Decision• Putting the chosen alternative into action.

– Conveying the decision to and gaining commitment from those who will carry out the decision.

6

7



e.g., Assessed Values of Franchise Opportunities Using Decision Criteria

Start-Up Franchise Financial Open FranchisorCosts Support Qualifications Locations History

Franchise

Curves For Women 10 3 10 8 5

Quiznos Sandwiches 8 7 7 8 7

Jani-King 8 5 7 10 10

Jackson-Hewitt Tax Service 8 7 7 8 7

GNC Vitamins andNutritional Supplements 7 8 7 8 7

Radio Shack 8 3 6 10 8

Chem-Dry Carpet Cleaning 10 7 8 6 7

McDonald’s 4 10 4 8 10



e.g., Evaluation of Franchise Alternatives Against Weighted Criteria

Start-Up Franchise Financial Open FranchisorCosts Support Qualifications Locations History Total

Franchise

Curves For Women 100 24 60 32 15 231

Quiznos Sandwiches 80 56 42 32 21 231

Jani-King 80 40 42 40 30 232

Jackson-Hewitt Tax Service 80 56 42 32 21 231

GNC Vitamins andNutritional Supplements 70 64 42 32 21 229

Radio Shack 80 24 36 40 24 204

Chem-Dry Carpet 100 56 48 24 21 249

McDonald’s 40 80 24 32 30 206


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Evaluating the Decision’s Effectiveness

• The soundness of the decision is judged by its outcomes.

– How effectively was the problem resolved by outcomes resulting from the chosen alternatives?

– If the problem was not resolved, what went wrong?

8


17

A rational model, Great! But in reality, do we really follow the steps?

• Probably NOT!

• A lot of assumptions:


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How many of them hold in reality???

Assumptions of Rationality


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Bounded RationalityBounded Rationality

Managers make decisions rationally, but Managers make decisions rationally, but are limited (bounded) by their ability to are limited (bounded) by their ability to process information.process information.

Assumptions are that decision makers:Assumptions are that decision makers: Will not seek out or have knowledge of all Will not seek out or have knowledge of all

alternativesalternatives

Will Will satisficesatisfice—choose the first —choose the first alternative encountered that satisfactorily alternative encountered that satisfactorily solves the problem—rather than maximize solves the problem—rather than maximize the outcome of their decision by considering the outcome of their decision by considering all alternatives and choosing the best.all alternatives and choosing the best.

More reasonable

assumptions?

This helped Herbert Simon and his buddy

get a Nobel Prize


20

Satisficing Model (Nobel prize!)

NONO

YESYES

Simplify Simplify problemproblem

Problem: Need Problem: Need for a decisionfor a decision

Identify limitedIdentify limitedset of alternativesset of alternatives

Set satisficingSet satisficingcriteriacriteria

Select the firstSelect the firstgood enoughgood enoughchoicechoice

Does a satisficing Does a satisficing alternative exist?alternative exist?

Expand searchExpand searchfor alternativesfor alternatives

Compare Compare alternatives onealternatives oneat a time againstat a time againstsatisficing criteriasatisficing criteriaDo we look at all alternatives?

NO. We SATISFICE.


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Bounded RationalityBounded RationalityInfluences on Decision Influences on Decision MakingMaking?? Escalation of CommitmentEscalation of Commitment

Increasing or continuing a Increasing or continuing a commitment to previous decision commitment to previous decision despite mounting evidence that the despite mounting evidence that the decision may have been wrong.decision may have been wrong.

The Role of IntuitionThe Role of Intuition Intuitive decision makingIntuitive decision making

Making decisions on the basis of Making decisions on the basis of experience, feelings, and accumulated experience, feelings, and accumulated judgement.judgement.



What is Intuition?

Source: Based on L.A. Burke and M.K. Miller. “Taking the Mystery Out of Intuitive Decision Making.” Academy of Management Executive. October 1999. pp. 91–99.


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Intuitive Decision Making? Intuitive Decision Making?

There are a number of conditions favoring There are a number of conditions favoring intuitive decision makingintuitive decision making A high level of uncertainty existsA high level of uncertainty exists There is little precedent to draw onThere is little precedent to draw on Variables are less scientifically predictableVariables are less scientifically predictable ““Facts” are limitedFacts” are limited Facts don’t clearly point the wayFacts don’t clearly point the way Analytical data are of little useAnalytical data are of little use Several plausible alternative solutions existSeveral plausible alternative solutions exist Time is limited and pressing for the right Time is limited and pressing for the right

decisiondecision

Logic not everything. For example,In creativity, intuition helps!


2424


2525

Problems and DecisionsProblems and Decisions

Structured ProblemsStructured Problems Involve goals that clear.Involve goals that clear. Are familiar (have occurred before).Are familiar (have occurred before). Are easily and completely defined—Are easily and completely defined—

information about the problem is information about the problem is available and complete.available and complete.

Programmed DecisionProgrammed Decision A repetitive decision that can be A repetitive decision that can be

handled by a routine approach.handled by a routine approach.

Policy, procedure, rulePolicy, procedure, rule


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Problems and DecisionsProblems and Decisions (cont’d) (cont’d)

Unstructured ProblemsUnstructured Problems Problems that are new or unusual and Problems that are new or unusual and

for which information is ambiguous or for which information is ambiguous or incomplete.incomplete.

Problems that will require custom-made Problems that will require custom-made solutions.solutions.

Nonprogrammed DecisionsNonprogrammed Decisions Decisions that are unique and Decisions that are unique and

nonrecurring.nonrecurring. Decisions that generate unique Decisions that generate unique

responses.responses.



Types of Problems, Types of Decisions, and Level in the Organization


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Decision-Making ConditionsDecision-Making Conditions

1.1. CertaintyCertainty A ideal situation in which a manager A ideal situation in which a manager

can make an accurate decision can make an accurate decision because the outcome of every because the outcome of every alternative choice is known.alternative choice is known.

2.2. RiskRisk A situation in which the manager is A situation in which the manager is

able to estimate the likelihood able to estimate the likelihood (probability) of outcomes that result (probability) of outcomes that result from the choice of particular from the choice of particular alternatives.alternatives.


2929

Decision-Making ConditionsDecision-Making Conditions

3.3. UncertaintyUncertainty Limited or information prevents Limited or information prevents

estimation of outcome probabilities for estimation of outcome probabilities for alternatives associated with the alternatives associated with the problem and may force managers to problem and may force managers to rely on intuition, hunches, and “gut rely on intuition, hunches, and “gut feelings”.feelings”. MaximaxMaximax:: the optimistic manager’s choice the optimistic manager’s choice

to maximize the maximum payoffto maximize the maximum payoff MaximinMaximin:: the pessimistic manager’s choice the pessimistic manager’s choice

to maximize the minimum payoffto maximize the minimum payoff MinimaxMinimax:: the manager’s choice to the manager’s choice to

minimize his maximum regret.minimize his maximum regret.


3030

Decision-Making StylesDecision-Making Styles

Dimensions of Decision-Making Dimensions of Decision-Making StylesStyles Ways of thinkingWays of thinking

Rational, orderly, and consistentRational, orderly, and consistent

Intuitive, creative, and uniqueIntuitive, creative, and unique

Tolerance for ambiguityTolerance for ambiguity Low tolerance: require consistency and Low tolerance: require consistency and

orderorder

High tolerance: multiple thoughts High tolerance: multiple thoughts simultaneouslysimultaneously



Decision-Making Styles - ABCD

Source: S.P. Robbins and D.A. DeCenzo, Supervision Today. 2nd ed. (Upper Saddle River, NJ: Prentice Hall, 1998). p. 166.



Even if 100% rational, but still there are lots of - Common Decision-Making Errors and Biases


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Biases and ErrorsOverconfidence Bias

Holding unrealistically positive views of one’s self and one’s performance. Believing too much in our own decision competencies.

Immediate Gratification Bias Choosing alternatives that offer immediate rewards and minimize immediate costs.

Anchoring EffectFixating on initial information and ignoring subsequent information. the rule

of thumb that says that decisions about how big or small an amount should be can be made by making adjustments from some initial amount. Potential bias is inappropriate decisions when initial amounts are too high or too low.

Selective PerceptionSelecting organizing and interpreting events based on the decision maker’s

biased perceptions. Confirmation Bias

Seeking out information that reaffirms past choices and discounting contradictory information.

Framing BiasSelecting and highlighting certain aspects of a situation while ignoring other

aspects.


34

More Biases and Errors (and a lot more...)

Availability BiasLosing decision-making objectivity by focusing on the most recent events. Using

information that is available, most readily at hand. The rule of thumb that says an event that is easy to remember is likely to have occurred more frequently than an event that is difficult to remember. Potential bias is overestimating the frequency of vivid, extreme, or recent events and causes.

Representation BiasDrawing analogies and seeing identical situations when none exist. Assessing the

likelihood of an occurrence by trying to match it with a preexisting category. This rule of thumb that says similar kinds of events that happened in the past are a good predictor of the likelihood of an upcoming event. Potential bias is failure to take into account base rates and overestimating the likelihood of rare events.

Randomness ErrorTrying to create meaning out of random events by falling prey to a false sense of control or

superstitions, creating unfounded meaning out of random events.

Sunk Costs ErrorsForgetting that current actions cannot influence past events and relate only to future

consequences.

Self-Serving BiasTaking quick credit for successes and blaming outside factors for failures.

Hindsight BiasMistakenly believing that an event could have been predicted once the actual outcome is

known (after-the-fact)


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Biases and Errors

Not rare, but common.

Examples in life?


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1. Do you think the Chang Jiang river is longer or shorter than 2000km?

2. How long is the Chang Jiang River?A. 1500B. 2000C. 2500D. 7000


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1. Do you think the Chang Jiang river is longer or shorter than 8000km?

2. How long is the Chang Jiang River?A. 1500B. 2000C. 2500D. 7000

ANCHORING BIAS


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• First we are offered a bonus of $300. Then choose between:

• Receiving $100 for sure; or

• Toss a coin. If we win the toss we get $200; if we lose we receive nothing.

Much preferred


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• This time we are first offered a bonus of $500. Then choose between:

• Losing $100 for sure; or

• Toss a coin. If we lose we pay $200; if we win we don’t pay anything.

PREFERRED

Asymmetry between losses and gains


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• 90% of people believes they are “Above average”

• “This is due tomorrow”

• ...



Overview of Managerial Decision Making


42

Decision Making for Today’s World

• Guidelines for making effective decisions:– Know when it’s time to call it quits.– Practice the five “whys”.– Be an effective decision maker.

• Habits of highly reliable organizations (HROs)– Are not tricked by their success.– Defer to the experts on the front line.– Let unexpected circumstances provide the solution.– Embrace complexity.– Anticipate, but also anticipate their limits.


43

Characteristics of an Effective Decision-Making Process

• It focuses on what is important.

• It is logical and consistent.

• It acknowledges both subjective and objective thinking and blends analytical with intuitive thinking.

• It requires only as much information and analysis as is necessary to resolve a particular dilemma.

• It encourages and guides the gathering of relevant information and informed opinion.

• It is straightforward, reliable, easy to use, and flexible.


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ANOTHER Nobel Prize for intuition!

So, how Are Decisions Actually Made in Organizations?

OR

http://images.google.com/imgres?imgurl=http://www.quizwiz.biz/life/ramquiz/QQpics/decision-making.jpg&imgrefurl=http://www.quizwiz.biz/life/ramquiz/QQtopics/qqtopic25decision.html&h=500&w=339&sz=20&tbnid=Q2pq6eL_93cJ:&tbnh=127&tbnw=86&hl=en&start=4&prev=/images%3Fq%3Ddecision%2Bmaking%26svnum%3D10%26hl%3Den%26lr%3D%26newwindow%3D1%26safe%3Doff%26sa%3DG


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Ch. 7 Foundations of Ch. 7 Foundations of PlanningPlanning

Define planningDefine planning Explain why managers planExplain why managers plan Describe how goals tie to planningDescribe how goals tie to planning Distinguish among types of plansDistinguish among types of plans Tell how goals are establishedTell how goals are established Describe well-designed goalsDescribe well-designed goals


4646

What Is Planning?What Is Planning?

PlanningPlanning A primary functional managerial activity A primary functional managerial activity

that involves:that involves: Defining the organization’s goalsDefining the organization’s goals Establishing an overall strategy for achieving Establishing an overall strategy for achieving

those goalsthose goals Developing a comprehensive set of plans to Developing a comprehensive set of plans to

integrate and coordinate organizational work.integrate and coordinate organizational work.

Types of planningTypes of planning Informal:Informal: not written down, short-term focus; not written down, short-term focus;

specific to an organizational unit.specific to an organizational unit. Formal:Formal: written, specific, and long-term focus, written, specific, and long-term focus,

involves shared goals for the organization.involves shared goals for the organization.


4747

WWHY HY Do Managers Plan?Do Managers Plan?

Purposes of PlanningPurposes of Planning Provides directionProvides direction Reduces uncertaintyReduces uncertainty Minimizes waste and redundancyMinimizes waste and redundancy Sets the standards for controllingSets the standards for controlling


4848

HOWHOW Do Managers Plan? Do Managers Plan? Elements of PlanningElements of Planning

Goals (also Objectives)Goals (also Objectives) Desired outcomes for individuals, Desired outcomes for individuals,

groups, or entire organizationsgroups, or entire organizations Provide direction and evaluation Provide direction and evaluation

performance criteriaperformance criteria PlansPlans

Documents that outline how goals are Documents that outline how goals are to be accomplishedto be accomplished

Describe how resources are to be Describe how resources are to be allocated and establish activity allocated and establish activity schedulesschedules


4949

GoalsGoals and Plans in Planning and Plans in Planning Financial GoalsFinancial Goals

Are related to the expected internal Are related to the expected internal financial performance of the financial performance of the organization.organization.

Strategic GoalsStrategic Goals Are related to the performance of the Are related to the performance of the

firm relative to factors in its external firm relative to factors in its external environment (e.g., competitors).environment (e.g., competitors).

Stated Goals versus Real GoalsStated Goals versus Real Goals Broadly-worded official statements of the Broadly-worded official statements of the

organization (intended for public organization (intended for public consumption) that may be irrelevant to consumption) that may be irrelevant to its real goals (what actually goes on in its real goals (what actually goes on in the organization).the organization).



Stated Objectives from Large U.S. Companies

Financial Objectives

• Faster revenue growth

• Faster earnings growth

• Higher dividends

• Wider profit margins

• Higher returns on invested capital

• Stronger bond and credit ratings

• Bigger cash flows

• A rising stock price

• Recognition as a “blue chip” company

• A more diversified revenue base

• Stable earnings during recessionary periods

Strategic Objectives

• A bigger market share

• A higher more secure industry rank

• Higher product quality

• Lower costs relative to key competitors

• Broader or more attractive product line

• A stronger reputation with customers

• Superior customer service

• Recognition as a leader in technology and/or product innovation

• Increased ability to compete in international markets

• Expanded growth opportunities

Source: A.A. Thompson Jr. and A.J. Strickland III. Strategic Management 12th ed. (New York: McGraw-Hill/Irwin, 2001), p. 43.


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SMART goals?

• Specific

• Measurable

• Achievable (but not easy)

• Realistic

• Time-anchored



Types of Plans


5353

Types of PlansTypes of Plans

Strategic PlansStrategic Plans Apply to the entire organization.Apply to the entire organization. Establish the organization’s overall Establish the organization’s overall

goals.goals. Seek to position the organization in Seek to position the organization in

terms of its environment.terms of its environment. Cover extended periods of time.Cover extended periods of time.

Operational PlansOperational Plans Specify the details of how the overall Specify the details of how the overall

goals are to be achieved.goals are to be achieved. Cover short time periodCover short time period


5454

Types of PlansTypes of Plans (cont’d) (cont’d)

Long-Term PlansLong-Term Plans Plans with time frames extending beyond three yearsPlans with time frames extending beyond three years

Short-Term PlansShort-Term Plans Plans with time frames on one year or lessPlans with time frames on one year or less

Specific PlansSpecific Plans Plans that are clearly defined and leave no room for Plans that are clearly defined and leave no room for

interpretationinterpretation Directional PlansDirectional Plans

Flexible plans that set out general guidelines, provide Flexible plans that set out general guidelines, provide focus, yet allow discretion in implementation.focus, yet allow discretion in implementation.

Single-Use PlanSingle-Use Plan A one-time plan specifically designed to meet the A one-time plan specifically designed to meet the

need of a unique situation.need of a unique situation. Standing PlansStanding Plans

Ongoing plans that provide guidance for activities Ongoing plans that provide guidance for activities performed repeatedly.performed repeatedly.



Specific Versus Directional Plans


5656

Approaches to Establishing Approaches to Establishing GoalsGoals Traditional Goal SettingTraditional Goal Setting

Broad goals are set at the top of the Broad goals are set at the top of the organization.organization.

Goals are then broken into subgoals for each Goals are then broken into subgoals for each organizational level.organizational level.

Assumes that top management knows best Assumes that top management knows best because they can see the “big picture.”because they can see the “big picture.”

Goals are intended to direct, guide, and Goals are intended to direct, guide, and constrain from above.constrain from above.

Goals lose clarity and focus as lower-level Goals lose clarity and focus as lower-level managers attempt to interpret and define the managers attempt to interpret and define the goals for their areas of responsibility.goals for their areas of responsibility.



Traditional Objective Setting


5858

Approaches to Establishing GoalsApproaches to Establishing Goals

Management By Objectives (MBO)Management By Objectives (MBO) Specific performance goals are jointly Specific performance goals are jointly

determined by employees and determined by employees and managers.managers.

Progress toward accomplishing goals is Progress toward accomplishing goals is periodically reviewed.periodically reviewed.

Rewards are allocated on the basis of Rewards are allocated on the basis of progress towards the goals.progress towards the goals.

Key elements of MBO:Key elements of MBO: Goal specificity, participative decision Goal specificity, participative decision

making, an explicit performance/evaluation making, an explicit performance/evaluation period, feedbackperiod, feedback


59

MBO: Cascading of Objectives

OrganizationalObjectives

DivisionalObjectives

DepartmentalObjectives

IndividualObjectives

The XYZ Company

Consumer Products Industrial Products

DevelopmentResearchMarketingCustomerService

SalesProduction

From another textbook by Robbins, “Organizational Behavior”, Pearson


60

Key Elements of MBOKey Elements of MBO

GoalGoalSpecificitySpecificity

ExplicitExplicitTime PeriodTime Period

Participation inParticipation inDecision MakingDecision Making

PerformancePerformanceFeedbackFeedback


61

Steps in a Typical MBO Program

1. The organization’s overall objectives and strategies are formulated.

2. Major objectives are allocated among divisional and departmental units.

3. Unit managers collaboratively set specific objectives for their units with their managers.

4. Specific objectives are collaboratively set with all department members.

5. Action plans, defining how objectives are to be achieved, are specified and agreed upon by managers and employees.

6. The action plans are implemented.7. Progress toward objectives is periodically reviewed, and

feedback is provided.8. Successful achievement of objectives is reinforced by

performance-based rewards.


6262

Does MBO Work?Does MBO Work?

ReasonReasonss for MBO Success for MBO Success Top management commitment and involvementTop management commitment and involvement Employee motivationEmployee motivation

Potential Problems with MBO ProgramsPotential Problems with MBO Programs Not as effective in dynamic environments that Not as effective in dynamic environments that

require constant resetting of goals.require constant resetting of goals. Overemphasis on individual accomplishment Overemphasis on individual accomplishment

may create problems with teamwork.may create problems with teamwork. Allowing the MBO program to become an Allowing the MBO program to become an

annual paperwork shuffle.annual paperwork shuffle.


63

Characteristics of Well-Designed Goals

• Written in terms of outcomes, not actions– Focuses on the ends, not the

means.

• Measurable and quantifiable– Specifically defines how the

outcome is to be measured and how much is expected.

• Clear as to time frame– How long before measuring

accomplishment.

• Challenging yet attainable– Low goals do not motivate.– High goals motivate if they

can be achieved.

• Written down– Focuses, defines, and

makes goal visible.

• Communicated to all– Puts everybody “on the

same page.”


6464

Steps in Goal SettingSteps in Goal Setting

1.1. Review the organization’s mission statement.Review the organization’s mission statement.1.1. Do goals reflect the mission?Do goals reflect the mission?

2.2. Evaluate available resources.Evaluate available resources.1.1. Are resources sufficient to accomplish the Are resources sufficient to accomplish the

mission?mission?

3.3. Determine goals individually or with others.Determine goals individually or with others.1.1. Are goals specific, measurable, and timely?Are goals specific, measurable, and timely?

4.4. Write down the goals and communicate them.Write down the goals and communicate them.1.1. Is everybody on the same page?Is everybody on the same page?

5.5. Review results and whether goals are being Review results and whether goals are being met.met.

1.1. What changes are needed in mission, What changes are needed in mission, resources, or goals?resources, or goals?


6565

Developing PlansDeveloping Plans

Contingency Factors in A Manager’s Contingency Factors in A Manager’s PlanningPlanning Manager’s level in the organizationManager’s level in the organization

Strategic plans at higher levelsStrategic plans at higher levels Operational plans at lower levelsOperational plans at lower levels

Degree of environmental uncertaintyDegree of environmental uncertainty Stable environment: specific plansStable environment: specific plans Dynamic environment: specific but flexible Dynamic environment: specific but flexible

plansplans Length of future commitmentsLength of future commitments

Current plans affecting future commitments Current plans affecting future commitments must be sufficiently long-term to meet the must be sufficiently long-term to meet the commitments.commitments.



Planning in the Hierarchy of Organizations


67

Approaches to Planning

• Establishing a formal planning department

– A group of planning specialists who help managers write organizational plans.

– Planning is a function of management; it should never become the sole responsibility of planners.

• Involving organizational members in the process

– Plans are developed by members of organizational units at various levels and then coordinated with other units across the organization.


6868

Contemporary Issues Contemporary Issues - - Criticisms Criticisms of Planningof Planning? Can we avoid ? Can we avoid them?them?

Planning may create rigidity.Planning may create rigidity.

Plans cannot be developed for Plans cannot be developed for dynamic environments.dynamic environments.

Formal plans cannot replace intuition Formal plans cannot replace intuition and creativity.and creativity.

Planning focuses managers’ Planning focuses managers’ attention on today’s competition not attention on today’s competition not tomorrow’s survival.tomorrow’s survival.

Formal planning reinforces today’s Formal planning reinforces today’s success, which may lead to success, which may lead to tomorrow’s failure.tomorrow’s failure.


6969

Contemporary Issues Contemporary Issues - - Effective Effective Planning in Dynamic EnvironmentsPlanning in Dynamic Environments

Develop plans that are specific but Develop plans that are specific but flexible.flexible.

Understand that planning is an Understand that planning is an ongoing process.ongoing process.

Change plans when conditions Change plans when conditions warrant.warrant.

Persistence in planning eventually Persistence in planning eventually pay off.pay off.

Flatten the organizational hierarchy Flatten the organizational hierarchy to foster the development of planning to foster the development of planning skills at all organizational levels.skills at all organizational levels.


7070

A lot of things to memorize for A lot of things to memorize for this class? this class? Hard! To make it easier, think about Hard! To make it easier, think about

one or two one or two concrete example(s) in concrete example(s) in your own decision-making your own decision-making experienceexperience. Analyze the specific . Analyze the specific situation, your approaches, situation, your approaches, procedures, and any other factors procedures, and any other factors involved, using what we learned.involved, using what we learned.

Your experience + textbook knowledge Your experience + textbook knowledge your knowledge your knowledge


7171

Homework Homework (remember, this course is (remember, this course is to to HELPHELP you to think critically you to think critically, but i, but it is t is

YOUYOU who who THINK THINK):):

Think about your own Decision Think about your own Decision making and Planning experience. making and Planning experience. Analyze it!Analyze it!

Plan ahead ! – mid-term exam, Plan ahead ! – mid-term exam, group movie projectgroup movie project


7272

next class...hot topicnext class...hot topic

Strategic ManagementStrategic Management

&&

Review for Mid-term!Review for Mid-term!

(what will be covered, what kind (what will be covered, what kind of questions, what we want to of questions, what we want to

see in your answer)see in your answer)


73

Questions on the movie project

1. Ppt and report due Jul.32. Presentation Jul.53. Real H-style movie (check with us if not), with clips from the movie (ethicsissue here?)4. Look through all the possible topics5. Focus and depth! Don’t try to cover everything in your analysis.


74

GroupGroup