Management - Planning and Decision Making

8/13/2019 Management - Planning and Decision Making

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Management theories and

Practices

Week 4


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Step 1

The Planning Function


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The head of operations of a pharmaceutical plant

realized that the quantity of output was less than

the input. He called meeting of production

engineers, supervisors and workers to solve the

problem and then brain storm on possible causes.

All ideas were jotted down with list of possiblecauses. Small groups were formed to assess the

suitability of causes. Based on recommendations of

groups the decision were taken

How effective was the approach?


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The Managerial Decision Making


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Decision making is the essence of management

All managers want to make good decisions-why?

Managers at all levels take decisionsbut ofwhat kind?


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How to make decision ?

The steps


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Managerial decisions and the management

functions

Any examples you can think of?


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Managerial decision making :

The rationality

How rational they can be ?

Reasons ?


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Bounded rationality

Suffice

Escalation of commitment

Why?


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Is there a role of intuition in managerial decisionmaking


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Types of Decisions and Decision MakingConditions


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1. Structured problems and programmed decisions

What could be various situations?

What happens then?the decision making process.

Examples.

Customer is always right. Rule

Employee wages will remain competitive. Policy


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2. Unstructured, Nonprogrammed Decisions

What could be various situations?

What happens then?the decision making process.

Examples.New ban imposedwhich type?


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Which level of managers take which type ofdecisions?


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The situation and their impact on decisionmaking:

Certainty

Risk

Uncertaintypsychological makeup


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Sumup

Linear and non-linear style of decision making


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The biases and errors

Overconfidence

Immediate gratification

Anchoring effect

Selective perception

Confirmation

Framing

Availability

Randomness

Sunk costsSelf serving

Hindsight bias


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Decision-Making

Process

Decision-Making Approach

Rationality

Bounded rationality

Intuition

Type of Problems and Decisions

Well structuredprogrammed

Unstructurednon programmed

Decision-Makers StyleLinear thinking style

Nonlinear thinking style

Decision-Making Conditions

Certainty

Risk

Uncertainty

Decision

Choosing best alternative-maximizing

- satisficing

Implementing

Evaluating

Decision-Making

Errors and Biases


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Decision making in todays world

Cultural differences

Know when its time to call it quits

Use effective decision making processsubjective and objective

Build an organization that can spot theunexpected and quickly adapt to the changedenv.


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Think.

How organizational culture influence the waymanagers make decisions ?


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Consider this

Your company is advertising for a new employee to workin your area of responsibility. The person in this positionwill be important because the work directly impacts thequality and quantity of your performance. One of yourfriends from college needs a and you think he is qualifiedfor position. But you feel you could find a better qualifiedand more experienced candidate if you keep looking.

What would you do? Which factors would influence yourdecisions?

Could org develop any rules, procedures or policies todeal with such situation?


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Recall managerial decision making and org

objectives

And lets do some planning for the organization

!!!


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How important planning is?

Consider a situation .


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Boeing called its new 787 aircraft, the dreamliner,but the project turned out to be a nightmare for the

managers. The new plane was the companys mostpopular product ever, mostly because of itsinnovations, especially in fuel efficiency. However,one month before its delivery date , the company

announced delay in delivery date for about 15months. The company admitted that the projectstimeline was way too ambitious, even though everydetail had been meticulously planned. Whathappens if Boeings customers get tired of waitingand cancel their orders? Could the managers haveplanned better?


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What is planning ?

Involves defining orgs goals, establishing strategies

for achieving those goals and developing plans tointegrate and coordinate work activities.

Concerned with bothends and means

Formal planning - Time frame , org wideunderstanding of goals


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Why do managers plan?


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Provides direction

Reduces uncertainty

Minimizes wastes and redundancy

Establishes goals and standards used incontrolling


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Planning and performance of org

Is there a link ?


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Associated with positive financial results

Planning and executionno matter how much

planning is done

External forcesthe culprit

Time frame - four/five years of planning before itimpacts performance


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Elements of planning


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Objectives

Actions

Resources

Implementation

Lets take look at diagram


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Goals and plans


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What are goals , what are plans ?

One goal or many goals?

Financial vs strategic goals

Stated goalsofficial statements of what anorganization says its goals are

Conflict between real goals (the actions) and statedgoalscan such situation happene.g university


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Types of Plans


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Described in terms of breadth

Time frame

Specificity

Frequency of use

Lets take look at diagram


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Type of

Plans

Frequency of

UseSpecificityTime FrameBreadth

Single useDirectionalLong termStrategic

Operational StandingSpecificShort term


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How to set goals ?


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1. Traditional goal setting:

Set by top managerscommunicated below , translatedinto responsibilities

Performance measures against those goals

Problem with translating strategic goals into

departmental goals

Theres another problem --- lets see in diagram


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Department

Managers Objective

Top

Managements

Objective

Division

Managers Objective

We need to improve the

companys performance

Increase profits

regardless of the means.

I want to sea asignificant improvement in

this divisions profits.

Dont worry about

quality; just work fast.Individual

Employees Objective


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Management by objectives:

How this happens?


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Steps in goals setting


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Review orgs mission/ purpose

Evaluate resourceswhy?

Determine goals individually with input fromothers

Write down and communicatewhy

Review results


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Developing plans .

Cater for - managerial level, uncertainty, time

frame (not too short term nor too long term)


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Criticism on planning :

Planning create rigidity

Plans cant be developed for dynamic env

Formal plans cant replace intuitioncreativity

Just planning isnt enough


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What to do then.

Develop flexible plansits an ongoing processand serve as road map although destination may

change

Managers need to stay alert to env. Changes

Involve employees to make it quicker (avoid flowfrom top), flexible and best ones to provide input


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Class exercise:

Mastering the planpriceless

Documents

Management - Planning and Decision Making