Planning and Decision Making Chapter 3 EXAM Review

1. Planning and Decision MakingChapter 3 EXAM Review Mr. Sherpinsky Business Management Class Council Rock School District

2. The Planning Process • Planning: the process of deciding which objectives to pursue during a future time period and how to achieve those objectives. • Primary management function

3. Why Plan? • Planning enables an organization to actively affect rather than passively accept the future. • Planning provides a means for actively involving personnel from all areas of the organization in the management of the organization

4. Formal Planning • Defined: The systematic studying of an issue and the preparation of a written document to deal with the problem. • Formal Plan: Defined: a written, documented plan developed through an identifiable process • Levels of sophistication • Depends on the needs and organization

5. Formal Planning • Functional Plans • Most frequently encountered types • Sales and marketing • Productions • Financial • Personnel

6. Formal Planning • Planning Horizons: • Short-rangeplanscover up-to a one-year period of time • Long-rangeplanscover at least a three-to-five year period of time. • Intermediate planscover the time span between short-range and long-range • Usually between short and long range timeframes

7. Operational or Tactical Short-range planning Focuses on forming ideas for dealing with specific functions in the company Ex: production schedules and day-to-day operations Strategic Long-range planning Done by highest management levels President, vice-president, chief operating officer Affects many parts of the organization Operational vs. Strategic Plans

8. Contingency Plans • Regardless of thorough you plan, something always goes wrong…. • Remember planning is a one-sided process • Contingency Plans: back up plans that address the what ifs of the management job. • Always short-term

9. Objectives • Objectives: Defined: are statements outlining what a manager is trying to achieve. • Objectives give an organization and its members directions and purpose. • Should be clear, concise, and measurable

10. Objectives • Short-range • Derived from in-depth evaluation of long-range objectives • List of priorities to achieve longer-range objectives • Long-range • Generally go beyond the organization’s current fiscal year • Must support and not conflict with the organization mission

11. The Planning Process • MBOs (Management by Objectives) • Philosophy that converts company objectives to personal and management ones • Policies • Broad general guides to action that direct or constraint and provide predictability • Procedures • Series of steps to meet objectives • Usually done chronologically • Rules • Specific actions to take (or not to take)

12. Making Decisions • Decision-making • Not all decisions involve problems • Group decision-making • Group decisions are generally better then making quick independent decisions

13. Making Decisions • Decision Making Vs. Problem Solving • Decision making: Choosing from various alternatives • Problem solving:The process of determining the appropriate recompense or actions

14. Approaches to Problem Solving • Satisficing • Principle of bounded rationality • Assumes that people have the time and cognitive ability to process only a limited amount of information • Assumes knowledge of alternatives and criteria is limited • Assumes people act on the basis of a simplified concept of the world

15. Making Decisions • Decision maker’s environment • Environmental factors • Manager’s position • Structure of organization • Tradition of organization • Informal and formal group structures (i.e., unions) • Superiors and subordinates

16. Making Decisions • Intuitive approach • Using emotions to make decisions • Fastening on unsubstantiated facts and sticking with them

17. Making Decisions • Maximaxand Maximin approach • Maximax: Look at best alternative whose best possible outcome is best for all alternatives • Maximin: Looking at the best alternative and comparing to the worst possible outcomes

18. Making Decisions • Risk averting approach • Choosing an alternative with least variation among outcomes • Timing • Need for a decision must be recognized • Must act at some point • Participation • Two heads are better than one • Group performance is usually better than individual performance

19. Barriers to Decision Making • Complacency • Ignoring data or not making a decision at all • Defensive avoidance • Denies the importance of the danger or opportunity • Panic • Frantic attempts to solve a problem • Deciding to decide • Accepting responsibility for the decision

20. Management Information Systems • Integrated approach for providing interpreted and relevant data to help make decisions • Data processing • Capture, processing and storage of data • MIS uses that data to produce information to make good decisions • Transaction processing system • Replaced manual record-keeping procedures • Payroll, billing inventory records • Routine • Highly structured decisions

21. Questions? • Exam Next Class • 100 Points • Multiple Choice • T/F • Drop box • Essay