Planning and Decision Making Week 5
Definition
defining the organisation's objectives and goals
establishing an overall strategy for achieving those goals
Developing plans to integrate and coordinate activities
Two Types
Formal
Informal
Why Plan?
provides direction
reduces uncertainty
minimises waste and redundancy
establishes goals and standards used for controlling
Elements of planning
Goals
Plans
Types of plans
breadth
time frame
specificity
frequency of use
Steps
Review the mission
Evaluate available resources
Determine goals
Write down and communicate goals
Review results - if goals are being met
Establishing goals
Traditional goal setting
goals set at top level then broken down into subgroups for each level
means to an end chain
Management by objectives (MBO)
mutually agreed upon goals
used to evaluate employee performance
four elements to MBO programs
goal specificity
participative decision making
explicit time frame
performance feedback
Characteristics of well-defined goals
Written in terms of outcomes rather than actions
measurable and quantifiable
clear as to a time frame
challenging yet attainable
written down
communicated to all necessary organisational members
Developing plans
contingency factors
level in the organisation
degree of environmental uncertainty
length of future commitment
higher level
lower level
strategic
operational
high uncertainty - specific plans but flexible
plans should meet promised commitments
Criticisms
Planning may create rigidity
plans cannot be developed for dynamic environments
formal plans cannot replace intuition and creativity
planning focuses managers' attention on today's competition not tomorrow's survival
formal planning reinforces today's success which may lead to tomorrow's failure
just planning is not sufficent
Decision making
Steps
the process of choosing between two or more alternatives
- Identification of a problem
Issues
Over-confidence
self-serving
click to edit
Decisions
Bounded Rationality
Intuition
Rationality