Bài giảng Principles of Management - Chapter 5 Planning and Decision Making

chapter 5Planning and Decision MakingMcGraw-Hill/IrwinPrinciples of Management © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.Learning ObjectivesDescribe the different levels of planning in an organization.Explain the difference between strategic, tactical, operating, and unit plans.Outline the value of simple-use plans, standing plans, and contingency plans.Describe the main components of a typical strategic planning system.Identify the main pitfalls that managers encounter when engaged in formal planning processes, and describe what can be done to limit those pitfalls.Discuss the major reasons for poor decisions, and describe what managers can do to make better decisions. Steps in PlanningChoose goalsIdentify actionsAllocate responsibilityReview PerformanceMake adjustmentsUnit plans (heads of departments, teams, individualsLevels of PlanningOperating plans (heads of functions)Business-level strategic plan(heads of businesses)Shaped by input fromSets the context forCorporate-levelStrategic plan (CEO)Types of PlansStrategic plans: A plan that outlines the major goals of an organization and the organizationwide strategies of attaining those goals.Operating plans: Plans that specify goals, actions, and responsibility for individual functions.Tactical plans: The action managers adopt over the short to medium term to deal with a specific opportunity or threat that has emerged.Unit plans: Plans for departments within functions, work teams, or individuals.Types of PlansSingle-use plans: Plans that address unique events that do not reoccur.Standing plans: Plans used to handle events that reoccur frequently.Contingency plans: Plans formulated to address specific possible future events that might have a significant impact on the organization.Crisis management planning: Plan formulated specifically to deal with possible future crises.Scenario planning: Plans that are based on “what if” scenarios about the future.Scenario Planning Identify different Possible futures(scenarios)Formulate plans to deal with those futures Invest in oneplan but Hedge your betsby preparing forother scenariosand Switch strategy iftracking of signpostsshows alternativescenarios becomingmore likelyQuestionCan scenario planning apply and be useful to you as a student? Explain. Develop three scenarios for your post-graduation future and possible plans to deal with them.Scenario Planning TrapsTreating scenarios as forecastsFailing to make scenarios global enough in scopeFailing to focus scenarios in areas of potential impactTreating scenarios as informational onlyNot using an experience facilitatorSource:www.valuebasedmanagement.netThe Strategic Planning ProcessFeedbackMission, vision,values, and goalsSWOT analysisformulate strategiesDraft action plansImplementReview progressagainst planExternalanalysis(opportunities andthreats)Internalanalysis(strengths andweaknesses)Assign subgoals,roles,responsibilities,timelines,and budgetsSetting the Context: Mission, Vision, Values, and GoalsMission: The purpose of an organization.Vision: A desired future state.Values: The philosophical properties to which managers are committed.Goals: A desired future state that an organization attempts to utilize.QuestionIn describing the purpose of the organization, _____ should be _______-oriented. mission; customervision; productvalues; productgoals; customerMission ChecklistEnds, not meansEffortVerbsNouns embodying activitiesThe UnidentifiableBrevityBroad vs. narrowValue addedUniqueSource: raise-funds.comCharacteristics of GoalsThey are precise and measurable. They address important issues. They are challenging but realistic. They specify a time period in which they should be achieved.10 Ingredients for Successful GoalsSpecificSimpleSignificantStrategicRationalMeasurableTangibleWrittenSharedConsistent with your valuesSource:www.topachievement.comThe Benefits of Planning Planning gives direction and purpose to an organization; it is a mechanism for deciding the goals of the organization.Planning is the process by which management allocates scarce resources, including capital and people, to different activities.Planning drives operating budgets-strategic, operations, and unit plans determine financial budgets for the coming year.Planning assigns roles and responsibilities to individuals and units within the organization.Planning enables managers to better control the organization.Countering the Pitfalls of PlanningPitfallToo centralized;top-downFailure to questionassumptionFailure toimplementFailure toanticipaterivals’ actionsDecentralizedplanningScenario planning;devil’s advocateLink to goals;tie to budgetsRole-playingSolutionThe Rational Decision-Making ModelIdentify theproblemIdentifydecisioncriteriaWeightcriteriaGeneratealternativecourses ofactionChoose onealternativeImplementalternativeContinue with course of actionEvaluateoutcomeDoes not meetexpectationsMeetsexpectationsBounded Rationality and SatisficingBounded rationality: Limits in human ability to formulate complex problems, to gather and process the information necessary for solving those problems, and thus to solve those problems in a rational way.Satisfice: Aiming for a satisfactory level of a particular performance variable rather than its theoretical maximum.Decision-Making Heuristics and Cognitive BiasesDecision heuristics80-20 ruleCognitive biasPrior hypothesis biasFraming bias80-20 RulePerforming in your 20 percent if you’re: Engaged in activities that advance your overall purpose in lifeDoing things you have always wanted to do not what others want you to do Hiring people to do the tasks you are not good at or don't like doing. Smiling. Source: Family Practice Management, September 2000Improving Decision MakingDevil’s advocacy: The generation of both a plan and a critical analysis of the plan by a devil’s advocate.Dialectic injury: The generation of a plan (a thesis) and a counterplan (an antithesis) that reflect plausible but conflicting courses of action.Outside view: Identifying a reference class of analogies past strategic initiatives, determining whether those initiatives succeeded or failed, and evaluating a project at hand against those prior initiatives.