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Chapter 5 Planning and Decision Making MGMT6 © 2014 Cengage Learning.

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Presentation on theme: "Chapter 5 Planning and Decision Making MGMT6 © 2014 Cengage Learning."— Presentation transcript:

1 Chapter 5 Planning and Decision Making MGMT6 © 2014 Cengage Learning

2 5-1 discuss the benefits and pitfalls of planning 5-2 describe how to make a plan that works 5-3 discuss how companies can use plans at all management levels, from top to bottom 5-4 explain the steps and limits to rational decision making 5-5explain how group decisions and group decision-making techniques can improve decision making

3 Benefits of Planning Intensified effort Persistence Direction Creation of task strategies © 2014 Cengage Learning 5-1

4 Pitfalls of Planning Impedes change and prevents or slows adaptation Creates a false sense of certainty Detachment of planners © 2014 Cengage Learning 5-1

5 © 2014 Cengage Learning 5-2

6 Setting Goals S.M.A.R.T. Goals Specific Measurable Attainable Realistic Timely © 2014 Cengage Learning 5-2

7 Developing Commitment to Goals Goal commitment – the determination to achieve a goal Set goals collectively Make the goal public Obtain top management’s support © 2014 Cengage Learning 5-2

8 Developing Effective Action Plans An action plan lists… Specific steps (how) People (who) Resources (what) Time period (when) …for accomplishing a goal © 2014 Cengage Learning 5-2

9 Tracking Progress Proximal goals and distal goals Performance feedback © 2014 Cengage Learning 5-2

10 © 2014 Cengage Learning 5-2

11 Maintaining Flexibility Options-based planning – keep options open by making, small simultaneous investments in many alternative plans. Slack resources – a cushion of resources, like extra time or money, that can be used to address and adapt to unanticipated changes. © 2014 Cengage Learning 5-2

12 © 2014 Cengage Learning 5-3

13 Starting at the Top Strategic plans – make clear how the company will serve customers and position itself against competitors in the next 2 to 5 years Purpose statement – a statement of a company’s purpose or reason for existing Strategic objective – a more specific goal that unifies company-wide efforts, stretches and challenges the organization, and possess a finish line and a time frame. © 2014 Cengage Learning 5-3

14 Bending in the Middle Tactical plans – specify how a company will use resources, budgets, and people to accomplish specific goals related to its strategic objective – time frame: 6 months to 2 years Management by Objectives (MBO) – discuss possible goals – collectively set goals – jointly develop tactical plans – meet regularly to review progress © 2014 Cengage Learning 5-3

15 Finishing at the Bottom Operational plans Single-use plans Standing plans – policies – procedures – rules and regulations Budgets © 2014 Cengage Learning 5-3

16 Steps to Rational Decision Making © 2014 Cengage Learning 1.Define the problem 2.Identify decision criteria 3.Weight the criteria 4.Generate alternative courses of action 5.Evaluate each alternative 6.Compute the optimal decision 5-4

17 Define the Problem © 2014 Cengage Learning Existing state Desired state 5-4

18 Identify Decision Criteria The standards used to guide judgments and decisions. © 2014 Cengage Learning 5-4

19 Weight the Criteria Absolute comparisons Relative comparisons © 2014 Cengage Learning 5-4

20 © 2014 Cengage Learning 5-4

21 © 2014 Cengage Learning 5-4

22 Generate Alternative Courses of Action After identifying and weighting the criteria that will guide the decision- making process, the next step is to identify possible courses of action that could solve the problem. © 2014 Cengage Learning 5-4

23 Evaluate Each Alternative The next step is to systematically evaluate each alternative against each criterion. The key is to use information to systematically evaluate each alternative against each criterion. © 2014 Cengage Learning 5-4

24 Criteria Ratings Used to Determine the Best Location for a New Office © 2014 Cengage Learning 5-4

25 Compute the Optimal Decision © 2014 Cengage Learning (rating for criterion A) x (weight for criterion A) + (rating for criterion B) x (weight for criterion B) + (rating for criterion C) x (weight for criterion C) etc. 5-4

26 Limits to Rational Decision Making In theory, fully rational decision makers maximize decision by choosing the optimal solution. In practice, limited resources make it nearly impossible to maximize decisions. © 2014 Cengage Learning 5-4

27 Advantages of Group Decision Making Groups do a better job than individuals at Defining the problem Generating alternative solutions © 2014 Cengage Learning 5-5

28 Pitfalls of Group Decision Making Groupthink Takes considerable time Strong willed members © 2014 Cengage Learning 5-5

29 Structured Conflict C-type (cognitive) conflict – focuses on problem- and issue-related differences of opinion – willingness to examine, compare, reconcile differences to produce the best possible solution A-type (affective) conflict – emotional reaction that can occur when disagreements become personal – hostility, anger, resentment, distrust, cynicism, apathy © 2014 Cengage Learning 5-5

30 Creating C-Type Conflict Devil’s advocacy Nominal Group Technique Delphi Technique Brainstorming/Electronic brainstorming © 2014 Cengage Learning 5-5

31 Plant Fantasies 1.Did Plant Fantasies owner Teresa Carleo follow the rational decision-making process to launch Plant Fantasies? Explain. 2.List an example of a programmed decision at Plant Fantasies. Identify a nonprogrammed decision at Plant Fantasies. © 2014 Cengage Learning

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