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chapter three

The document outlines the importance of planning and decision-making in management, emphasizing their roles in achieving organizational goals. It details the planning process, types of plans, and principles of effective planning, as well as the decision-making process and environments. Key aspects include the need for coordination, flexibility, and the ability to adapt to changing circumstances.

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4 views3 pages

chapter three

The document outlines the importance of planning and decision-making in management, emphasizing their roles in achieving organizational goals. It details the planning process, types of plans, and principles of effective planning, as well as the decision-making process and environments. Key aspects include the need for coordination, flexibility, and the ability to adapt to changing circumstances.

Uploaded by

hanose
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Chapter Overview

 Planning and Decision Making: Integral functions of management, critical for


achieving organizational goals.

1. Planning Defined

 Definition: Planning involves preparing for the future by outlining activities necessary to
achieve organizational goals.
 Process: Includes determining objectives, establishing strategies, formulating programs,
and assigning responsibilities.
 Importance: Minimizes risk, enhances coordination, focuses on goals, anticipates
problems, facilitates control, promotes forward-thinking, and establishes teamwork.

Six Basic Questions Planning Answers

1. What: The goal to achieve.


2. When: Timing of actions.
3. Where: Location of implementation.
4. Who: Individuals or units responsible.
5. How: Strategy or method to achieve the goal.
6. How Much: Resources required.

Importance of Planning

 Reduces uncertainty and risk.


 Coordinates activities.
 Focuses on goals.
 Anticipates problems.
 Facilitates control.
 Promotes forward-thinking.
 Establishes teamwork.

Features of Planning

 Primary Function: Basis for other management functions.


 Goal-Oriented: Focuses on achieving goals efficiently.
 Pervasive: Required at all management levels.
 Intellectual Activity: Requires application of mind and intelligence.
 Future-Oriented: Aims at future goals.
 Integrated Approach: Links plans of different departments.
 Continuous Process: Needed as long as business activities exist.
 Decision Making: Involves choosing from alternatives.
 Antithesis of Status Quo: Dynamic and proactive.

Approaches to Planning
1. Top-Down Approach: Initiated by top management, providing direction to departments
and work groups.
2. Bottom-Up Approach: Initiated at the operational level, plans are integrated into a
cohesive master plan.

Types of Plans

 Based on Repetitiveness:
o Standing Plans: Used repeatedly, e.g., policies, procedures, rules.
o Single-Use Plans: Specific to particular situations, e.g., programs, projects,
budgets.
 Based on Time Horizon:
o Long-Range Planning: 5-10 years, future direction.
o Intermediate-Range Planning: 1-5 years.
o Short-Range Planning: Less than one year, operational plans.
 Based on Scope:
o Strategic Planning: Long-term goals, resource allocation.
o Tactical Planning: Implementing parts of strategic plans.
o Operational Planning: Short-term, specific tasks.
o Contingency Planning: Alternative actions for changing circumstances.

The Planning Process

1. Understanding the Existing Situation: Assess internal and external environments.


2. Forecasting: Predict future conditions.
3. Establishing Objectives: Set expected results.
4. Determining Alternatives: Identify different strategies.
5. Evaluating Alternatives: Weigh them against goals.
6. Selecting a Course of Action: Decide on a plan.
7. Formulating Derivative Plans: Support the main plan.
8. Numberizing Plans by Budgeting: Convert plans into budgets.
9. Implementing the Plan: Develop action plans, assign resources.
10. Controlling and Evaluating: Monitor progress, make adjustments.

Principles of Planning

 Contribution to Objectives: Plans should achieve corporate goals.


 Sound and Consistent Premises: Assumptions about the environment.
 Limiting Factors: Identify and address limiting elements.
 Commitment: Cover future periods adequately.
 Coordinate Effort: Integrate all plans.
 Timing: Arrange plans hierarchically.
 Efficiency: Minimize costs and use resources efficiently.
 Flexibility: Adapt plans to changing environments.
 Navigational Change: Periodically review plans.
 Acceptance: Ensure plans are understood and accepted by employees.
2. Decision Making

 Definition: Rational choice among alternatives; involves making judgments and


conclusions.
 Characteristics:
o Goal-oriented.
o Involves alternatives.
o Positive or negative outcomes.
o Both a science and an art.
o Situational and complex.

Types of Decisions

1. Programmed Decisions: Routine problems, handled by policies.


2. Non-Programmed Decisions: Novel, unstructured problems, require judgment and
creativity.

Decision-Making Process

1. Define the Problem.


2. Identify Limiting Factors.
3. Develop Alternatives.
4. Analyze Alternatives.
5. Select the Best Alternative.
6. Implement the Solution.
7. Establish Control and Evaluation.

Decision-Making Environments

 Certainty: Perfect knowledge of alternatives and consequences.


 Risk: Known alternatives but uncertain outcomes.
 Uncertainty: Unknown probabilities and outcomes, rely on judgment and experience.

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