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Essentials of Management

Session 2
Planning , Decision Making and strategy

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Planning and Decision making


Planning is Setting organisational goals and
deciding how best to achieve them.
Decision making is part of the planning
process that involves selecting a course of
action from a set of alternatives.

(Griffin, 2005, p10)

Procter and Gamble (P&G) case


Identify plans and DM activity.
Double the revenue in 10 years
Increase revenues by 25 percent or increase
revenues by 3 times
Diversification into new markets, cost cutting
or buying competing businesses.

Organisational goals
Mission statement
Strategic goals Goals set by and for the top
management of the organisation.
Tactical goals Operationalize actions?
Operational goals Optimize operations.

Organisational plans - Nature


Strategic plans general plan outlining decisions
on resource allocation, priorities and action steps
necessary to facilitate long term strategic goals.
Tactical plans implementing specific parts of
strategic plans with specific focus. Effective
tactical plan involves both development and
execution
Operational plans aims at achieving operational
goals. Focussed on functional effeciency.

Organisational plans - Timeframe

Long range plans


Intermediate plans
Short range plans
Contingency plans

Operational plans
Single use plans
1. Program large set of activities. Complex steps
2. Project less scope and more focus
Standing plans
1. Policies Framework or a guide for action
2. Standard operating procedure (SOP) Steps to
be followed
3. Rules and regulations specific on how to carry
out a particular activity

Management by objectives (MBO)


A formal goal-setting process involving
collaboration between managers and
subordinates; the extent to which goals are
accomplished is a major factor in evaluating
and rewarding subordinates performance

MBO Process

Starting formal goal


setting program

Establishment of
organisational goals
and plans

Collaborating goal
setting and planning

Communicating
organisational goals
and plans, meeting,
verifying goals,
counselling, resources

Periodic review

evaluation

Decision making
Act of choosing one alternative from among a
set of alternatives (Griffin, 2005, p276)
Types of decisions in organisations
1. Programmed decisions structured and
recurs with some frequency
2. Non-programmed decisions unstructured
and ocurs less often

Rational decision making process


Recognising and
defining decision
situation

Identifying
alternatives

Evaluating
alternatives

Selecting the best


alternative

Implementing

Follow up and
evaluation

Stimulus positive or negative


Ex employee turnover has increased by 5%

Generating obvious and creative alternatives


Ex Increase wages, benefits, change hiring standards

Feasibility, satisfaction, consequences


Increased benefits may not be feasible. Increasing wages or Changing hiring standards may benefit the organisation

Choose the alternative that best fits the situation


Changing hiring standards is time consuming so increase wages

Implemented into the organisational system


Approval from top mgmt. establishing new wage system by HR

Periodically Ascertain the alternative chosen and implemented against results


Six months later, drop in the turnover

Strategy
Strategy is the direction and scope of an organisation
over the long term, which achieves advantage in a
changing environment through its configuration of
resources and competences with the aim of fulfilling
stakeholder expectations Johnson et al (2005)
Exploring Corporate Strategy p.9
Strategic management is a comprehensive and
ongoing management process aimed and formulating
and implementing effective strategies.

Strategic management
Types of strategies
1. Corporate level strategies
2. Business level strategies

1.
2.
3.

Steps in strategic management


Strategy formulation
Strategy implementation
Strategy evaluation

Swot analysis for strategy formulation


Strengths

weaknesses

Opportunities

Threats

Corporate level strategies


1. Single product strategy
2. Related diversification
3. Unrelated diversification

Business level strategies Porters


generic strategies
1. Differentiation strategy organisation seeks
to differentiate itself from competitors
through quality of its products and services
2. Cost-leadership strategy organisation aims
to gain competitive advantage by reducing
its cost below cost of competitors
3. Focus strategy organisation concentrates
on specific regional market or product line

Summary

Thank you..