CHAPTER 4 (Decision – Making)

Decision-making as Management Responsibility

- Decisions must be made at various level in the work place and made at the various stages
in the management process.
- Is a responsibility of the manager and understandable for managers to make wrong
decisions at times but the wise manager will correct them as soon as they are identified

Decision Making – may be defined as the process of defining the problem and identifying the
problem and identifying and choosing alternative courses of action in a manner appropriate to the
demands of the situation.

- Is regarded as “the heart” of all the management functions.

The Decision – Making Process

Rational decision – making is a process involving the following steps:

1. Diagnosing the problem;

2. Analyzing the environment;
2 Components of the Environment
 Internal environment
-consists of organizational activities within a firm that surrounds decision – making.
-Like: organizational aspects, marketing aspects, personal aspects, production aspects and
financial aspects
 External environment
-refers to the variables that are outside the organization and not typically within the short –
run control of top management.
-Like government, labor unions, public, climate, competitors, banks, suppliers and
professional managers
3. Articulating the problem or opportunity;
4. Developing viable alternatives;
- In solving the problem, however, the best among alternative solutions must be considered
by management.
- This is made possible by using a procedure with the following steps:
a. Prepare a list of alternative solutions;
b. Determine the viability of each solution; and
c. Revise the list by striking out those which are not viable.
5. Evaluating the alternatives
6. Making a choice
7. Implementing the decision; and
8. Evaluating and adapting the decision results.

2 Approaches in SolvingProblems

 Qualitative evaluation – refers to evaluation of alternatives using intuition and subjective

judgement.
 Managers tend to use the qualitative approach when:
1. The problem is fairly simple.
 2. The problem is familiar.
3. The costs involved are not great
4. Immediate decisions are needed.
 Quantitative Evaluation – refers to the evaluation of alternatives using technique in a group
classified as rational & analytic.

QUANTITATIVE MODELS FOR DECISIONS – MAKING

1. Inventory models – consists of several types and are all designed to help the manager
make decisions regarding inventory.
2. Queuing Theory –is one that describes how to determine the no. of services units that will
minimize both costumer waiting time and cost of service.
3. Network Models – are models where large complex tasks are broken into smaller segments
that can be managed independently.
4. Forecasting – actually collecting past and current information to make predictions about the
future.
5. Simulation – a model constructed to represent reality, on w/c conclusions about real-life
problems can be based.
6. Sampling Theory – a quantitative technique where sample of populations are statistically
determined to be used for a number of process, such as quality control and marketing
research.

CHAPTER 5 (PLANNING)

Planning – may be defined as selecting the best course of action in anticipation of future trends so
that the desired result may be achieved.

Planning Activities Undertaken at Various levels

1. Top management level – strategic planning

2. Middle management level – intermediate planning
3. Lower management level – operational planning

Strategic Planning – refers to the process of determining the major goals of the organization and
the policies and strategies for obtaining and using resources to achieve those goals; the concern
of the top management.

Intermediate Planning – refers to the process of determining the contributions that subunits can
make with allocated resources; is designed to support the strategic plan.

- The concern of middle management

Operational Planning – the process of determining how specific tasks can be accomplished on
time with the available resources; the responsibility of lower management.

MANAGEMENT LEVEL PLANNING HORIZON

Chief Executive Officer,

President, Strategic Planning
TOP MANAGEMENT Vice President, (one to ten years)
General Manager,
 Division Heads
Functional Managers,
MIDDLE MANAGEMENT Product Line Managers, Intermediate Planning
Department Heads (6 months to 2 years)

LOWER MANAGEMENT Unit Managers, Operational Planning

First Line Supervisors (one week to one year)

THE PLANNING PROCESS

The process of planning consists of various steps depending on the management level that
performs the planning tasks. Generally, however, planning involves the following:

1. Setting organizational, divisional or unit goals

- The first tasks of the manager is to provide a sense of direction to his firm (if he is the chief
executive), to his division (if he heads a division), or to his unit (if he is a supervisor).
2. Developing strategies or tactics to reach those goals;
- After determining the goals, the next task is to devise some means to realize them.
- The ways chosen to realize the goals are called strategies.
- Strategy may be defined as a course of action aimed at ensuring that the organization will
achieve its objectives. An example of strategy is as follows:

ORGANIZATIONAL LEVEL EXAMPLE OF GOAL

COMPANY
ARGEEJAY To expand market share by 20%.
Manufacturing Company

DIVISION

Cosmetics to increase the no. of products manufactured and

sold by the company
Division
UNIT
To increase the number of product managers.
Personnel
Services

3. Determining resources needed;

4. Setting standards
- Standard may be defined as quantitative or qualitative measuring device designed to help
monitor the performance of people, capital goods, or processes.
TYPES OF PLAN

 FUNCTIONAL AREA PLANS

1. Marketing Plan – is the written document or blueprint for implementing and controlling
an organization’s marketing activities related to a particular marketing strategy.
2. Production Plan – a written document that states the quantity of output a company must
produce in broad terms and by product family.
3. Financial Plan – a document that summarizes the current financial needs, and
recommends a direction for financial activities.
4. Human Resource Management Plan – a document that indicates the human resource
needs of a company detailed in terms of quantity and quality.

Plans with Time Horizons

1. Short – range plans – are plans intended to cover a period of less than one year and first
line supervisors are mostly cornered with these plans.
2. Long – range plans – are plans covering a time span of more than one year and mostly
undertaken by middle and top management.

PLANS ACCORDING TO FREQUENCY OF USE

1. STANDING PLANS – are plans that are used again and again, and they focus on
managerial situations that recur repeatedly.
 Standing plans may be further classified as follows:
a. Policies – are broad guidelines to aid managers at every level in making
decisions about recurring situations or functions.
b. Procedures – are plans that describe the exact series of actions to be taken in a
given situation.
c. Rules – are statements that either require or forbid a certain action.

2. SINGLE USE PLANS - are plans specifically developed to implement courses of action that
are relatively unique and are unlikely to be repeated.

Types of Single- Use Plans

1. Budget – a plan which sets forth the projected expenditures for a certain activity and
explains where the required funds will come from.
2. Programs – a single-use plan designed to coordinate a large set of activities.
3. Projects – a single-use plan that is usually more limited in scope than a program and is
sometimes prepared to support a program.
 TYPES OF PLANS

FUNCTIONAL PLANS WITH VARIED PLANS WITH TIME

AREA PLANS FREQUENCY OF USE HORIZON

MARKETING STANDING SINGLE-USE SHORT- LONG-RANGE

PLAN PLAN PLANS RANGE PLAN PLAN

PRODUCTION
POLICIES PROCEDURES RULES BUDGET PROGRAM PROJECT
PLAN

FINANCIAL
PLAN

HUMAN
RESOURCE
PARTS
PLAN OF THE STRATEGIC PLAN

The strategic plan must contain the following:

1. Company or corporate mission – refers to the strategic statements that identify why an
organization exists, its philosophy of management and its purpose as distinguished from
other similar organizations in terms of products, services, and markets.
2. Objectives or goal
3. Strategies

MAKING PLANNING EFFECTIVE

Planning may be made successful if the following are observed:

1. Recognizing the planning barriers

The planning barriers consist of the following:

 The manager’s inability to plan

 Improper planning process
 Lack of commitment to the planning process
 Improper information
 Focusing on the present at the expense of the future
 Too much reliance on the planning department
 Concentrating on only the controllable variables
2. Using the aids to planning

Among the aids to planning that may be used are:

 Gathering as much information as possible

 Developing multiple resources of information
 Involving others in the planning process
CHAPTER 6 (ORGANIZING BUSUNESS ACTIVITIES)

ORGANIZING

- is that management function which relates to the structuring of resources of activities to

accomplish objectives in an efficient and effective manner.
- Undertaken to facilitate the implementation of plans.
- In effective organizing, steps are undertaken to break up the total job into more
manageable man-size jobs.

THE ORGANIZATIONAL STRUCTURE AND ITS DETERMINANTS

STRUCTURE – the means by which the organization will attain its objectives and goals; it must be
the one that considers, apart from the organization’s goals and objectives, its resources and its
environment, both internal and external.

The determinants of organization structure are:

1. Strategy, or plans for achieving the company’s objectives;

2. The technology that will be used in carrying out the strategy;
3. The people employed at all levels and their functions; and
4. The size of the organization.

Formal Organization – the structure that details lines of responsibility, authority and position.

The Formal Structure is described by management through:

1. Organizational Chart – a diagram of the organization’s official’s positions and formal lines of
authority.
2. Organizational manual – provides written descriptions, details the functions of major
organizational units, and describes job procedures.
3. Policy – describes personnel activities and company policies.

Informal Groups – when members of an organization spontaneously form a group with something
as a principal reason for belonging.

LEVELS OF MANAGEMENT AND SUPERVISION

The management and supervision of an organization may be done through levels of hierarchy
which may be flat or tall.

 FLAT STRUCTURE – has few levels of management. This characteristic provides it with
the following advantages:
1. Communication is generally faster and less distorted.
2. Decisions can be more quickly.
3. Supervisor’s salaries are eliminated.
 MANAGER
MANAGER

DOCUMENTS COLLECTOR/
COLLECTOR/
UTILITY
UTILITY DRIVER
DRIVER SALES CLERK
SALES CLERK DOCUMENTS CLERK
CLERK MECHANIC
MECHANIC PARTS CLERK
PARTS CLERK CASHIER
CASHIER CI
CI
 TALL STRUCTURE– has many levels of management. It has the following advantages:
1. Since the average span of control is narrower, the supervisory load is less for each
manager.
2. There are more opportunities for promotion because there are more levels of positions.
3. Managers are provided with opportunities to specialize.
4. There is less demand for managers with multiple skills.
5. Managers are afforded with more time to attend to other important problems.

GENERAL
GENERAL MANAGER
MANAGER

AREA MANAGER AREA MANAGER

BRANCH
BRANCH MANAGER
MANAGER BRANCH
BRANCH MANAGER
MANAGER

CREDIT
CREDIT AND
AND COLLECTION
COLLECTION SALES
SALES SUPERVISOR
SUPERVISOR
SUPERVISOR
SUPERVISOR

SALES
SALES CLERK
CLERK DOCUMENTS
DOCUMENTS CLERK
CLERK

BASIC ELEMENTS OF ORGANIZATIONAL STRUCTURE

In designing the organizational structure, certain basic elements are considered as follows:

1. Work specialization – the degree to which tasks are divided in the organization.
2. Departmentation – refers to the grouping of jobs based on criteria that managers believe
help in the coordination and control of activities.
Criteria for Grouping of Jobs. If departmentation is the choice, there are certain criteria
used in the grouping of jobs. These are as follows:
a. Knowledge and skills
b. Work process and function
c. Time
d. Product
e. Customers
f. Location
 3. Pattern of Authority – an element in designing organizational structure refers to the extent
by which organization members are allowed to make decisions w/out getting the approval of
another member.

Either

 CENTRALIZED – when decision-making is concentrated in the hands of higher – level

managers.
 DECENTRLIZED – when decision-making authority is granted to middle and lower
management positions.

Advantages of Decentralized Authority

1. Efficiency
2. Flexibility
3. Initiative
4. Motivation
5. Development

Disadvantages of Decentralized Authority

1. Control
2. Duplication
3. Centralized expertise
4. Competency

Span of Control – refers to the number of subordinates reporting to a single supervisor.

Coordination – refers to the linking of activities in the organization that serve to achieve a common
goal or objective.

BASIC ORGANIZATIONAL DESIGN

1. Functional Design – an organizational design basically according to function where

employees grouped together in separate departments on the basic of common tasks, skills,
or activities.
2. Divisional Design – is that type where all activities needed to produce a good or service are
grouped together into an independent unit.
3. Hybrid Design – a combination of divisional units and functional departments located at
corporate headquarters.
4. Matrix Design – one that implements functional and divisional structures simultaneously in
each department.

CHAPTER 7 (STAFFING THE ORGANIZATION)

Staffing – may be defined as the management function that determines human resources, needs,
recruits, selects, trains, and develop human resource for jobs created by an organization.

THE STAFFING PROCEDURE

1. Human resource planning

Human resource planning activities
  Forecasting – this an assessment of future human resource needs of the
organization in relation to its current capabilities.
 Programming – this means transplanting the forecasted human resource needs to
personnel objectives and goals.
 Evaluation and Control – this refers to monitoring human resource action plans and
evaluating their success,
 Monitoring methods – are those that provide early warning signals in significant
changes in established patterns and relationships so that the manager can assess
the likely impact and plan responses if required.
2. Recruitment – refers to attracting qualified persons to apply for vacant positions in the
company.

SOURCE OF APPLICANTS

 The organizations current employees – some organizations current employees may

be qualified to occupy positions higher than the one they are occupying.
 Newspaper advertising – newspaper are good sources of applicants.
 Schools – these are places where potential employees may be asking to apply.
Representatives of companies may interview applicants inside campuses.
 Referral form employees – current employees sometimes recommended relatives
and friends who may be qualified.
 Recruitment firms – are companies organized specifically to assist client’s firms in
recruiting qualified persons.
 Competitors – the recruiting firm have the advantage of hiring personnel who may
have been previously trained by the competitor.
3. Selection – refers to the act of choosing from those that are available the individuals most
likely to succeed on the job.

Ways of Determining the Qualifications of a Job Candidate

 Application blanks – provides information about a person’s characteristics such as

age, marital status, address and other personal information.
 References – those written by previous employees, co-worker, teachers and club
officers.
 Interviews – information may be gathered in an interview by asking a series of
relevant questions to the job.
 Testing – this involves an evaluation of the future behavior or performance of an
individual.

TYPES OF TESTS

a. Psychological test – an objective, standard measure of sample behavior

individual.
 Aptitude test – used to measure a person’s capacity or potential ability to
learn.
 Performance test – this test is used to measure a person’s current
knowledge of a subject.
  Personality test – used to measure personality traits as dominance,
sociability & conformity.
 Interest test – a test used to measure a person’s interest in various fields
of work.
b. Physical Examination – a type of test given to assess the physical health of an
applicant. It is administered to assure that the health of the applicant is adequate
to meet the job requirements.
4. Induction and orientation–this is the next step undertaken after an applicant is finally
selected from among the various ones and is then subsequently hired.
Induction
– the new employee is provided with the necessary information about the company. His
duties, responsibilities and benefits relayed to him.
-Company history, its products and services and the organization structure are explained to
the new employee.
Orientation –the new employee is introduced to the immediate working environment and
co-workers. The following are discussed:
 Location
 Rules
 Equipment
 Procedures
 Training plans
5. Training and Development – if the newly- hired (newly-promoted employee) employee is
assessed to be lacking the necessary skills required by the job, training becomes a
necessity.
Training – refers to the learning that is provided in order to improve performance on the
present job. Training programs be classified into the following:
 Training programs for non-managers – type of training is directed to non-
managers for specific increases in skill and knowledge to perform a particular job.
METHODS:
a. On-the-job training – where the trainee is placed in an actual work situation under
the direction of his immediate supervisor, who acts as trainer.
b. Vestibule school – where trainee is placed in a situation almost exactly the same
as the workplace where machines, materials and time constraints are present.
c. Apprenticeship program – where a combination of on-the-job training and
experiences with classroom instruction in particular subjects are provided to
trainees.
d. Special courses – are those which provide more emphasis on education rather
than training.
 Training Programs for Managers
Has classified into four areas:
a. Decision-making skills
In-basket –where the trainee is provided with a set of notes, messages,
telephone calls, letters and reports, all pertaining to a given company
situation.
 Management games – a training method where trainees are placed in a
stimulated situation and are required to make an on-going series of
decisions about the situation.
Case studies –method that presents actual situations in organizations and
enables one to examine successful and unsuccessful operations.
b. Interpersonal skills
Role Playing – a method by which the trainees are assigned roles to play
in a given case incident and its purpose is to improve the skill of the
trainees in human relations, supervision and leadership.
Behavior modeling – this method attempts to influence the trainee by
showing model persons behaving effectively in a problem situation and the
trainee is expected to adapt the behavior of the model
Sensitivity Training – awareness and sensitivity to behavioral patterns of
oneself and others are developed.
Transactional Analysis – a training method intended to help individuals not
only understand themselves and others but also to improve their
interpersonal communication skills.
c. Job Knowledge
On-the-job experience – provides valuable opportunities for the trainee to
learn various skills while actually engaged in the performance of a job.
Coaching – requires a senior manager to assist a lower-level manager by
teaching him the needed skills and generally providing direction, advice,
and helpful criticism.
Understudy – a manager works as assistant to a higher-level manager and
participates in planning and other managerial functions until he is ready to
assume such position himself.
d. Organizational Knowledge
Position Rotation – the manager is given assignments in a variety of
departments; its purpose is to expose him to different functions of the
organizations
Multiple management – premised on the idea that junior executives must
be provided with the means to prepare them for higher management
positions.
6. Performance Appraisal -