MBA 501 Planning Defined

Principles of Management &

Organizational Behavior
w Defining the organization’s objectives or
[Chapter 05] goals
w Establishing an overall strategy for achieving
Hanif Mahtab those goals
email: hanif@iub.edu.bd w Developing a comprehensive hierarchy of
plans to integrate and coordinate activities

Planning is concerned with ends (what is to be

done) as well as with means (how it is to be done).

Reasons for Planning Criticisms of Formal Planning

w Planning may create rigidity.

w Plans can’t be developed for a dynamic
environment.
w Formal plans can’t replace intuition and
creativity.
w Planning focuses managers’ attention on today’s
competition, not on tomorrow’s survival.
w Formal planning reinforces success, which may
lead to failure.

Planning and Performance Types of Plans

w Formal planning generally means higher profits,

higher return on assets, and other positive
financial results.
w Planning process quality and implementation
probably contribute more to high performance than
does the extent of planning.
w When external environment restrictions allowed
managers few viable alternatives, planning did not
lead to higher performance.

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 Planning: Focus and Time Specific and Directional Plans

w Strategic plans w Specific plans

n Plans that are organization-wide, establish overall
objectives, and position an organization in terms of its n Plans that have clearly defined objectives and
environment leave no room for misinterpretation
w Tactical plans l “What, when, where, how much, and by whom”
n Plans that specify the details of how an organization’s (process-focus)
overall objectives are to be achieved
w Directional plans
w Short-term plans n Flexible plans that set out general guidelines
n Plans that cover less than one year
l “Go from here to there” (outcome-focus)
w Long-term plans
n Plans that extend beyond five years

Directional versus Specific Plans Single-Use and Standing Plans

w Single-use plans
n A plan that is used to meet the needs of a
particular or unique situation
l Single-day sales advertisement

w Standing plan
n A plan that is ongoing and provides guidance for
repeatedly performed actions in an organization
l Customer satisfaction policy

Setting Goals Management by Objectives

w A system in which specific performance objectives

are jointly determined by subordinates and their
supervisors, progress toward objectives is
periodically reviewed, and rewards are allocated on
the basis of that progress.
w Links individual and unit performance
objectives at all levels with overall organizational
objectives
w Focuses operational efforts on organizationally
important results.
w Motivates rather than controls

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 Cascading of Objectives Setting Employee Objectives

w Identify an employee’s key job tasks.

w Establish specific and challenging (stretch)
goals for each key task.
w Allow the employee to actively participate.
w Prioritize goals.
w Build in feedback mechanisms to assess goal
progress.
w Link rewards to goal attainment.

Characteristics of Well-Written
Goals Strategic Management

w At a glance:

The Organization’s Current

Identity Analyze the Environment

w Mission statement w Environmental scanning

n Defines the purpose of the organization n Screening large amounts of information to detect
w Objectives emerging trends and create a set of scenarios

w Strategic plan w Competitive intelligence

n A document that explains the business founders n Accurate information about competitors that
vision and describes the strategy and operations allows managers to anticipate competitors’
of that business. actions rather than merely react to them

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 SWOT: Identifying Organizational
Opportunities SWOT Analysis
wStrengths (strategic)
w SWOT analysis
n Internal resources that are available or things that an
n Analysis of an organization does well
organization’s l Core competency: a unique skill or resource that represents a
strengths, weaknesses, competitive edge
opportunities, and wWeaknesses
threats in order to
n Resources that an organization lacks or activities that it
identify a strategic does not do well
niche that the
wOpportunities (strategic)
organization can
exploit n Positive external environmental factors
wThreats
n Negative external environmental factors

Formulating, Implementing,
and Evaluating Results Grand Strategies
wGrowth strategy
Formulating Strategies
n A strategy in which an organization attempts to increase
the level of its operations;
wRetrenchment strategy
n A strategy characteristic of a company that is reducing its
size, usually in an environment of decline
wCombination strategy
n The simultaneous pursuit by an organization of two or
more of growth, stability, and retrenchment strategies
wStability strategy
n A strategy that is characterized by an absence of
significant change

Competitive Strategies Evaluating Strategy

w Strategies that position an organization in such a

way that it will have a distinct advantage over its
Strategy Implementation
competition
Formulation and Execution
n Cost-leadership strategy
l Becoming the lowest-cost producer in an industry
n Differentiation strategy
l Attempting to be unique in an industry within a broad market
n Focus strategy Evaluation
l Attempting to establish an advantage (cost/differentiation) in a
narrow market segment

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 MBA 501 Decision-Making
Principles of Management &
Organizational Behavior
w Decision-making process
[Chapter 04] n A set of eight steps that includes identifying a
problem, selecting a solution, and evaluating the
Hanif Mahtab effectiveness of the solution
email: hanif@iub.edu.bd w Problem
n A discrepancy between an existing and a desired
state of affairs
w Decision criteria
n Factors that are relevant in a decision

Using the Decision-Making

The Decision-Making Process
Process

Steps 2 & 3

Determining the Best Choice:

Assessment of Car Alternatives Weighting of Vehicles (Assessment Criteria
X Criteria Weight)
Steps 4 & 5

Steps 5 & 6

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 Making Decisions:
Decision-making (cont’d) Circumstances
w Decision implementation w Certainty

Step 7
n Putting a decision into action; includes
conveying the decision to the persons who
will be affected by it and getting their
commitment to it
n The implication that the outcome of every possible
alternative is known
w Uncertainty
n A condition under which there is not full knowledge of
the problem and reasonable probabilities for alternative
outcomes cannot be determined.
w Risk
n The probability that a particular outcome will result from
a given decision

Assumptions of Rationality
Making Decisions: The
Rational Model
w Rational
n Describes choices that are consistent and value-
maximizing within specified constraints
w Bounded rationality
n Behavior that is rational within the parameters of
a simplified model that captures the essential
features of a problem
w Satisfice
n Making a “good enough” decision

Intuition in Decision Making

Common Decision-making
Errors
w Heuristics: Using judgmental shortcuts
n Availability heuristic
l thetendency for people to base their judgments on
information that is readily available to them
n Representative heuristic
l Thetendency for people to base judgments of
probability on things with which they are familiar
n Escalation of commitment
l Anincreased commitment to a previous decision
despite negative information

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 Programmed Decision-Making
How Do Problems Differ? Aids
w Well-structured problems w Policy
Straightforward, familiar, easily defined problems
n
n A general guide that establishes parameters for making
w Ill-structured problems decisions about recurring problems
New problems in which information is ambiguous or incomplete
w Procedure
n

w Programmed decision
n A series of interrelated sequential steps that can be used
n A repetitive decision that can be handled by a routine approach
to respond to a well-structured problem (policy
w Nonprogrammed decisions
implementation)
n Decisions that must be custom-made to solve unique and
nonrecurring problems w Rule
n An explicit statement that tells managers what they ought
or ought not to do (limits on procedural actions)

Types of Problems & Decisions, Technology And Decision

and Level in the Organization Making
w Expert systems
n Software that acts like an expert in analyzing and solving
ill-structured problems
l Use specialized knowledge about a particular problem area
rather than general knowledge
l Use qualitative reasoning rather than numerical
calculations
l Perform at a level of competence higher than that of
nonexpert humans.
w Neural networks
n Software that is designed to imitate the structure of brain
cells and connections among them

Decision-Making Styles
How Do Groups Make
Decisions?
w Important decisions are often made by
groups who will be most affected by those
decisions:
n Committees
n Task forces
n Review panels
n Work teams

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 Group Decision Making Group Decision Making

w Advantages w Disadvantages
n Make more accurate decisions
n Provides more complete information
n Offers a greater diversity of experiences and
perspectives
n Generates more alternatives
n Increases acceptance of a solution
n Increases legitimacy of a decision.
n Is more time-consuming, infrequent and less
efficient
n Minority domination can influence decision
process
n Increased pressures to conform to the group’s
mindset (groupthink)
n Ambiguous responsibility for the outcomes of
decisions

Improving Group Decision

Making
w Brainstorming
n An idea-generating process that encourages
alternatives while withholding criticism
w Nominal group technique
n A decision-making technique in which group
members are physically present but operate
independently
w Electronic meeting
n A type of nominal group technique in which
participants are linked by computer