Planning and Decision May, Gurukul ca CHAPTER-4 ING PLANNING AND DECISION MAK by e A. Definition of Planning + Type of planning * On the basis of Leve} On the basis of Use On the basis Of flexibility C. Importance of Planning . Methods of Planning of Management ~ Top-down Method of Planning {Bottom-up method of planning * Participative method of Pla ning ©, Team method of planning Steps in Process of Planning Meaning of Decision Making Types of Deci ns Programmed and ‘non-programmed decisions Strategic, tactical and operational decisions Individual and group decisions Personal and organizational decisions H. Decision Making Styles I. Decision Making Environment J. Steps in Decision Making Process K. Creative methods of group decision makin; —amethoc’s of group decision making Scanned with CamScannerof Planning natives. It serves as a guide for allocati Tanning selects future courses of action from Ng resourc In 8 coordinated way. It specifies ways and means of goal of organization, Planning is a process and cyclic implementing and evaluating plan, It is never ending process and not the the existence of organization, It is not only the function of top level management barcicoe : ‘anagem organization. All the member of organizatic fa Formulating plan is not a phy i level oftmental achtviteed ‘ing and analysis which requires high | Plan is way of saving cost and ‘one ti mulate | ne time task of manager. Manager should formulate plan until | 1¢ 10 perform task. So, planning is efficiency oriented. Different external and internal environment remal have high degree of flexibility so that situations. ins changing. So, planning must be dynamic and | plan formulated can be changed according to changed | 4 Planning gives direction to the organization and deals with uncertainty. So, it must be future-oriented. | ] nning types of plans. The types of plan depends on the complexity of operation and nature of organization. of level of Management This plan is prepared by top level management by taking the long term objectives of organization and strategies to achieve the defined objective. It establishes corporate mission, goals and strategies. Mission is the basic function which provide reason for existence and organization wants to become Goals are result to be achieved Strategies are broad action plans to achieve goals. They provide future direction and scope of organization ‘The strategic orientation of corporate plan can be based on: Products offered i = Es - actical a EeeEas cpared by the middle Tevel management In simple word, tis sub-division of ‘work corporate plan to implement in practical fel. I idemfis priorities of the divisional " | activiti tasks and resources to program. : eal song a ‘weakness and they consistent with corporate plans. It is prepared for one to five years. 74 Scanned with CamScannerGurakul CA |. Operational plan/unit plan These is prepared by the lower level management. In simple aly fe ihe ston pia fay every department. It prepares schedule of each unity and implem¢ aan Practica) LIt is consistent with tactical plans it is prepared for short term, generally annual, ‘These are the plans formulated for single purpose and cannot be implemented re ee are developed to meet needs of a particular situation and they be ners activities of organization, They are used only once and ant oan Plan after of time and after achievement of goal examples, project, budget. = ‘These are the plan formulated for repetitive use. They are developed for ongoing repetive sci They can be implemented again and again. They focuses on programmed ivities And broad Suideline to achieve goal in different situations. They are used over a long period of time, Bolicies, procedures, strategies, goal, etc. Planning is important 1. Uncertainty reduction 1. Flexible ‘These are the formulated plans that can be reviewed and modified as per time and situation, plan Drovide general guideline. They have high degree of flexibility and ability to adopt dynamic They can be changed according to changes in environment. a 2. Specific If plan is formulated for specific objective and provide specific clearly defined objectives, plan luncertainty is low. Specific procedures, specific budget allocations and specific schedule, activities are specified to reach the objective. Importance of Planning ‘Organization. Important of planning can be classified by following Organization bas to work in an environment uncertain and ever-changing due to the cere and internal factors. Planning helps enterprise to reduce uncertainty by study about challenges and uncertainties which may arise in future course of actions 2. Goal Focus Planning focus the attention of the Serve as blue print of course of action and eliminates the unnecessary to priorities. So, to focus the goal planning is necessary 3. Improve efficiency Planning help for optimum utilization of resources, a avoids the concept of trial and error, and defines clear efficiency of organization, planning is iding wasteful efforts and money and of action. So, to improve overall 4. Facilitates to Planning defines the minimum standard of work to be ad hieved after evaluating the control achievement of work, manager will be able to find deviation and take necessary steps if ther deviation. So, planning is necessary to facilitate control. 5. Better Planning defines in advance, what, when and by whom the work should be done ie. clari coordination | authority and responsibility of each and every employee. This is helpful to harmonize the ae between employees and develop feeling of team spirit. So, for beter coondinaays. also planning] necessary. 6. Ensure Planning ensures commitment of manager and employees to commitment _| convert individual goals to organizational goal, by devel Sto goal of organization. It fa loping sense of team spirit and grou tates ici . ip . Envi | Contingency planning anticipates future events and develops action plans to Suit th t oe Planning encourages innovation and creativity that is essential for growth and expansion of F areas of business and also manager will be able to create st woke strategy to complete goal in ever, environment. ~~changin ‘Therefore, planning is ‘essential funetion for the successful completion of organizational performances --———— Scanned with CamScannerPlanning and Decision Making nning can be categorized into following types: ‘This method is top management driven, In this method, top managers determine goals and formulate plans. And later on th i for impl elect : ie plans are communicated to middle and lower level managers ‘This method assumes that i it planning, is general eanco® management possesses knowledge, skils and authority for Middle and lo ly used in highly centralized organization. It focuses on autocratic style. wer level managers have no rule in pl: ricts initiati i a lan formation. It restricts initiative. It is als not sensitive to local conditions. : na It is driven by middle and lower level mana; is a ager. In this method, plans are formulated in Operational and departmental level and they are forwarded to top level management, And in method, top level management provides resources information and guidelines to middle and lower level to formulate plan. Though plan are made by sub-ordinates itis reviewed, modified and certified by top level. ‘This method assumes that first line manager and departmental managers have sufficient information about real picture of resources and requirements. It is decentralized approach to | ing. This is responsible for implementation are involved in planning. It is the combination of both top down and bottom-up method i.e. top, middle and lower level | manager formulate plan by joint effort or on the basis of interaction. In this method, top level “management provides planning framework and guidelines about different specific objective and ‘are finalized on the basis of consultation and interaction. \ od focuses on effective implementation of plan This method provides flexibility in 411 level of managers are involved in planning process. 76 Scanned with CamScannerIt is known as pre-step of planning, which is < aloo hhas to analyze strengths, weakness, opP0" chreall assessment is done to find out resource availability, the main jg has to define objectives by considering conta And these objectives are broken down into different bate » ‘Objectives/goals must be SMART i.e. specific, nseasratl acceptable minor mistake in setting objectives might affect in implementation Premises are the Key assumptions about the future environment in Premises can be in terms of sales, production, revenue, cost, price, availability of resources. They may be tangible and intangible, exter after setting objective is to determine premises. Not Tangible and intangible: Tangible premises involve capital inves available, cost per unit etc. similarly, tangible premises involves motivation, etc, 2. Internal and external: Internal involve money, materials, machine: means competitor strategy, government policy, technological chan ete, 4. Determinatio Various alternatives courses of action for achievement of © of far as possible all the hidden alternatives ‘must be determine by using i alternatives _ | ot secondary sources. 5. Evaluation of | After determining all possible alternatives, they must be evaluate from alternatives | Management may use techniques of analysis from many disciplines su economics, psychology. etc. 6. Selecting a The best course of action must be selected by considering past course of future contingencies. Ths step result in final plan, 1 es are also provi a Action plans are converted into budget. aaa io et. Bud will it cst. They serve as standards for cones 7 Scanned with CamScannernd Decision Makin: Planning Decision Making jours of action Which ig con lens. ng is the act of choosing yctenee from among a set of alternatives to achieve a desired result he par of every managerial age MH=MaLVes among fom I the number one job of manne” fnvolve decision making. ‘ ichoice among alte any alternative for solving, BETS. All decisio; I decisions influence managerial Performance. All functions of 8 the organization from existing state to desired 4 set of alternatives Decision is made to Organization from initial state to ing at all levels have to rs thai levels take decisions on matters e So, decision making is all cieuinen cepa Physical task but itis mental thinking and » “SPerience and maturity on the Part of decision m during performing analysis which requires | naker. It is essentially a has freedom of choi ice is y ice. Choice is Gecision maker. So, it is process of choosing a choie, Decision making soives a problems wi ecision is taken for solving problem, weeds to) be communicated to all Communication, decision taken will "¢ among many available alternative, ithout problems, there will be no need for decisions. So, | actions without Decisions med and non- mmed decisions med _| These are the decisions made in routine, repetitive, well-anucture situation with predetermined rules. Middle and lower deals with such decision, They develop habit to handle them. These are based on habit, established policies, rules and procedhoce ont stem from prior experience or technical knowledge. In other word, programed decisions are made in response to recurring organizational Problems. They are repetitive in nature e.g. payroll procedures, processing admission | application, etc. There is great deal of certainty. They are structured. é ‘These are the decision made in custom, non-repetitive, ill-structured situations. Top level management deals with such decision with high level of managerial thinking. ‘Non-programmed decision are made in response to unique circumstances, unpredictable results and important consequences for organization. They are non-repetitive in nature ie. They are a Sie, intuition and creativity to solve problems by top management. And top-level manager are trained to handle them. tion of new building, computerization, : ion of new product, construction ot Examples are: Introduction of etc, 78 Scanned with CamScannerJ manager for long term es jeve thrust tare the decisions taken by 19 rey creates forward é a positioning of orga . a jc level manager for short term personnel. And such p desisio Es = é These are the decisions taken to meet i - decal end made on the basis of personal need desire and necessity other pei Problems. They are made on the basis of rules and official decisions. ° maker. They have ability to adapt to situations. This style is characterized by: © High tolerance for ambiguity + _ Rational way of thinking In ths style, manager work well with others. They collect views, take decision by conducting meeting and avoiding conflict, This style is characterized b; * Low tolerance for ambiguity *_Intuitive way of thinking + Conceptual | In ths style, manger develop many alternatives and analyze Style them. They focus on long run, This style is characterized by: * High tolerance for ambiguity * Intuitive way of thinking, 4. Directive style fees In this style, Manager develop few alternati ates lop native and make fast This style is characterized by: 4 ity 1+ Rational way of thinking ¢ Low tolerance of ambiguit Scanned with CamScannerPlanning and Decision Making king Environment/Conditions made eee ae yn which is defined as the collection of information, alternatives. av jecision. An ideal decision environment would include all possible are reasonably sure about what will happen, when they make a decision. Managerial control is ities. There is little ambiguity and high aware about the available factual information may exist, but it may be incomplete So, decision maker base. i is unware about the outcomes of decision. In this condition result is calculated in probability on exist in non-program decision and in case of lack of sufficient information. Managerial control is lo not know whether or not data are reliable and they er is not well informed about alternatives to solve to lack of information. Decision maker have only a meager database, they d ‘whether or not situation may change. Decision mal difficult to identify fact or specific problem. Probability cannot be calculated due possibility of making ineffective decisions high And managerial control is very low. Certainty Risk Uncertainty ty reasonably | Managers unaware about | Managers are unsure about the outcome of decision _| whether or not situation may sure what will happen change Medium Low Non-program decision _| Lack of information, data may ‘or may not be reliable, etc. High chances of ineffective decision Scanned with CamScanneredi It is the stage of diagnosing the ead Ce pre do is to state the underlying pro ‘ {identification of problem is the half solution. Note: Problem may be defined as the gap between be deviation between actual and planned performance. ——— a Its the depth study of problem and evaluation of possi a = deals with the short-term and long-term effect of problem. g much time and effort. Appropriate alternative courses of actions to solv i problem SI ‘managers should be creative and innovative to identify alternatives, ive can be: ; File search: The information contained in the problem file g Discussions with sub-ordinates, customers, etc. Opinions of experts h Management information system sear Bi. Creative methods such as brainstorming, Delphi Techniques, ~ i a [Creative methods of Group Decision making techniques are di chapter] 4, Evaluate the selected alternatives: 5. Choosing the best alternative Each selected alternatives should be evaluated in terms of decision crit are; Feasibility of the alternatives in terms of costs, time, legal constraj resources Satisfactoriness of the alternative for solving problem, Affordability of the alternatives, The evaluated alternatives are ranked according to their benefiv/cost rat This is choice phase for choosing the best alternatives, The approach can be: j & Experience: Experience is the best teacher. It can be a usefil of action, 4 b. Experimentation: Its pre-testing the alternative Research and Analysis: A model is built to stimulate the Further, it must consider willing of people. 6. Implement the selected alternative ‘This isthe next obvious step and itis the puting decision into acti i ler and command to other members 7. Evaluation and follow up This step is essential to evaluate the decision Progress is monitored and its success is eval effectiveness in solvin g th ated. Scanned with CamScannernod of group decision making Feas are generated for a specific problem throu ‘as necessary So that the group members understand i n all group members and record the ideas presented. A; oup members begin the process of evaluation and fi ng is allowed and combining and grouping of ideas is welcome. ein process, Group technique with relativ. mbers of Delphi “group” are selected, because ofthe specifi reted member are asked to provide ideas, fe process. In first stage, group members are required to compose a comprehensive list of the tives in writing privately. Once finished, each group members is asked to provide one item from list. At al exchanges are limited for clarification. No evaluation or criticism. Once, all proposal are listed publicly es in discussion of the listed alternatives which ends in some form of ranking. ely high quality. 8h group creativity. Group leader described situations in issue or problem completely. Then, group leader nd when, the ideas of all the group member have nally best decision is selected. Planning and Decision Making e ic knowledge or expertise of the problem input or alternative solution to the i i problem independently. other go member ask question and alternatives are ranked. After an indefinite number of p eventually arrives at a common decision which is regard as best course of action, h conducted on group decision making provide evidence that greater number of alternatives are Brainstorming Delphi technique Nominal Group Technique Tdeas ofall the members | Selected members having Members compose list of their are collected specific knowledge or expertise | ideas in writing. Then, some provide ideas, input or verbal exchanges are done for alternative clarification T Critical evaluation by all | After each stage, other group | No criticism or evaluation within members. member ask questions and group. Later on the alternatives alternatives are ranked. are ranked on the basis of some forms. Best decisions is selected | Common decision arrived is a} Rank | among alternatives is the best course of action decision 82 Scanned with CamScannerer Summ: B. Type of planning On the basis of level On the basis of Management of use 1. Corporate or Single use plan Strategic plan’ Standing/ 2. Tactical plan multiuse plan, 3. Operational plan ‘unit plan » Top-down Method of Planning 2. Bottom-up method ofplanning + Participative method of Planning 4. Team method of of Decisions 2. Charact, HL Deci 1. Programmed & non. cristies Programmed decisions 1. Goat-oriener ?- Strategic, tactieal ana 2. Dynamic Perational decisions 3. Continuous 3. Individual & group 4. Pervasive: decisions 5 MentaVintetlectual activity 4: Personal 6. Choice Oreanizational decisions 7. Problem solving 8. Needs effective communication 3: Steps in Decision Making Process K. Creative met - Recognize and define Problem: 2. Analyzing the problem 3. Identify alternatives: 4. Evaluate the sel 5 ‘Choosing the 6. Implement 7. Evaluation lected alternatives, best alternative the selected alternative and follow up Scanned with CamScannerPlanning and Decision Making nportance of planning, lng, Deseibe the major steps involved inthe planing process of planning. vironment of decision making? rt note on decision making process, 101 marks, June 2018} [3 Marks, December 2015} of planning [3 Marks, June 2015] ive methods of planning [3 Marks, December 2016] ‘planning [3 marks, June 2016] aking under the condition of risks [Decem! environment [3 marks, June 201.4] bout the steps of rational decision making process in brief. {5 mark, June 2016) decision [3 Marks, December2018, 3 Marks, June 2016) December 2014] 18 Process. [5 Marks, December 2013] understand by brainstorming? [3 Marks, December 2013] ber 2019, 3 marks} Scanned with CamScannerGurukul ca, MULTIPLE CHOICE QuESTIONS Planning fulfils 5 ‘Strategic gap 2) Vacances of organization None of above. 23 i ‘ 3) pnts 64 ete fing? b) Efficiency oriented 4d) Decision oriented b) staffing 4) controlling b) Environment adaptation ©) Better co-ordination ) All of above 5. iSa path selected for moving the organization from existing to a ) Planning 'b) Decision making ©) Leading 4) Controlling 6. Planning is useful for , a a) Reducing inefficiency b) Raising employee moral ©) Motivating employees 4) Better utilization of resources 7. Planning provides 2) Purpose and direction to all persons b) Predetermined goals ©) Basis for policy formulation 4) Information Ba8 ) Budgets ™Ptons of future conditions in which plan isto be implemented, a) Budgets b) Premises ©) Standards 4) All of above, 9. Which one is not process of planning? 8) Correcting actions ) Development of alternatives ©) Budgeting 4) Setting goal 10. The integrated action plans become a) Program ) Strategy ©) Policy 4) None of above, ri ~~ Serve as standard for control, a) Policy ) action ©) Budget 4) None of above 12. Team prepares ........., a) Draft plan >) Fi ©) Resource plan a 4) Unit plan Scanned with CamScannerPlanning and Decision Making b) Line 2) Adviery ments TOP 4d) Bottom up. of managers involved in planning process means . b) Bottom up method d) Team method of planning means ......... approach b) Bottom up. d) Team: ‘of increasing creativity of subordinate is the disadvantage of .. b) Bottom up method ) All method long term direction and scope to the organization. ) Operational plan 4) Individual plan on analysis of environmental opportunities and threats. b) Operational plan 4d) None of above. s priorities ofthe divisional cvs. b) Tactical 4) Individual 86 Scanned with CamScannerd) None of above i itive activities. Plan is designed for repetit by Specie d) None of above. ~*-sssone Plans have clearly defined objectives ; 4) Single use b) multi-use ©) Specific d) Flexible 29.In..., >> Plan the uncertainty is low. ) Single use b) Multi-use ©) Flexible 4) Specific 30. is also known as directional plan to provide general guideline, a) Flexible plan b) specific plan ©) Single use 31. Operational planning is undertaken at a) Top level Management ©) Lower level management 32. Decision making is ....... a) Selecting process ©) Making choice BBit ) Planning ©) Decision making 34. Decision making means .., 8) Deciding future action ¢) Taking decision about vision & mission 35. Decision making is 4) A course of action chosen from acceptable alternative ©) Managerial response to problems +-- Plan is specific in terms of result ~»- Plan is developed to meet the needs of a particular situation. tse is managerial response to problem b) Operational d) All of above 'b) Standing use 4) multi-use b) Middle level Management 4) None of the above b) Problem solving 4) All of above b) Control d) None ») Decision about Authority & 4 Solving problem by select »)A means to achieve ends d) All of above Scanned with CamScannerPlanning and Decision Making b) Problem solving d) making choice b) Selecting a course of acti 4) Implementing rules. tion about problem, alternatives and result to decision maker means 4 b) certainty : 4) None management control is medium. ») risk 4) All of above on about alternatives and result means b) risk 4) uncertainty probability is calculated to know about the result. b) Certainty 4) None of above ity cannot be calculated. b) certainty d) Analytical ) Unfavorable result d) Alll ofabove. "b) Defining problem 4d) Identifying problem ) the existence of alternatives 4d) None of above. of decision making? . c alternative 'b) Choosing best option 4d) Defining problem g & decision making? ») Defining objective & goal ) Budgeting financial Resource Scanned with CamScannerGurukul CA _ style : ' ion before taking decisions i. 48. Collecting more information ) Analytical s Directive D pebaviora i 49... ‘style focuses on long run. by Behavioral Cone Danial yd ae and — decision making means ») Bebavos : ©) Directive 4) Analytical . . style manager works well with others. b) Behavioral d) Analytical ) Conceptual ©) Directive 4) Behavioral ‘53. Solving problem with creativity means . . style. ) Conceptual b) Behavioral ©) Directive d) Anal; 54. Consulting with other members and subordinates while taking decision means .. a) Behavioral Style b) Rational Style ©) Conceptual Style 4d) Analytical Style 55. Finding creative solution of problem by focusing long run means ... ) Behavioral Style ) Conceptual Style ©) Analytical Style ¢) Directive Style 26 Jf manager isnot fully aware about the alternatives of solving problems & a) Certainty b) Risk ai ©) Unfavorable 4) Uncertainty 57. Advance information to decision maker about result & future ‘outcome | a) Certainty b) Risk ©) Favorable d) Unfavorable 58. Medium control of management over result & decision is in a) Certainty b) Risk ’ es ©) Uncertainty ) General pportunity 59. - 15 managerial response to problem 4) Planning Ke ©) decision making Nea Ly Scanned with CamScannerPlanning and Decision Making 4) Programmed «++ decision 'b) Organizational d) Personal on for dealing with complexity means +b) Non-programmed decision 4d) Group decision {te strategic decisions into departmental actions is b) Strategic decision ) Operational decision sals with repetitive & routine problems b) Tactical ¢) Individual 'b) Operational decisions <) Functional decisions Scanned with CamScannerGurukul CA eee : he oes 1 [4 | * b > 2 [> La 17; 18 mM iz 1B 4 15 16 > c ¢ a d c d £ 21 nm [3 [24 25 26 2, [2s b c a d b 8 £ ses fs f37 38 c a c d d a b b a Jaye [a [as ae if 47 48 c d a c c b 3 [2 [ss [sa [3s [5657 38 c a a b d a b 61 62 63 64 «(| 65 66 67 a c d b [c c a Scanned with CamScanner