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MGMT 3000 Chapter 4

choosing (deciding on) a goal and developing a method, process, or strategy to achieve that goal (generically: a process applicable to all organizations at all levels of the organization) all firms do this but differently, understanding the environment the firm exists in is the foundational first step in this process
benefits of planning
includes: intensified effort, persistence, direction, and creation of task strategies, also it has been proven to work for managers and employees (larger profits and faster growth)
intensified effort
managers and employees do this when following a plan (specific plan yields harder work)
working hard for long periods of time, even without short-term success
plans encourage managers and employees to direct their persistence efforts toward activities that help accomplish their goals and away from activities that don’t
creation of task strategies
plans encourage the development of this because it forces people to think of better ways to do their jobs
pitfalls of planning
includes: impeded change/slow adaptation, a false sense of certainty, and detachment of planners
impeded change and slow adaptation
people get too focused with the plan to realize the plans aren’t working or the goals need to be changed
a false sense of certainty
planners sometimes feel that they know exactly what the future holds for their competitors, suppliers, and their own firms but plans are based on assumptions (which must hold true to keep the plan effective)
detachment of planners
strategic planners are supposed to focus on big picture and not the micro implementation of their plans so planners sometimes plan things they don’t fully understand (plans are supposed to be guidelines not theory) so planners must be familiar with the day to day
decision making
the cornerstone of planning and the catalyst that drives the planning process (goals follow decisions made by managers and managers must decide on difference goals for planning), the process of choosing between alternatives
generic planning process
a five step process that develops a plan that works: set goals, develop commitment, develop effective action plans, track progress toward goal achievement, and maintain flexibility
setting goals
the first step in the generic planning process, direct behavior and increase effort to provide a target for which to aim and a standard against which to measure to success, these must be specific and challenging, typically by using the SMART guidelines
SMART goals
goals that are specific, measurable, attainable, realistic, and timely
developing goal commitment
the second step in the generic planning process, the determination to achieve a goal, which is not automatic, managers and workers must choose to commit themselves to a goal by: either setting goals participatively (managers and employees choose goals together) to make the goals more realistic, making the goal public (more likely to follow through), or obtaining top management’s support (provision of funds, support, participation)
developing effective action plans
the third step in the generic planning process, action plans are detailed to lay out the certain steps to accomplish the goal of the plan
action plans
lists the specific steps (how), people (who), resources (what), and time period (when) for accomplishing a goal
tracking progress toward goal achievement
the fourth step in the generic planning process, there are two accepted methods of doing this: (1) either by setting proximal goals (short-term) or distal goals (long-term/primary), proximal goals motivate and reward achievement sooner than the main goal (2) and planners can gather and provide performance feedback (allows workers and mangers to track their progress toward goal achievement and make adjustments in effort, direction, and strategies)
maintaining flexibility
the fifth step in the generic planning process, due to goals being poorly conceived and not achievable planners must adopt option based planning and learning based planning
option based planning
this approach has a goal of keeping options open by making small, simultaneous investments in many alternative plans, then investing in the more attractive looking options and reducing investments in the options losing money (opposite of traditional planning) also leave commitments open by maintaining slack resources (cushion of resources -> time, people, money, production capacity) that can be used to address and adapt to unanticipated changes, problems, and opportunities (both breed flexibility->options/resources)
learned based planning
an approach to maintain flexibility (traditional plans say action plans are correct and lead to success) which assumes that action plans need to be continually tested, changed, and improved as companies learn better ways of achieving goals (encourages frequent reassessment and revision of organizational goals)
levels of organizational planning
planning works better when each organizations level has plans that push the organization in the same direction, three basic levels: top, middle, and first level managers (planners)
top managers
responsible for developing long-term strategic plans, purpose statement, and strategic goals, includes: chief officers and board of directors
purpose statement
referred to as organizational mission or vision, a statement of a company’s purpose or reason for existing (brief) that are enduring, inspirational, clear, and consistent with widely shared company purposes, premises, direction, beliefs and values (doesn’t change with geography) fits in with the company’s environment (all plans and goals flow from this->central)
strategic plans
(flow from mission) long term plans outline decisions of resource allocation, priorities, and action steps necessary to achieve strategic goals, determined from strategic goals and mission, goals that make clear how the company will serve customers and position itself against competitors in the next 2-5 years
strategic objectives/goals
(flow from mission) a specific goal that unifies company-wide efforts, stretches and challenges the organization, and possesses a finish line and time frame, grows out of company’s purpose (doesn’t change)
middle managers
responsible for developing and carrying out tactical plans and goals to accomplish the organizations strategic objectives and responsible for management by objective
tactical plans
(input is strategic plans/goals) plans that specify how a company will use resources, budgets, and people to accomplish specific tactical goals related to specific parts of the strategic objective for the next six months to two years
tactical goals
help shape tactical plans, these are set by and are for middle managers and they focus on how to operationalize actions necessary to achieve the strategic goals set by upper management
management by objectives (MBO)
a management technique often used to develop and carry out tactical plans, four step process in which managers and their employees: (1) discuss possible goals (2) collectively set goals that are challenging, attainable, and consistent with the company’s strategic goals (3) jointly develop tactical plans that lead to the accomplishment of tactical goals and (4) meet regularly to review progress toward accomplishment of tactical goals
first line managers
responsible for developing and carrying out operational plans
operational plans
day to day plans set by and for lower managers, shaped by tactical plans/goals (concern with shorter term issues associated with tactical goals) narrow focus for producing or delivering the organizations products and services, direct the behavior, efforts, and priorities of operative employees for periods ranging from one to six months, three types: single-use plans, standing plans, and budgeting
single use plans
(operational plan) with unique, one time only events (created and carried out once and never used again)
standing plans
(operational plan) save managers time because once the plans are created, they can be used repeatedly to hand frequently recurring events (three types: policies, procedures, and rules and regulations
indicate the general course of action that company managers should take in response to a particular event or situation, also specifies reason for existence and what outcome it is intended to produce
more specific than policies because they indicate the series of steps that should be taken in response to a particular event
rules and regulations
(operational plan) more specific than procedures because they specify what must happen or not happen, describe precisely how a particular action should be performed
quantitative planning because it forces managers to decide on how to allocate available money to best accomplish company goals, act as a language for communicating goals
rational decision making
a systematic process in which managers define problems, evaluate alternatives, and choose optimal solutions that provide maximum benefit to their organization
rational decision making process
to make rational decisions use this six step process: define the problem, identify decision criteria, weigh the criteria, generate alternative courses of action, evaluate each alternative, and compute the optimal decision
define the problem
step one of the rational decision making process, a problem exists when there is a gap between desired state (what is wanted) and existing state, existence of said gap is not guarantee that managers will make decisions to solve problems
criteria gap will lead to decision making process
(1) managers must be aware of gap between desired and existing state (2) managers must be motivated to reduce the gap and (3) managers must also have the knowledge, skills, abilities, and resources to fix the problem
identify the decision criteria
step two of the rational decision making process, these are the standards used to guide judgments and decisions, the more criteria a potential solution meets the better that solution will be, factors which affect the problem at hand
weigh the criteria
step three of the rational decision making process, must decide which criteria are more or less important, decision maker must initially rank each criteria, can use absolute comparisons or relative comparisons
absolute comparisons
a method of weighing the criteria in which each decision criterion is compared to a standard or ranked on its own merits (individual criterion have a range of possible rankings)
relative coparisons
a method of weighing the criteria in which each criterion is compared directly with every other criterion (criterion ranked against each other on a plot)
generate alternative courses of action
step four of the rational decision making process, identify possible courses of action that could solve the problem (generate as many alternatives as possible)
evaluate each alternative
step five of the rational decision making process, systematically evaluate each alternative against each criterion, very long and expensive step due to all the information required, different methods for gathering information that is used to determine criterion in respect to a certain alternative
compute the optimal decision
step six of the rational decision making process, must determine optimal value of each alternative (the sum of all criterion value, multiply criterion weight by determined rating from evaluation) and pick the alternative with the highest value
limits to rational decision making
because world isn’t perfect, decision will never be completely perfect, and the decision process is subject to time and monetary constraints and managers don’t always have the necessary expertise in the decision, model describes the way decisions should be made but because of real world constraints solutions usually aren’t completely optimal and benefits not completely maximized
bounded rationality
most managers use this rather than the rational decision making process to make decisions, it means that managers try to take a rational approach to decision making but are restricted by real world constraints, incomplete and imperfect information, and their own limited decision making capabilities
because of real world constraints, managers cannot maximize benefits of their decisions so they do this which is choosing a good enough alternative
using groups to improve decision making
groups have certain benefits and pitfalls to decision making, can involve themselves in defining the problem and generating alternative solutions because of their multiple perspectives, ability to find more information, can generate more alternatives, and groups increase members commitments to the solution (five main types: structured conflict, nominal group technique, delphi technique, stepladder technique, and electronic brainstorming)
negatives with groups making decisions
includes: groupthink, group decision making takes considerable time (aligning schedules, unpreparedness, confusion), sometimes one or two people dominate the discussion and limit good decision making, and sometimes group members don’t feel accountable for the decisions
occurs in highly cohesive groups, a barrier to good decision making caused by pressure within the groups for members to agree with each other, occurs when: groups are insulated from others with different perspectives, the group leader begins by expressing a strong preference for a particular decision, the group has no established procedure for systematically defining problems and exploring alternatives, and group members have similar backgrounds and experiences
structured conflict
conflict leading to good group decision making, conflict can either be C (good) or A type (bad)
C-type/cognitive conflict
conflict focusing on problem and issue related differences of opinion, in this type of conflict group members disagree because their different experiences and expertise lead them to view the problem and its potential solutions differently, characterized by willingness to examine, compare, and reconcile those differences to produce the best possible solution (two methods of introduction: devil’s advocacy and dialectical inquiry)
devils advocacy
used to create c-type conflict by assigning an individual or a subgroup to the role of critic, 5 steps: generate a potential solution, assign this to someone to criticize and question solution, present the critique of the potential solution to key decision makers, gather additional relevant information, and decide whether to use, change, or not use the originally proposed solution
dialectical inquiry
creates c-type conflict by forcing decision makers to state the assumptions of a proposed solution (thesis) and then generate a solution that is the opposite (antithesis) of the proposed solution, 5 steps: generate a potential solution, identify the assumptions underlying the potential solution, generate a conflicting counterproposal based on the opposite assumptions, have advocates of each position present their arguments and engage in a debate in front of key decision makers, and decide whether to use, change, or not use the originally proposed solution
A-type/affective conflict
refers to emotional reactions that can occur when disagreements become personal rather than professional, resulting in hostility, anger, resentment, distrust, cynicism, and apathy, undermines c-type conflict,
nominal group technique
(decreases A-type conflict but restricts c-type conflict) begin with quiet time in which group members independently write down as many problem definitions and alternative solutions as possible (group members act as individuals initially) then group leader asks each member to share one idea at a time with the group (posted for all to see) continuing until all ideas have been shared then the group discusses the advantages and disadvantages of the ideas then there’s a second quiet in which group members rank all the ideas, then idea with highest average rank is chosen
delphi technique
members of a panel of experts respond to questions and to each other until reaching agreement on an issue (members don’t have to physically convene) use open ended questionnaire, then responses are analyzed, summarized, and fed back to the group for reactions until the members reach agreement
stepladder technique
begins with discussion between two group members who share their thoughts, ideas, and recommendations before jointly making a tentative decision, then other group members are added one at a time (and they share their ideas with group) and process continues until all members have contributed (cannot be rushed and must be followed accordingly)
electronic brainstorming
group members use computers to communicate and generate alternative solutions use brainstorming (overcomes normal disadvantages) allows for anonymity, random posting, and eliminates wait time for suggestion
group members build on each others ideas, a technique for generating a large number of alternative solutions, four rules: the more ideas, the better, all ideas are acceptable no matter how wild or crazy they might seem, other group members ideas should be used to come up with even more ideas, and criticism or evaluation of ideas isn’t allowed
disadvantages to brainstorming
includes: production blocking and evaluation apprehension
production blocking
occurs when you have an idea but have to wait to share it because someone else is already presenting an idea to the group, and idea you have is forgotten during delay
evaluation apprehension
being afraid what others will think of your ideas

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