PowerPoint Presentation by Charlie Cook The University of West Alabama Student Version © 2010 South-Western, Cengage Learning, Inc. All rights reserved.

7–2 Decision Making and Planning Decision MakingDecision Making  Is the cornerstone of planning.  Is the catalyst that drives the planning process.  Underlies every aspect of setting goals and formulating plans. PlanningPlanning  All organizations plan, but not in the same fashion.  All planning occurs within an environmental context.  All goals require plans to guide in their achievement.  All goals are tied higher goals and plans.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.7–3 Organizational Goals Guidance and unified direction Promotion of good planning Source of motivation Evaluation and control Purposes of Goals

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.7–4 Kinds of Goals By Level Mission statement Strategic goals Tactical goals Operational goals By Area Operations Marketing Finance Production Time Frame Long-term goals Intermediate goals Short-term goals Explicit goals Open-ended goals Setting Organizational Goals

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.7–5 Responsibilities of Setting Goals Who Sets Goals?Who Sets Goals?  All managers  Managerial responsibility for goal setting should correspond to the manager’s level in the organization. Managing Multiple GoalsManaging Multiple Goals  Optimizing allows managers to balance and reconcile inconsistent or conflicting goals.  Managers can pursue one goal and exclude all others or to seek a mid-range goal.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.7–6 Kinds of Organizational Plans Strategic Plans (upper management) Tactical Plans (middle management) Operational Plans (lower-level managers)

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.7–7 Time Frames for Planning The Time Dimension of PlanningThe Time Dimension of Planning  Planning must provide sufficient time to fulfill the managerial commitments involved. Long-range (strategic) plans of 5 or more years Short-range (operational) action and contingency plans of 1 year or less Intermediate-range (tactical) plans of 1–5 years 1510

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.7–8 Contingency Planning and Crisis Management Contingency PlanningContingency Planning  The determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate.  These plans help managers to cope with uncertainty and change. Crisis ManagementCrisis Management  The set of procedures the organization uses in the event of a disaster or other unexpected calamity.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.7–9 Managing Goal-Setting and Planning Processes Barriers to Goal Setting and PlanningBarriers to Goal Setting and Planning  As part of managing the goal-setting and planning process, managers must understand the barriers that can disrupt them.  Managers must also know how to overcome them.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.7–10 Using Goals to Implement Plans Management by Objectives (MBO)Management by Objectives (MBO)  A technique for integrating formal goal setting and planning by giving subordinates a voice and clarifying what they are expected to accomplish.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.7–11 The Effectiveness of Formal Goal Setting Strengths (Success)Strengths (Success)  Improved employee motivation  Enhances communication  Fosters more objective performance appraisals  Focuses attention on appropriate goals and plans  Helps identify managerial talent  Provides a systematic management philosophy  Facilitates control of the organization Weaknesses (Failure)Weaknesses (Failure)  Poor implementation of the goal setting process  Lack of top-management support for goal setting  Delegation of the goal-setting process to lower levels  Overemphasis on quantitative goals  Too much paperwork and record keeping  Managerial resistance to goal setting

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.7–12 Key Terms missionmission strategic goalstrategic goal tactical goaltactical goal operational goaloperational goal optimizingoptimizing strategic planstrategic plan tactical plantactical plan operational planoperational plan reaction planreaction plan long-range planlong-range plan intermediate planintermediate plan short-range planshort-range plan crisis managementcrisis management single-use plansingle-use plan programprogram projectproject standing planstanding plan policypolicy rules and regulationsrules and regulations management by objectives (MBO)management by objectives (MBO)