1. Planning and Decision Making Chapter 3 EXAM Review Mr. Sherpinsky Business Management Class Council Rock School District

2. The Planning Process Planning: the process of deciding which objectives to pursue during a future time period and how to achieve those objectives. –Primary management function

3. Why Plan? Planning enables an organization to actively affect rather than passively accept the future. Planning provides a means for actively involving personnel from all areas of the organization in the management of the organization

4. Formal Planning Defined: The systematic studying of an issue and the preparation of a written document to deal with the problem. –Formal Plan: Defined: a written, documented plan developed through an identifiable process Levels of sophistication Depends on the needs and organization

5. Formal Planning Functional Plans –Most frequently encountered types Sales and marketing Productions Financial Personnel

6. Formal Planning Planning Horizons: –Short-range plans cover up- to a one-year period of time –Long-range plans cover at least a three-to-five year period of time. –Intermediate plans cover the time span between short- range and long-range Usually between short and long range timeframes

7. Operational vs. Strategic Plans Operational or Tactical –Short-range planning –Focuses on forming ideas for dealing with specific functions in the company Ex: production schedules and day-to-day operations Strategic –Long-range planning –Done by highest management levels President, vice- president, chief operating officer –Affects many parts of the organization

8. Contingency Plans Regardless of thorough you plan, something always goes wrong…. –Remember planning is a one-sided process Contingency Plans: back up plans that address the what ifs of the management job. Always short-term

9. Objectives Objectives: Defined: are statements outlining what a manager is trying to achieve. Objectives give an organization and its members directions and purpose. Should be clear, concise, and measurable

10. Objectives Long-range –Generally go beyond the organization’s current fiscal year –Must support and not conflict with the organization mission Short-range –Derived from in- depth evaluation of long-range objectives –List of priorities to achieve longer- range objectives

11. The Planning Process MBOs (Management by Objectives) –Philosophy that converts company objectives to personal and management ones Policies –Broad general guides to action that direct or constraint and provide predictability Procedures –Series of steps to meet objectives –Usually done chronologically Rules –Specific actions to take (or not to take )

12. Making Decisions Decision-making –Not all decisions involve problems Group decision-making –Group decisions are generally better then making quick independent decisions

13. Making Decisions Decision Making Vs. Problem Solving –Decision making: Choosing from various alternatives –Problem solving: The process of determining the appropriate recompense or actions

14. Approaches to Problem Solving Satisficing –Principle of bounded rationality Assumes that people have the time and cognitive ability to process only a limited amount of information Assumes knowledge of alternatives and criteria is limited Assumes people act on the basis of a simplified concept of the world

15. Making Decisions Decision maker’s environment Environmental factors –Manager’s position –Structure of organization –Tradition of organization –Informal and formal group structures (i.e., unions) –Superiors and subordinates

16. Making Decisions Intuitive approach –Using emotions to make decisions –Fastening on unsubstantiated facts and sticking with them

17. Making Decisions Maximax and Maximin approach –Maximax: Look at best alternative whose best possible outcome is best for all alternatives –Maximin: Looking at the best alternative and comparing to the worst possible outcomes

18. Making Decisions Risk averting approach –Choosing an alternative with least variation among outcomes Timing –Need for a decision must be recognized –Must act at some point Participation –Two heads are better than one –Group performance is usually better than individual performance

19. Barriers to Decision Making Complacency –Ignoring data or not making a decision at all Defensive avoidance –Denies the importance of the danger or opportunity Panic –Frantic attempts to solve a problem Deciding to decide –Accepting responsibility for the decision

20. Management Information Systems Integrated approach for providing interpreted and relevant data to help make decisions –Data processing Capture, processing and storage of data MIS uses that data to produce information to make good decisions –Transaction processing system Replaced manual record-keeping procedures Payroll, billing inventory records Routine Highly structured decisions

21. Questions? Exam Next Class 100 Points –Multiple Choice –T/F –Drop box –Essay