Topic 4 (A+B)

• Planning

  • Planning involves selecting from among alternative future course of action for the enterprise as a whole and for every department.
  • People must know what they are expected to accomplish- this is the function of planning.
  • All organizations engage in planning activities, but no two organizations plan in exactly the same fashion.
• Mission statement- N.B


  A statement of the organisation's purpose, premises and values
• Strategic goals


  Set by top management to address broad competitive issues
• Tactical goals


  Set by middle management to focus on how to operationalise actions to support strategic goals
• Operational goals


  Set by lower-level managers to focus on actions in support of tactical goals
• Time frames for planning

  • Long-range plans of 5 or more years
  • Intermediate-range plans of 1-5 years
  • Short-range action and contingency plans of 1 year or less
• Planning Continued

  • With this understanding as a foundation, managers must then establish the organization’s mission. The mission outlines the organization’s purpose, premises and values.
  • Flowing from the mission are streams of goals and plans.
• Contingency Planning


  The determination of alternative courses of action to be taken if an intended plan is unexpectedlydisrupted or rendered inappropriate.
• Crisis Management


  The set of procedures the organization uses in the event of a disaster or other unexpected calamity.
• The management process

  
• Programmed Decisions


  Starbucks uses programmed decisions to purchase new supplies of coffee beans, cups and napkins.

  Employees are given established training for brewing coffee.
• Non-programmed Decisions


  Decisions made about mergers and acquisitions.

  Decisions about new products. Non routine and new.
• Steps in the rational decision making process


  ...

  
• Incomplete information


  most managers do not see all alternatives and make a decision based on incomplete information. In reality it can be difficult to get access to

  complete information such as information about competitors or customers intentions.

  The manager’s decision may or may not be in the organisation’s best interests because of the imperfect information, and because of other limitations such as ‘bounded rationality ad satisficing.
• Bounded rationality


  The theory of bounded rationality says that an individual’s rationality is limited by the information they have, the cognitive limitation of their minds, and the finite amount of time they have to make a decision.This explains why human behaviour often goes against purely rational economic decisions.
• How does Administrative Decision making model compare with Rational model?

  1. The Administrative model gives a different picture of decision making to the rational decision making model.
  2. Each model can be used to help explain how managers make decisions.
  3. The rational model explains how managers attempt to be rational and logical in making decisions.
  4. The administrative model can be used to gain a better understanding of the impact of behavioural impact on decision making i.e. inherent biases and limitations.
• Group Decision Making


  Many decisions are made in a group setting.Groups tend to reduce biases and can call oncombined skills and abilities.More options/alternatives are likely to be generated.More acceptance of the final decision is likely asmore parties were involved in its development.
• Group Decision Making 


  There are some disadvantages to groups too:Biased decision making resulting from group members striving for agreement.