Chapter 5: Planning and Decision Making

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1

Planning

is choosing a goal and developing a method or strategy to achieve that goal

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How to make a plan that works

1. set goals

2. develop commitment

3. develop effective action plans (who, what, where, when, how)

4. Track progress toward goal achievement

5. Maintain flexibility

(revise existing plan or begin planning process anew)

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SMART GOALS

S-Specific

M-Measurable

A-Attainable

R-Realistic

T-Timely

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Goal Commitment

determination to achieve a goal

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Action Plan

lists the specific steps, people, resources, and time period needed to attain a goal

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Proximal goals

short-term goals or subgoals

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Distal goals

long term or primary goals

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Options-based planning

maintaining planning flexibility by making small, simultaneous investments in many alternative plans

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Slack resources

a cushion of extra resources that can be used with options-based planning to adapt to unanticipated changes, problems or opportunities

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Strategic plans

overall company plans that clarify how the company will serve customers and position itself against competitors over the next two to five years

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Purpose statement

statement of a company's purpose or reason for existing

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Top Managers

create the organization purpose statement and strategic objective

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Middle Managers

develop tactical plans and use management by objectives to motivate employee efforts toward the overall purpose and strategic objective

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First level Managers

use operational, single use, and standing plans to implement the tactical plans

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Strategic objective

a more specific goal that unifies company-wide efforts, stretches and challenges the organization, and possesses a finish line and a time frame

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Tactical plans

plans created and implemented by middle managers that specify how the company will use resources, budgets, and people over the next six months to two years to accomplish specific goals within its mission

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Management by obectives

is a four-step process in which managers and their employees

  • (1) discuss possible goals;
  • (2) collectively select goals that are challenging, attainable, and consistent with the company’s overall goals;
  • (3) jointly develop tactical plans that lead to the accomplishment of tactical goals and objectives; and
  • (4) meet regularly to review progress toward accomplishment of those goals.
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Operational plans

day to day plans developed and implemented by lower level managers for producing or delivering the organizations products and services over a thirty day to six month period

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Single-use plans

cover unique one time only events

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Standing plans

planes used repeatedly to handle frequently recurring events

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Policies

standing plans that indicate the general course of action that should be taken in response to a particular event or situation

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Procedures

standing plans that indicate the specific steps that should be taken in response to a particular event

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Rules and regulations

standing plans that describe how a particular action should be performed or what must happen or not happen in response to a particular event

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Budgeting

quantitative planning through which managers decide how to allocate available money to best accomplish company goals

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Decision making

the process of choosing a solution from available alternatives

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Rational decision making

a systematic process of defining problems, evaluating alternatives, and choosing optimal solutions

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Problem

a gap between desired state and an existing state

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Decision criteria

standards used to guide judgements and decisions

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Absolute comparisons

a process in which each decision criterion is compared to a standard or ranked on its own merits

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Relative comparison

process in which each decision criterion is compared directly with every other criterion

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Generate alternative courses of action

After identifying and weighting the criteria that will guide the decision-making process, the next step is to identify possible courses of action that could solve the problem

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Evaluate each alternative

is to systematically evaluate each alternative against each criterion. Because of the amount of information that must be collected, this step can take much longer and be much more expensive than other steps in the decision-making process

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Compute the optimal decision

final step in the decision-making process is to compute the optimal decision by determining the optimal value of each alternative. This is done by multiplying the rating for each criterion by the weight for that criterion, and then summing those scores for each alternative course of action that you generated

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Maximize

choosing the best alternative

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Satisficing

choosing a "good enough" alternative

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Groupthink

barrier to good decison making causes by pressure within the group for members to agree with each other

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C-Type conflict (cognitive conflict)

disagreement that focuses on problem and issue related differences of opinion

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A-type conflict (affective conflict)

disagreement that focuses on individuals or personal issues

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Devil's advocacy

decision making method in which and individual or bugroup is assigned the role of critic

  • Generate a potential solution.
  • Assign a devil’s advocate to criticize and question the solution.
  • Present the critique of the potential solution to key decision makers.
  • Gather additional relevant information.
  • Decide whether to use, change, or not use the originally proposed solution
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Dialectical Inquiry

decision making method in which decision makers state the assumptions of a proposed solution (a thesis) and generate a solution that is the opposite (antithesis) of that solution

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Nominal group technique

decision making method that begins and ends by having group members quietly write down and evaluate ideas to be shared with the group

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Delphi technique

decision making method in which members of a panel of experts respond to questions and to each other until reaching agreement on an issue

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Brainstorming

decision making method in which group members build on each others ideas to generate as many alternative solutions as possible

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Electronic brainstorming

decison making method in which group members use computers to build on each others ideas and generate as many alternative solutions as possible

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Production blocking

disadvantage of face to face brainstorming in which a group member must wait to share an idea because another member is presenting an idea

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Evaluation apprehension

fear of what others will think of your ideas