Chap5 Planning&DM

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Lecture 5

Planning and

Decision Making

Prepared by: hkp First Prepared on: 08-12-04 Last Modif ied on: xx-xx-xx

Quality checked by: xxx

Copyright 2004 Asia Pacific Institute of Information Technology

Introduction to ManagementBM007-3-1


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Module Code and Module Title Title of Slides

At the end of this chapter, YOU should

be able to:

How to proceed through the basic steps in anyplanning process.

How strategic planning differs from tactical and

operational planning.

Why is it important to analyse both the externalenvironment and internal resources of the firm

before formulating strategies

Learning Outcomes


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Planning

Strategy

Strategic, Tactical and Operational Planning Mission, Vision, Goals

SWOT Analysis

Decision Making

Key Terms you must be able to

use


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Planning

A process that managers use to identify and selectappropriate goals and courses of action for an

organisation.

Strategy Cluster of decisions and actions thatmanager stake to help and organisation achieve its

goals.

Planning is a decision making and strategy makingprocess.


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Types of Planning

Top Level Planning / Strategic Planning

Done by top management

Long range objectives and policies

Second Level Planning / Tactical Planning Carried out by Senior Executives

Medium term goals

Function Oriented

Third Level Planning / Operational Planning

Very short term goals

Individual goals


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Time Horizons of Plans

Each plan has different time frame, meaning thatdifferent plans have different time to be completed; Long term plans 5 years

Intermediate term plans 1-5 years

Short term plans Less than 1 year

Rolling Plan is usually updated and amended yearly bytaking the environment into account.

Standing Plan used where programmed decisionmaking is done.

Single Used Plan to handle non-programmed decisionmaking and one of a kind situation.


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Importance of Planning

To get all managers to participate in decision

making appropriate goals and strategies for anorganisation.

A sense ofdirection and purpose for the organisation -goals the organisation is trying to achieve and strategiesused.

To coordinate managers of the different functions anddivisions of organisation to ensure that there is a pull in

the same direction.

To control managers within an organisation. A goodplan specifies goals and strategies and activities the

orgnisation has to carry out.


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Formal Planning Process

Establishment of

mission, vision &

goals

Analysis of

internal strengths

and weaknesses

Analysis ofexternal

opportunities and

threats

SWOT analysis

& strategy

formulation

Strategy

ImplementationStrategic

Control


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Step 1 Establishment of

mission, vision and goals

Mission basic purpose and values of the

organisation.

Vision provides a perspective on the

direction of the organisation. E.g. Shell

becoming the premier U.S. company.

Strategic Goals evolve around from the

mission and vision.


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Step 2: Analysis of external

Opportunities and threats

Industry and market analysis

Competitor analysis

Political and regulatory analysis Social analysis

Human Resource analysis

Macroeconomic analysis

Technological analysis


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Step 3: Analysis of internal

strengths and weaknesses

Financial analysis

Human resource assessment

Marketing audit

Operations analysis

Purchasing

Management of information systems


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Step 4: SWOT analysis and

strategy formulation (I)

SWOT analysis a comparison of

strengths, weakness, opportunities and

threats that help formulate strategy.

Corporate strategies

Concentration strategy focuses on a single

business competing in a single industry

Vertical Integration the acquisition ordevelopment of parts or components of the

organisations product (becoming supplier /

distributor)


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Step 4: SWOT analysis and

strategy formulation (II)

Concentric diversification moving into new

businesses that are related to the original

business

Conglomerate diversification expanding into

unrelated business


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Step 5: Strategy Implementation

Ensure new strategies are implemented

effectively and efficiently.

Adopt a more comprehensive view of

implementation.

Strategies must be supported by

appropriate organisation structure,

technology, human resource, rewardsystems, culture etc.


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Step 6: strategic control

To support managers in evaluating the

organisations progress with its strategy

and in taking corrective actions. E.g. Budget monitoring


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Obstacles to Effective Planning

Lack of top management involvement and

support.

Lack of cooperation from various operatingunits.

Difficult to forecast and set goals.

Inconsistency in follow up. Depending on planning as a quick fix.

Resistance to change.


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Decision Making

Programmed decision Decisions made

in routine, repetitive, well structured

situations through the use ofpredetermined decision rules.

Non programmed decision Decisions for

which predetermined decision rules areimpractical because the situations re novel

and /unstructured


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Steps in effective Decision

Making

1. Identifying the problem Scanning

Categorising

Diagnosis

2. Generating Alternative Solutions

3. Evaluating and Choosing and Alternative

Feasibility Quality

Acceptability

Costs

Reversibility


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Q & A

Question and AnswerSession


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Topic and Structure of next session: -

Chapter 6 Motivation

What we will cover next

Chap5 Planning&DM

Documents

Transcript of Chap5 Planning&DM