Basic Management Function

: The Management Process;

PLANNING
Planning & Decision Making
Definition
• Involves defining the organisation’s goals,
Week 2 establishing an overall strategy for achieving
Chapter 2 those goals, and developing a comprehensive
By: Jason set of plans to integrate and coordinate
organizational work.
• It is concerned with what is to be done(ends)
and how it is to be done(means).

• Can be either formal or informal. • All managers engage in planning but their
• Formal planning planning might be only informal.
– Specific goals covering a period of time are defined.
– These goals are written down and shared with organizational • Informal planning
members.
– Nothing is written down
– Specific action programmes exist for the achievement of these
goals. – There is little or no sharing of goals with others in the
organization
– Is general and lacks continuity
– More common in small businesses but it also exists in
some large organizations.

• Purposes of Planning • It reduces overlapping and wasteful activities

• There are at least four reasons why managers – When work activities are coordinated according to
should plan. established plans, wasted time and resources and
• It gives direction redundancy can be minimized.
– It establishes coordinated effort thus give direction to
employees. When employees know where the • It establishes goals or standards used in
organization is going and what they must do or controlling
contribute to reach the objectives.
– Clear defined or what they are trying to achieve
• It reduces uncertainty provide a means for managers to compare the actual
– Uncertainty can be reduced as planning actually force performances against the objectives set.
managers to look ahead, anticipate change and
develop appropriate responses. – Without planning, there would be no way to control.

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• Principles of Planning • Types of Plans
• There are 6 main principles of planning • The most popular way to describe plans are by
– Plans made should be based upon clearly defined
goals and objectives. their:
– Plans should. take into consideration of the • Specific plans
environment.
– Plans should consider the organisation current - are clearly defined
resources. - have specifically stated objectives.
– Plans should be provided for controls so that
performances can be measured. • Directional plans
– Plans should be stated as simple as possible and of - are flexible plans that set out general guidelines
course precise and practical.
– Plans should be flexible enough to change.

• Single-use plan Strategic Plans

- one-time plan specifically designed to meet the
needs of a unique situation
• -Plans that apply to the entire
• Standing plan organisation, establish the organisation's
-ongoing plan that provides guidance for activities overall objectives
performed repeatedly • and seek to position the organisation in
-All these planning classifications are dependent terms of its environment.
and interrelated with each other. Eg long term
and short term plans are closely related to
strategic and operational plan.

• Strategic Planning • Operational Plans

-Involves deciding upon the major goals of - Plans that specify the details of how the
an organisation and what policies will be overall objectives are to be achieved.
used to achieve them. - How do strategic and operational plans
differ?
-It involves a longer time period and relies
on more unreliable long-term forecasts - These two plans can be differentiated
through their differences in their time
and occurs at more senior levels {eg frame, scope and whether the
General manager and above} organisation’s objectives are met or not.

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• Strategic plans Tactical Plans
Those with a time frame usually beyond 3 years
• short-term operational plan in which it is
Broader view, less specific
Include in formulation of goals
concern with the ways in which resources
are
•Operational plans • used to implement the strategic plans
•Those covering one year or less-monthly, weekly and day-to-day
• the primary concern is to achieve overall
•Defines ways to achieve the goals
•Narrow view, more specific
efficiency.

Tactical Planning
• involves deciding upon how resources will
be used to help the organisation achieve DECISION-MAKING
its
• strategic goals.
• relies more on past records {eg
sales/productivity} and involves shorter
time period.

DECISION-MAKING DECISION-MAKING

What is a Decision? Who in an organisation makes decisions?

• ‘Choosing between alternative courses of action
• Ansoff (1965;1987) identified three key decision-making
on the basis of information available at the time’ areas for management
Dixon (2005) 1. Strategic
2. Operational
• ‘All managerial action is decision making’ 3. Administrative
Simon (1960)
• Simon (1960)
– Routine or ‘programmed’ decisions are taken by
• ‘Managers deal with demands, constraints and junior and middle managers based on past experience
or record
choices – the last is the most difficult’ – Complex or ‘unprogrammed’ decisions involving high
Stewart (1982) levels of uncertainty, unique elements, high risk, often
of a strategic nature are taken by more senior
managers

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 DECISION-MAKING DECISION-MAKING

A Structured Approach to Decision-making Barriers to Effective Decision-making

AIM
(What is your aim or objective?) • Lack of discipline

DATA • Lack of creativity

(What information do you need to generate or collect options for action?)
• Tunnel vision
OPTIONS
(What are the possible options for action?)
• Unable to handle complexity

DECISION
• Insufficient depth of evaluation
(Given the circumstances, what is the best choice?)
• Lack of confidence
ACTION
(How should the decision be implemented?)

DECISION-MAKING
Decision-making Tools

• Marginal costing
Introduction to Strategic
• Discounted cash flow appraisal
Management
• Cost-benefit analysis
Perspectives
• Risk analysis

• Decision trees

• Ishikawa (Fishbone) Diagram

Lecture Outline Learning Outcomes

• Administrative issues/Learning and By the end of the session students should
teaching issues/Expectations and understand the range of the subject area,
responsibilities of the viewpoints that may be taken in
• Discussion: What is strategy? acting strategically and have some
appreciation of a widely held view of what
strategy is.

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 A definition of strategy or what about...
“A strategy is the pattern or plan that “Strategy can be defined as the determination
of the basic long term goals and objectives of
integrates an organisation’s major goals,
an enterprise, and the adoption of courses of
policies and action sequences into a action and the allocation of resources
cohesive whole.” necessary for carrying out these goals.”
(Quinn 1980) (Robbins 1990)
“The essence of strategic thinking is creating a
sustainable competitive advantage.”
(Porter 1987)

Strategic decisions are

Strategic management
concerned with
“ strategic management is concerned with
• Purpose complexity arising out of ambiguous and non-
• Scope of activity routine situations with organisation-wide rather
• Values, expectations and goals than operation-specific implications”
(Johnson & Scholes, 1999)
• Long term direction
Strategic management is therefore concerned
• Matching activities to the environment with puzzles, dilemmas, trade-offs and
• Allocation of resources paradoxes
• Change management (de Wit and Meyer 1998)

Strategic problems (cont)

• A paradox is a situation that two contrasting and
sometimes “mutually exclusive factors” can be
true.
Note:
• Use of paradox in management theory (Poole &
Van de Ven, 1989; De Wit & Meyer, 2000;
Markides, 2001)
• Strategy as managing paradoxes organisations
face