Chapter Planning and Decision Making MGMT 2008 Chuck Williams Designed & Prepared by B-books, Ltd Copyright ©2008 by Cengage Learning All rights reserved Planning After reading these sections, you should be able to: discuss the benefits and pitfalls of planning describe how to make a plan that works discuss how companies can use plans at all management levels, from top to bottom Copyright ©2008 by Cengage Learning All rights reserved Planning Planning Choosing a goal and developing a method of strategy to achieve that goal Copyright ©2008 by Cengage Learning All rights reserved Benefits of Planning Benefits Benefits of ofPlanning Planning Persistence Persistence Intensified Intensified Effort Effort 1.1 Direction Direction Creation Creation of ofTask Task Strategies Strategies Copyright ©2008 by Cengage Learning All rights reserved Pitfalls of Planning Pitfalls Pitfalls of ofPlanning Planning False FalseSense Sense of ofCertainty Certainty Impedes ImpedesChange Change and andAdaptation Adaptation Detachment Detachment of ofPlanners Planners 1.2 Copyright ©2008 by Cengage Learning All rights reserved How to Make a Plan That Works Set Set Goals Goals Develop Develop Commitment Commitment Develop Develop Effective Effective Action Action Plans Plans Track Track Progress Progress Toward Toward Goal Goal Achievement Achievement Maintain Maintain Flexibility Flexibility Revise Reviseexisting existingplan plan or or Begin Beginnew newplanning planningprocess process Copyright ©2008 by Cengage Learning All rights reserved S.M.A.R.T Setting Goals Specific Specific Measurable Measurable Attainable Attainable Realistic Realistic Timely Timely 2.1 Copyright ©2008 by Cengage Learning All rights reserved Examples of S.M.A.R.T Goals? • Walgreens: “Second is to hire • a significant number of people with disabilities in our South Carolina distribution center, scheduled to open in 2007, and achieve 20% productivity gains • there.” • UPS: “65% of drivers will have access to the new technology (implemented in 2004) by the end of 2005.” and “In 2005, we will increase operating profit in each of our key businesses: domestic, int’l, supply chain.” • • Wrigley: “In 2005, the company will decrease the long-term rate of return assumption for the assets of its U.S (pension) plans from 8.75 % to 8.5%.” Halliburton: “We estimate that 74% of the backlog existing on 12/31 will be eliminated the following fiscal year.” Martha Stewart Living Omnimedia: “In 2004 we will discontinue the Catalog for Living and its online product options, and sell remaining inventory in early fiscal 2005.” Starbucks: “In fiscal 2006, we plan to open approximately 1,800 net new stores globally.” Copyright ©2008 by Cengage Learning All rights reserved Developing Commitment to Goals The determination to achieve a goal is increased by… – – – – setting goals participatively making goals reasonable making goals public obtaining top management support 2.2 Copyright ©2008 by Cengage Learning All rights reserved Developing Effective Action Plans An Action Plan Lists… Specific Specific Steps Steps People People Resources Resources Time Time Period Period 2.3 10 Copyright ©2008 by Cengage Learning All rights reserved Limits to Rational Decision Making Bounded Rationality A decision-making process restricted in the real world by: limited resources incomplete and imperfect information managers’ limited decision-making capabilities 4.7 31 Copyright ©2008 by Cengage Learning All rights reserved Limits to Rational Decision Making Maximize Maximize Satisfice Satisfice 4.7 32 Copyright ©2008 by Cengage Learning All rights reserved Using Groups to Improve Decision Making Structured Structured Conflict Conflict Delphi Delphi Technique Technique Nominal Nominal Group Group Technique Technique Stepladder Stepladder Technique Technique Electronic Electronic Brainstorming Brainstorming 33 Copyright ©2008 by Cengage Learning All rights reserved Group Decision Making Advantages 1.View View problems problems from from multiple multiple perspectives perspectives 2.Find Find and and access access more more information information 3.Generate Generate more more alternative alternative solutions solutions 4.More More committed committed to to making making chosen chosen solutions solutions work work 5.1 34 Copyright ©2008 by Cengage Learning All rights reserved Group Decision Making Disadvantages 1.Susceptible Susceptible to to groupthink groupthink and and to to considering considering aa limited limited number number of of solutions solutions 2.Takes Takes considerable considerable time time 3.One One or or two two people people can can dominate dominate group group discussion discussion 4.Members Members don’t don’t feel feel personally personally accountable accountable for for decisions decisions and and actions actions 5.1 35 Copyright ©2008 by Cengage Learning All rights reserved Groupthink Groupthink is likely to occur when… the thegroup groupisisinsulated insulatedfrom fromothers otherswith withdifferent different perspectives perspectives the thegroup groupleader leaderexpresses expressesaastrong strongpreference preference for foraaparticular particulardecision decision there thereisisno noestablished establishedprocedure procedurefor fordefining defining problems problemsand andexploring exploringalternatives alternatives group groupmembers membershave havesimilar similarbackgrounds backgrounds 5.1 36 Copyright ©2008 by Cengage Learning All rights reserved Structured Conflict C-Type C-Type Conflict Conflict Cognitive Cognitive conflict conflict Disagreement Disagreement that that focuses focuses on on problemproblem- and and issue-related issue-related differences differences of of opinion opinion A-Type A-Type Conflict Conflict Affective Affective conflict conflict Disagreement Disagreement that that focuses focuses on on individuals individuals or or personal personal issues issues 5.2 37 Copyright ©2008 by Cengage Learning All rights reserved Devil’s Advocacy Steps to Establish a Devil’s Advocacy Program 1 Generate Generateaapotential potentialsolution solution 2 Assign Assignaadevil’s devil’sadvocate advocateto tocriticize criticizeand andquestion question 3 Present Presentthe thecritique critiqueof ofthe thesolution solutionto to key keydecision decisionmakers makers 4 Gather Gatheradditional additionalinformation information 5 Decide Decidewhether whetherto touse, use,change, change,or ornot notuse use the theoriginally originallyproposed proposedsolution solution 5.2 38 Copyright ©2008 by Cengage Learning All rights reserved Dialectical Inquiry Beyond the Book Steps to Establish a Dialectical Inquiry Process 1 Generate Generateaapotential potentialsolution solution 2 Identify Identifythe theassumptions assumptionsunderlying underlyingthe the potential potentialsolution solution 3 Generate Generateaaconflicting conflictingcounterproposal counterproposalbased based on onopposite oppositeassumptions assumptions 4 Have Haveadvocates advocatesof ofeach eachposition positionpresent presenttheir their arguments argumentsand andengage engagein inaadebate debatein infront frontof of decision decisionmakers makers 5 Decide Decidewhether whetherto touse, use,change, change,or ornot notuse use the theoriginally originallyproposed proposedsolution solution 39 Copyright ©2008 by Cengage Learning All rights reserved Nominal Group Technique Steps to Establish Nominal Group Technique 1 During Duringaaquiet quiettime, time,group groupmembers memberswrite writedown down as asmany manyproblems problemsand andsolutions solutionsas aspossible possible 2 Each Eachmember membershares sharesone oneidea ideaatataatime time 3 Ideas Ideasare areposted postedon onflipcharts flipchartsuntil untilall allideas ideasare areshared shared 4 Group Groupdiscusses discussesadvantages/disadvantages advantages/disadvantages 5.3 5 Ideas Ideasare areranked rankedduring duringaasecond secondquiet quiettime time 6 Members Membersread readrankings rankingsaloud, aloud,and andthe theidea ideawith withthe the highest highestaverage averagerank rankisisselected selected 40 Copyright ©2008 by Cengage Learning All rights reserved Delphi Technique Steps to Establish Delphi Technique 1 Assemble Assembleaapanel panelof ofexperts experts 2 Create Createaaquestionnaire questionnaireof ofopen-ended open-endedquestions questions 3 Summarize Summarizethe theresponses responsesand andfeed feedback backto tothe thepanel panel until untilthe themembers membersreach reachagreement agreement 4 Create Createaabrief briefreport reportand andsend sendto tothe thepanel panelmembers membersfor for agreement/disagreement agreement/disagreement 5 Continue Continuethe thefeedback feedbackprocess processuntil untilpanel panelreaches reaches agreement agreement 5.4 41 Copyright ©2008 by Cengage Learning All rights reserved Stepladder Technique Beyond the Book Member Joins Group Shares thoughts, ideas, recommendations Members 1, 2, & Share previous thoughts, ideas, recommendations Discussion is Held and Tentative Group Decision is Made Step Member Joins Group Shares thoughts, ideas, recommendations Members & Share previous thoughts, ideas, recommendations Discussion is Held and Tentative Group Decision is Made Step Member Shares thoughts, ideas, recommendations Member Shares thoughts, ideas, recommendations Discussion is Held and Tentative Group Decision is Made Step 42 Copyright ©2008 by Cengage Learning All rights reserved Brainstorming Four Rules of Brainstorming 1 The Themore moreideas, ideas,the thebetter better 2 All Allideas ideasare areacceptable, acceptable,no nomatter matter how howwild wildor orcrazy crazy 3 Other Othergroup groupmembers’ members’ideas ideasshould shouldbe beused used to tocome comeup upwith witheven evenmore moreideas ideas 4 Criticism Criticismor orevaluation evaluationof ofideas ideasisisnot notallowed allowed 5.5 43 Copyright ©2008 by Cengage Learning All rights reserved Electronic Brainstorming Advantages of Electronic Brainstorming Overcomes production blocking • technology allows everyone to record their ideas as they are created • no ideas lost while waiting your turn to speak Overcomes evaluation apprehension • anonymity creates free expression 5.5 44 Copyright ©2008 by Cengage Learning All rights reserved Electronic Brainstorming Disadvantages of Electronic Brainstorming • Greater expense • No automatic acceptance of ideas because of one’s position • Some find it difficult to express themselves in writing • Lack of typing skills can frustrate participants 5.5 45 Copyright ©2008 by Cengage Learning All rights reserved ... isaafour-step four-stepprocess process 3.2 16 Copyright ©2008 by Cengage Learning All rights reserved Management by Objectives Steps to Management by Objectives: Discuss possible goals Select goals that... accomplishgoals goalswithin withinits itsmission mission (6 (6months monthsto to22years) years) Management Management by by Objectives Objectives Develop Developand andcarry carryout outtactical tacticalplans... (implemented in 2004) by the end of 2 005. ” and “In 2 005, we will increase operating profit in each of our key businesses: domestic, int’l, supply chain.” • • Wrigley: “In 2 005, the company will