Chapter-6( Planning and Decision Making).pptx

Principles of Mangement
by Griffin
Chapter-6
topic- Planning and decision making

1. MGT 201 – Principles of Management School of Business Administration Semester: Fall ‘2022

2. Decision Making and the Planning Process Decision making is the cornerstone of planning. For instance, consider that several years ago Procter & Gamble (P&G) set a goal of doubling its revenues over a 10-year period. 10-year period that was actually specified. Alternatively, the goal could have included diversifying into new markets, cutting costs, or buying competing businesses. Thus P&G’s exact mix of goals and plans for growth rate and time frame reflected choices—or decisions—from among a variety of alternatives. Ford Motor Company announced a goal of tripling global sales of its luxury brand Lincoln by the year 2020. This goal, in turns, will now drive investments in new production facilities, sales and marketing initiatives, factory hiring, financial planning, and other areas within the firm

3. THE PLANNING PROCESS

4. Organizational Goals Goals are critical to organizational effectiveness, and they serve a number of purposes. Organizations can also have several different kinds of goals, all of which must be appropriately managed. And a number of different kinds of managers must be involved in setting goals. Purposes of Goals Goals serve four important purposes. First, they provide guidance and a unified direction for people in the organization. Goals can help everyone understand where the organization is going and why getting there is important.

5. For Example: Top managers at General Electric have a long-standing goal that every business owned by the firm will be either number one or number two in its industry. This goal helps set the tone for decisions made by GE managers as it competes with other firms like Whirlpool and Electrolux (appliances), Rolls Royce (jet engines), and numerous financial services firms Second, goal-setting practices strongly affect other aspects of planning. Effective goal setting promotes good planning, and good planning facilitates future goal setting. For example, the ambitious revenue goal set for P&G demonstrates how setting goals and developing plans to reach them should be seen as complementary activities. The strong growth goal should encourage managers to plan for expansion by looking for new market opportunities, for example. Similarly, they must also always be alert for competitive threats and new ideas that will help facilitate future expansion.

6. Third, goals can serve as a source of motivation for employees of the organization. Goals that are specific and moderately difficult can motivate people to work harder, especially if attaining the goal is likely to result in rewards. Finally, goals provide an effective mechanism for evaluation and control. This means that performance can be assessed in the future in terms of how successfully today’s goals are accomplished School of Economics Semester: Spring ‘2022 School of Business Administration Semester: Fall ‘2022

7. Kinds of Goals Level Goals are set for and by different levels within an organization. As we noted earlier, the four basic levels of goals are the mission and strategic, tactical, and operational goals. An organization’s mission is a statement of its “fundamental, unique purpose that sets a business apart from other firms of its type and identifies the scope of the business’s operations in product and market terms.”For instance, Starbucks’ mission statement is “To inspire and nurture the human spirit—one person, one cup, and one neighborhood at a time.” Starbucks also espouses these principles School of Business Administration Semester: Fall ‘2022

8. Strategic goals are goals set by and for top management of the organization. They focus on broad, general issues. For example, Starbucks has a strategic goal of increasing the profitability of each of its coffee stores by 25 percent over the next five years. Tactical goals are set by and for middle managers. Their focus is on how to operationalize actions necessary to achieve the strategic goals. To achieve Starbucks’ goal of increasing its per-store profitability, managers are working on tactical goals related to company-owned versus licensed stores and the global distribution of stores in different countries School of Business Administration Semester: Fall ‘2022

9. Operational goals are set by and for lower level managers. Their concern is with shorter-term issues associated with the tactical goals. An operational goal for Starbucks might be to boost the profitability of a certain number of stores in each of the next five years. Area Organizations also set goals for different areas. *goals for operations, marketing, and finance. Time Frame Organizations also set goals across different time frames. School of Business Administration Semester: Fall ‘2022

10. School of Business Administration Semester: Fall ‘2022

11. School of Economics Semester: Spring ‘2022 School of Business Administration Semester: Fall ‘2022

12. Planning .

13. School of Economics Semester: Spring ‘2022 School of Business Administration Semester: Fall ‘2022

14. Departments of

15. followed by

16. Type of plan Single plan Standard Plan

17. Planning Process Choosing Alternatives Implementing plan Follow Up

18. Importance of Planning Standard of Controlling

19. 1. Planning provide direction . By starting in advance how work is to be done planning provides direction for action. . Planning ensure that the goals or objectives are clearly stated so that they act as a guide for deciding what action should be taken and in which direction .If goals are well defined, employees are aware of what the organization has to do and what must do to achieve those goals. . Departments and individuals in the organization are able to work in coordination. .If there was no planning, employees would be working in different directions and the organization are not able to achieve its desired goals.

20. Limitations of planning Reduce creativity Planning may not work in dynamic environment Time consuming Planning leads to rigidity Huge cost

21. School of Economics Semester: Spring ‘2022