Planning premises are determined as the

planning

1. PLANNING PREMISES

2. Planning premises Planning premises are determined as the anticipated environment in which plans are expected to operate. It includes assumptions or forecasts of the future and known conditions that will affect the operation of plans. The assumptions derived from forecasting and used in planning are called as planning premises. According to Koontz O’Donnell Planning premises provide a framework for planning and action in the midst of uncertainties in the business environment. They imply not only the assumptions about the future but also predictions. Planning premises constitute the framework with which planning is done

3. ENVIRONMENTAL FORECASTING Forecasting is a way of estimating the future events that have a major impact on the enterprise. Environmental forecasting is a technique whereby managers attempt to predict the future characteristics of the organizational environment and hence make decisions today that will help the firm deal with the environment of tomorrow. Forecasting involves the use of statistical and non-statistical or qualitative techniques

4. Forecasting with the Delphi technique A typical process of the Delphi technique is as follows: A panel of experts on a particular problem area is selected, usually from both inside and outside the organization. The experts are asked to make (anonymously, so that they will not be influenced by others) a forecast as to what they think will happen, and when, in various areas of new discoveries or developments The answers are compiled, and the composite results are fed back to the panel members. This process may be repeated several times. When a convergence of opinion begins to evolve, the results are then used as an acceptable forecast.

5. DECISSION MAKING Decision-making is defined as the selection of a course of action from among alternatives; it is at the core of planning. A plan cannot be said to exist unless a decision—a commitment of resources, direction, or reputation—has been made

6. The Decision Making Process Step 1: Identifying a problem. Step 2: Identifying decision criteria. Step 3: Allocating weights to the criteria. Step 4: Developing alternatives. Step 5: Analyzing alternatives. Step 6: Selecting an alternative. Step 7: Implementing the alternative. Step 8: Evaluating decision effectiveness.

7. Rationality in Decision-Making It is frequently said that effective decision-making must be rational. But what is rationality? When is a person thinking or deciding rationally? Rational decision making : describes choices that are consistent and value maximizing within specific constraints. Limited or “Bounded” Rationality : describes behavior that is rational within the parameters of a simplified decision making process, which is limited by an individual’s ability to process information. Limitations of information, time, and certainty limit rationality, even if a manager tries earnestly to be completely rational Herbert Simon called this satisficing, which is, picking a course of action that is satisfactory or good enough under the circumstances

8. The Process of Rational decision making Premising Identifying alternatives – consider the limiting factor. The principle of the limiting factor states that, by recognizing and overcoming those factors that stand critically in the way of a goal, the best alternative course of action can be selected Evaluation of alternatives – quantitative and qualitative factors Marginal Analysis :Evaluating alternatives may involve utilizing the technique of marginal analysis to compare the additional revenue and the additional cost arising from increasing output Cost-effectiveness Analysis An improvement on, or variation of, traditional marginal analysis is cost-effectiveness or cost–benefit analysis. Cost-effectiveness analysis seeks the best ratio of benefit and cost; this means, for example, finding the least costly way of reaching an objective or getting the greatest value for a given expenditure Selecting and Alternative Experience Experimentation Research and analysis

9. Programmed and non-programmed decisions Programmed decisions: S uited for structured or routine problems. These kinds of decisions are made especially by lower-level managers and nonmanagers Non-programmed decisions: used for unstructured and nonroutine problems and are made especially by upper-level managers

10. DECISION-MAKING UNDER CERTAINTY, UNCERTAINTY, AND RISK Virtually all decisions are made in an environment of at least some uncertainty involving the interaction of a number of important variables, and there are certain risks involved in making decisions. Managers dealing with uncertainty should know the degree and nature of the risk they are taking in choosing a course of action. Creativity, the ability and power to develop new ideas, is important for effective managing. Innovation is the use of these ideas. The creative process consists of four overlapping phases: unconscious scanning, intuition, insight, and logical formulation. A popular technique for enhancing creativity is brainstorming. Creative individuals can make a great contribution to the enterprise. At the same time, they can be disruptive by not following commonly accepted rules of behavior