MBA 501

Principles of Management &

Organizational Behavior
[Chapter 05]

Hanif Mahtab
email: hanif@iub.edu.bd


 Planning De ned
De ning the organization’s objectives or goals
Establishing an overa strategy for achieving those goals
Developing a comprehensive hierarchy of plans to integrate and
coordinate activities

Planning is concerned with ends (what is to be done) as well as

with means (how it is to be done).
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Reasons for Planning
 Criticisms of Formal Planning
Planning may create rigidity.
Plans can’t be developed for a dynamic environment.
Formal plans can’t replace intuition and creativity.
Planning focuses managers’ attention on today’s competition, not on
tomorrow’s survival.
Formal planning reinforces success, which may lead to failure.
 Planning and Performance
Formal planning genera y means higher profits, higher return on
assets, and other positive nancial results.
Planning process quality and implementation probably contribute
more to high performance than does the extent of planning.
When external environment restrictions a owed managers few
viable alternatives, planning did not lead to higher performance.
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Types of Plans
 Planning: Focus and Time
Strategic plans
Plans that are organization-wide, establish overa objectives, and position an
organization in terms of its environment
Tactical plans
Plans that specify the details of how an organization’s overa objectives are to be
achieved

Short-term plans
Plans that cover less than one year
Long-term plans
Plans that extend beyond ve years
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 Speci c and Directional Plans
Speci c plans
Plans that have clearly de ned objectives and leave no room for
misinterpretation
“What, when, where, how much, and by whom” (process-focus)

Directional plans
Flexible plans that set out general guidelines
“Go om here to there” (outcome-focus)
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Directional versus Speci c Plans

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 Single-Use and Standing Plans
Single-use plans
A plan that is used to meet the needs of a particular or unique situation
Single-day sales advertisement

Standing plan
A plan that is ongoing and provides guidance for repeatedly performed
actions in an organization
Customer satisfaction policy
Setting Goals
 Management by Objectives
A system in which speci c performance objectives are jointly
determined by subordinates and their supervisors, progress toward
objectives is periodically reviewed, and rewards are a ocated on the
basis of that progress.
Links individual and unit performance objectives at all levels
with overall organizational objectives
Focuses operational e orts on organizationally important results.
Motivates rather than controls
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Cascading of Objectives
 Setting Employee Objectives
Identify an employee’s key job tasks.

Establish speci c and cha enging (stretch) goals for each key task.

A ow the employee to actively participate.

Prioritize goals.

Build in feedback mechanisms to assess goal progress.

Link rewards to goal attainment.

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Characteristics of Well-Written Goals
 Strategic Management
At a glance:
 The Organization’s Current Identity
Mission statement
De nes the purpose of the organization

Objectives

Strategic plan
A document that explains the business founders vision and describes
the strategy and operations of that business.
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 Analyze the Environment
Environmental scanning
Screening large amounts of information to detect emerging trends
and create a set of scenarios

Competitive inte igence

Accurate information about competitors that a ows managers to
anticipate competitors’ actions rather than merely react to them
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SWOT: Identifying Organizational Opportunities

SWOT analysis
Analysis of an organization’s
strengths, weaknesses, opportunities,
and threats in order to identify a
strategic niche that the organization
can exploit
 SWOT Analysis
Strengths (strategic)
Internal resources that are available or things that an organization does we
Core competency: a unique ski or resource that represents a competitive edge
Weaknesses
Resources that an organization lacks or activities that it does not do we
Opportunities (strategic)
Positive external environmental factors
Threats
Negative external environmental factors
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 Formulating, Implementing, and Evaluating
Results
Formulating Strategies
 Grand Strategies
Growth strategy
A strategy in which an organization attempts to increase the level of its operations;
Retrenchment strategy
A strategy characteristic of a company that is reducing its size, usua y in an
environment of decline
Combination strategy
The simultaneous pursuit by an organization of two or more of growth, stability,
and retrenchment strategies
Stability strategy
A strategy that is characterized by an absence of signi cant change
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 Competitive Strategies
Strategies that position an organization in such a way that it wi have
a distinct advantage over its competition
Cost-leadership strategy
Becoming the lowest-cost producer in an industry
Di erentiation strategy
Attempting to be unique in an industry within a broad market
Focus strategy
Attempting to establish an advantage (cost/di erentiation) in a narrow market segment
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 Evaluating Strategy

Strategy Implementation
Formulation and Execution

Evaluation




 MBA 501
Principles of Management &
Organizational Behavior
[Chapter 04]

Hanif Mahtab
email: hanif@iub.edu.bd


 Decision-Making
Decision-making process
A set of eight steps that includes identifying a problem, selecting a
solution, and evaluating the e ectiveness of the solution
Problem
A discrepancy between an existing and a desired state of a airs
Decision criteria
Factors that are relevant in a decision
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The Decision-Making Process
Using the Decision-Making Process

Steps 2 & 3
Assessment of Car Alternatives

Steps 4 & 5
 Determining the Best Choice:
Weighting of Vehicles (Assessment Criteria X Criteria Weight)

Steps 5 & 6


 Decision-making (cont’d)
Decision implementation
Putting a decision into action; includes conveying the decision to the
persons who wi be a ected by it and getting their commitment to it

Step 7
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 Making Decisions: Circumstances
Certainty
The implication that the outcome of every possible alternative is known
Uncertainty
A condition under which there is not fu knowledge of the problem and
reasonable probabilities for alternative outcomes cannot be determined.
Risk
The probability that a particular outcome wi result om a given decision
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Assumptions of Rationality
 Making Decisions: The Rational Model
Rational
Describes choices that are consistent and value-maximizing within
speci ed constraints
Bounded rationality
Behavior that is rational within the parameters of a simpli ed
model that captures the essential features of a problem
Satis ce
Making a “good enough” decision
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Intuition in Decision Making
 Common Decision-making Errors
Heuristics: Using judgmental shortcuts
Availability heuristic
the tendency for people to base their judgments on information that is readily
available to them
Representative heuristic
The tendency for people to base judgments of probability on things with
which they are familiar
Escalation of commitment
An increased commitment to a previous decision despite negative information
 How Do Problems Di er?
We -structured problems
Straightforward, familiar, easily de ned problems
I -structured problems
New problems in which information is ambiguous or incomplete
Programmed decision
A repetitive decision that can be handled by a routine approach
Nonprogrammed decisions
Decisions that must be custom-made to solve unique and nonrecurring problems
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Programmed Decision-Making Aids
Policy
A general guide that establishes parameters for making decisions about recurring
problems
Procedure
A series of interrelated sequential steps that can be used to respond to a we -structured
problem (policy implementation)
Rule
An explicit statement that te s managers what they ought or ought not to do (limits on
procedural actions)
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Types of Problems & Decisions, and Level in the
Organization
 Technology And Decision Making
Expert systems
So ware that acts like an expert in analyzing and solving i -structured
problems
Use specialized knowledge about a particular problem area rather than general
knowledge
Use qualitative reasoning rather than numerical calculations
Perform at a level of competence higher than that of nonexpert humans.
Neural networks
So ware that is designed to imitate the structure of brain ce s and connections
among them
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Decision-Making Styles
 How Do Groups Make Decisions?
Important decisions are o en made by groups who wi be most
a ected by those decisions:
Committees
Task forces
Review panels
Work teams
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 Group Decision Making
Advantages
Make more accurate decisions
Provides more complete information
O ers a greater diversity of experiences and perspectives
Generates more alternatives
Increases acceptance of a solution
Increases legitimacy of a decision.
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 Group Decision Making

Disadvantages
Is more time-consuming, infrequent and less efficient
Minority domination can influence decision process
Increased pressures to conform to the group’s mindset
(groupthink)
Ambiguous responsibility for the outcomes of decisions

Improving Group Decision Making

Brainstorming
An idea-generating process that encourages alternatives while
withholding criticism
Nominal group technique
A decision-making technique in which group members are physica y
present but operate independently
Electronic meeting
A type of nominal group technique in which participants are linked by
computer

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