Principles of Management Chapter 5; Planning and Decision-making

S.M.A.R.T. goals are

Goals that are Specific, Measurable, Attainable, Realistic, and Timely

Rational decision-making

a systematic process of defining problems, evaluating alternatives, and choosing optimal solutions

options-based planning

maintaining planning flexibility by making small, simultaneous investments in many alternative plans

Budgeting

quantitative planning through which managers decide how to allocate available money to best accomplish company goals

Policies

standing plans that indicate the general course of action that should be taken in response to a particular event or situation

Procedures

standing plans that indicate the specific steps that should be taken in response to a particular event

Decision-making

the process of choosing a solution from available alternatives

Goal commitment is the

determination to achieve a goal

operational plans

day-to-day plans, developed and implemented by lower-level managers, for producing or delivering the organization's products and services over a 30-day to six-month period

The three kinds of standing plans are

Policies, Procedures, and Rules and Regulations.

C-type conflict (cognitive conflict)

disagreement that focuses on problem- and issue-related differences of opinion

The second disadvantage that electronic brainstorming overcomes is Evaluation Apprehension.

fear of what others will think of your ideas

Benefits of Planning

intensified effort, persistence, direction, and creation of task strategies. 1: Managers and employees put forth greater effort when following a plan. 2: Planning leads to persistence, that is working hard for long periods. 2: Planning provides a sense of direction. 4: Planning encourages the development of task strategies, or better ways to do their assigned jobs.

strategic plans

overall company plans that clarify how the company will serve customers and position itself against competitors over the next two to five years

Tactical plans

plans created and implemented by middle managers that direct behavior, efforts, and attention over the next six months to two years

Single-use plans

plans that cover unique, onetime-only events

standing plans

plans used repeatedly to handle frequently recurring events

Proximal goals are

short-term goals or subgoals

Rules and regulations

standing plans that describe how a particular action should be performed or what must happen or not happen in response to a particular event

Action Plan is

A plan that lists the specific steps, people, resources, and time period needed to attain a goal.

distal goals are

long-term or primary goals

satisficing

choosing a "good-enough" alternative

Planning is

choosing a goal and developing a strategy to achieve that goal

Suppose that Markus Braun has a set of steps that Wirecard takes each time they acquire a new company. This ______1________is known as a __________2______________. 1 A: standing plan B: single-use plan 2 A: rule B: policy C: standard operating procedure D: regulation

1 A: standing plan 2 C: standard operating procedure

Planning has been proven _________________ companies and individuals. A: to work for both B: to not work for both

A: to work for both

The three kinds of Operational Plans are

Single-Use plans Standing Plans Budgets

Groupthink

a barrier to good decision-making caused by pressure within the group for members to agree with each other. Most likely to occur under the following conditions: - The group is insulated from others with different perspectives. - The group leader begins by expressing a strong preference for a particular decision. - The group has no established procedure for systematically defining problems and exploring alternatives. - Group members have similar backgrounds and experiences.

slack resources

a cushion of extra resources that can be used with options-based planning to adapt to unanticipated changes, problems, or opportunities

The Devil's advocacy Approach is

a decision-making method in which an individual or a subgroup is assigned the role of critic. It can be used to create C-Type conflict to: - Generate a potential solution - Assign a devil's advocate to criticize and question the solution. - Present the critique of the potential solution to key decision makers. - Gather additional relevant information. - Decide whether to use, change, or not use the originally proposed solution.

The five steps of the Dialectical Inquiry process are:

1: Generate a potential solution. 2: Identify the assumptions underlying the potential solution. 3: Generate a conflicting counterproposal based on the opposite assumptions. 4: Have advocates of each position present their arguments and engage in a debate in front of key decision makers. 5: Decide whether to use, change, or not use the originally proposed solution.

The Four rules of Brainstorming are

1: The more ideas, the better. 2: All ideas are acceptable, no matter how wild or crazy they might seem. 3: Other group members' ideas should be used to come up with even more ideas. 4: Criticism or evaluation of ideas is not allowed.

An effective policy specifies: A: Actions that must be and must not be done B: Why it exists C: Steps to be taken in the event of an emergency

B: Why it exists A policy is a general course of action to be taken in response to a particular event or situation. A policy does not contain specific steps or actions that should or should not be done, but it should contain information about the philosophy underlying it (why it exists) and the outcome the policy is expected to produce.

Complete the table and help Jennifer by selecting the correct types of plans that match the given statements. We will actively seek to acquire an East Coast life-insurance company that has a diverse clientele. A: Purpose statement B: Tactical C: Strategic D: Operational

C: Strategic A strategic plan tells you how the overall organization will achieve its purpose, or mission. In this case, Allworld will attempt to provide low-cost, high-quality insurance to underrepresented populations by acquiring an East Coast life-insurance company. One of the ways you can identify a strategic plan is by its breadth. A strategic plan differs from a purpose statement because it is an activity that is specifically tied to an accomplishment rather than an overarching philosophy. Typically, very senior executives (CEO/CFO/COO or president) set strategic plans.

Suppose that Markus Braun was trying to decide where he should open businesses next. He wants to make a rational decision. What should be his first step in making that decision? A: Identify criteria for judging the decision. B: Generate alternative courses of action. C: Compute the optimal decision. D: Define the problem.

D: Define the problem. The first step in making a rational decision is to define the problem. Braun would need to figure out, for example, if he was looking for a country with lax investment laws, or if he was looking for a country with multiple investment opportunities. In order, the next steps in rational decision making are to identify decision criteria; weigh the criteria; generate alternative courses of action; evaluate each alternative; and compute the optimal decision.

Complete the table and help Jennifer by selecting the correct types of plans that match the given statements. Each sales agent will personally contact three potential clients in an underrepresented community every day. A: Purpose statement B: Tactical C: Strategic D: Operational

D: Operational An operational plan identifies the steps individuals and front-line managers will take in support of tactical or higher level organizational plans. In this case, each sales agent will contact three potential clients to help increase the percentage of new clients in underrepresented populations. Operational plans are very specific. In part, because of this specificity, someone with direct job experience—either the employee or an immediate supervisor—needs to set this plan.

A-type conflict

Disagreement that focuses on individuals or personal issues

Pitfalls of Planning

Impedes change and prevents or slows adaptation Creates a false sense of certainty Detachment of planners

dialectical inquiry is

a decision-making method in which decision makers state the assumptions of a proposed solution (a thesis) and generate a solution that is the opposite (antithesis) of that solution. Another method of creating C-Type conflict.

Brainstorming is

a decision-making method in which group members build on each others' ideas to generate as many alternative solutions as possible

Delphi technique is

a decision-making method in which members of a panel of experts respond to questions and to each other until reaching agreement on an issue

nominal group technique is

a decision-making method that begins and ends by having group members quietly write down and evaluate ideas to be shared with the group.

The first disadvantage that electronic brainstorming overcomes is Production Blocking.

a disadvantage of face-to-face brainstorming in which a group member must wait to share an idea because another member is presenting an idea

Management by objectives

a four-step process in which managers and employees: 1: Discuss possible goals; 2: collectively select goals that are challenging, attainable, and consistent with the company's overall goals; 3: Jointly develop tactical plans that lead to the accomplishment of tactical goals and objectives. 4: Meet regularly to review progress toward accomplishment of those goals.

The first step in decision-making is identifying and defining the problem. A Problem is

a gap between a desired state and an existing state

strategic objective

a more specific goal that unifies company-wide efforts, stretches and challenges the organization, and possesses a finish line and a time frame

relative comparisons

a process in which each decision criterion is compared directly with every other criterion

absolute comparisons

a process in which each decision criterion is compared to a standard or ranked on its own merits

purpose statement

a statement of a company's purpose or reason for existing

Word of your management expertise is starting to spread, and recently the CEO of Gingerforge, a company that manufactures wrought-iron garden gates, reached out to you for advice. Deon, the CEO, is trying to determine whether they should branch out into making patio furniture, such as benches and tables. Deon wants to know if you can help them make the right decision. First, you help Deon get an overview of the decision-making process by outlining what steps effective decision makers use to arrive at a solution to problems. Identify the order in which the steps are usually taken. Identify the decision criteria Compute the optimal decision Generate alternative courses of action Weigh the decision criteria Define the problem Evaluate each alternative

1: Define the problem 2: Identify the decision criteria 3: Weigh the decision criteria 4: Generate alternative courses of action 5: Evaluate each alternative 6: Compute the optimal decision

The following table contains the steps used in creating a workable plan. Identify the order in which the steps are usually taken. Planning Step Develop commitment to goals Track progress toward goal Develop an effective action plan Set goals Maintain flexibility

1: Set goals 2: Develop commitment to goals 3: Develop an effective action plan 4: Track progress toward goal achievement 5: Maintain flexibility

Electronic brainstorming

A decision-making method in which group members use computers to build on each others' ideas and generate as many alternative solutions as possible.

Dawn is a manager for a pet grooming shop. She has decided to engage in planning by creating goals for her employees. Dawn has created a plan to increase revenues at the store by setting goals for each employee to upsell customers into dog pedicures and hair dyeing services, which bring in higher revenues than dog bathing and trimming. Which of the following are likely results of the plan that Dawn has created? Check all that apply. A: Dawn's employees work harder during their shifts. B: The pet groomers become more efficient at bathing and trimming dogs so they have more time for dog pedicures and hair dyeing. C: Dawn notices her employees staying past their shifts the entire month in order to meet their goals. D: After not hitting the revenue goals the first month, Dawn's employees stop trying to up-sell customers and just focus on bathing and trimming.

A: Dawn's employees work harder during their shifts. C: Dawn notices her employees staying past their shifts the entire month in order to meet their goals. D: After not hitting the revenue goals the first month, Dawn's employees stop trying to up-sell customers and just focus on bathing and trimming. Planning offers several important benefits. First, managers and employees put forth greater effort when following a plan. Dawn's employees work harder during their shifts because they have a plan to follow. Next, planning can lead to persistence, meaning that employees will work hard for longer periods of time. Dawn notices her employees staying past their shifts the entire month in order to meet their goals shows the persistence of the employees. A third benefit of planning is that it encourages the development of task strategies in which people find better ways to do their jobs. The pet groomers become more efficient at bathing and trimming dogs so they have more time for dog pedicures and hair dyeing is a good example of task strategies. A final benefit of planning is that it gives people direction.

Businesses commonly rely upon groups to make decisions because of the many advantages to group decision making. Which of the following are advantages of group decision making? Check all that apply. A: Enhanced communication of the decision may result. B: Better decisions generally emerge. C: Equality bias, which causes individuals to treat all group members as equally competent. D: Groupthink may occur.

A: Enhanced communication of the decision may result. B: Better decisions generally emerge.

In general, companies with plans have ________ profits than companies without plans. A: Larger B: Smaller

A: Larger

Using your knowledge of S.M.A.R.T. goals, select the best goal. A: Our division will increase profits by 10 percent by the end of 2021. B: Our division will make money this year. C: Our division will become profitable soon. D: Our division will be successful by the end of 2021.

A: Our division will increase profits by 10 percent by the end of 2021. Increasing profits by 10 percent by the end of 2021 is the best goal. It is specific (you know you have to focus on profitability, not just making money or being successful); it is measurable (you can determine exactly how much your profits have increased from the prior year); it is attainable (if the economy cooperates!); it is result oriented (you are focusing on only one thing); and it is time-bound (you have a specific target date, not just the vague date of soon). All the other goals listed are missing one or more of these key components.

Occasionally, planning can lead to several drawbacks. Which of the following are pitfalls to planning? Check all that apply. A: Planning can hinder change and prevent adaptation. B: Planning does not provide direction for employees. C: Planning can create a false sense of certainty. d: Top-level managers can become detached, planning for things they don't understand.

A: Planning can hinder change and prevent adaptation C: Planning can create a false sense of certainty. d: Top-level managers can become detached, planning for things they don't understand. Planning not only offers several important benefits but also has a few pitfalls. First, planning can hinder change and prevent adaptation. Companies may become so committed to the plan that they fail to see the plans aren't working or that their goals need to change. Planning can create a false sense of certainty. A plan can make managers feel like they know what the future holds when they actually can't plan for how competition, suppliers, and their own companies might change. Top-level managers can become detached, planning for things they don't understand. Plans are meant to be guidelines for action, not abstract theories.

Jennifer couldn't believe her bad luck. The business-planning cycle at Allworld Insurance was almost over. The only thing her boss had asked her to do was to make copies of four sets of final plans. Each set contained a different level of planning, and each was supposed to be delivered to a different manager for review. But now those documents are all over the floor. Everything has to be back in the right order as quickly as possible. Knowing that you are a planning expert, Jennifer asks for your help. She tells you that Allworld Insurance uses an aligned, or cascading, goal system. You can expect to see each set of plans flow in a logical way throughout the company. Complete the table and help Jennifer by selecting the correct types of plans that match the given statements. We provide low-cost, high-quality insurance to underrepresented populations. A: Purpose statement B: Tactical C: Strategic D: Operational

A: Purpose statement A purpose statement defines the reason the company exists—in this case, to provide low-cost, high-quality insurance to underrepresented populations. Note that this statement gives you an overarching purpose for the company—it does not tell you how the company will achieve this purpose. (That is the role of plans.)

Which of the following methods can be used to track goal progress? Check all that apply. A: Setting proximal and distal goals B: Using options-based planning C: Providing performance feedback D; Maintaining slack resources

A: Setting proximal and distal goals C: Providing performance feedback Proximal (short-term) goals are a good way of tracking progress toward distal goals—if you are meeting your proximal goals, you have a good chance of meeting your distal goals. Feedback is also critical to track goal progress. Employees and managers can use feedback to see when they need to change how hard they are working, the type of work they are doing, or the goals they hope to accomplish. Options-based planning and the use of slack resources are ways of maintaining flexibility in planning, not ways to track goal progress.

If you want to encourage group members to be innovative and creative in generating a list of decision alternatives, then it is best to use this approach. A: Delphi technique B: Brainstorming C; Nominal group technique

B: Brainstorming Brainstorming is a decision-making method in which the group builds on each other's ideas to generate a large number of ideas. All ideas are acceptable, no matter how wild or crazy they might seem. In the nominal group technique team members independently rank or vote on ideas, and the idea with the highest average rank is selected. In the Delphi technique, a panel of experts respond to questions and to each other to reach an agreement.

Which of the following is a limitation of the planning process at Wirecard? Check all that apply. A: Goals and plans help employees understand what behaviors are needed at work. B: Goals and plans can derail innovation and creativity. C: Employees may find that the pressure created by goals is too much for them to handle. D: Goals can make managers think they know what the future will be like, even when they don't.

B: Goals and plans can derail innovation and creativity. C: Employees may find that the pressure created by goals is too much for them to handle. D: Goals can make managers think they know what the future will be like, even when they don't. The planning process has several limitations: (1) Employees may find that the pressure created by goals is too much for them to handle; (2) Goals can make managers think that they know what the future will be like, even when they don't; and (3) Goals and plans can derail innovation and creativity. Making employees more committed to work, helping employees understand what behaviors are needed at work, and defining desired performance levels are all advantages of the goal setting and planning process.

Next, you and Deon discuss some of the problems that can occur in the various phases in the decision-making process. For example, when evaluating alternatives, Deon should be careful: A: To fully understand the gap between current and ideal states B: Not to use satisficing, rather than maximizing, as a decision-making approach C: To generate new ideas, instead of considering only tried and true solutions

B: Not to use satisficing, rather than maximizing, as a decision-making approach When evaluating alternatives, most decision makers have neither the time nor the money to maximize their decision making by generating all possible options and thoroughly investigating each one. Instead, they use satisficing, choosing the first option that seems acceptable rather than the best option. But Deon might make a better decision by continuing the evaluation process a bit longer and considering additional alternatives even after they have found a solution that will work.

Complete the table and help Jennifer by selecting the correct types of plans that match the given statements. The Sales Division will routinely monitor the percentage of new clients in underrepresented populations. A: Purpose statement B: Tactical C: Strategic D: Operational

B: Tactical A tactical plan tells you what a large segment (a unit or division) of the organization expects to do in order to help accomplish strategic plans. In this case, the Sales Division will increase the percentage of new clients in underrepresented populations in order to increase sales to those populations. A tactical plan covers only a part of the organization, not the entire organization, and a vice president or director typically sets this plan. As you can see, tactical plans are also a bit more specific than strategic plans.

Decision criteria

the standards used to guide judgments and decisions