CBME1 Business Organization and Management PDF

 CBME1 Business Organization and Management Course Description: This is an introductory course in management for business and accountancy students who need to grasp the big picture of management concepts, processes and techniques as practiced today in business, industry, and...

 CBME1 Business Organization and Management Course Description: This is an introductory course in management for business and accountancy students who need to grasp the big picture of management concepts, processes and techniques as practiced today in business, industry, and government. The students gain a solid grasp of how effective managers orchestrate human resources and their own energies to contribute an organization’s successful achievement of its mission and bottom-line goals.  Lesson 1: I. What is Management? II. Managerial Planning III. The Evolution of Management Thought and the Evolution of Management Theories IV. Living In A Pluralistic Society V. Ethical and Social Responsibility VI. What is International Business? VII. Multinational Companies  Learning Objectives Our objectives for Lesson 1 are the following: Examine what managerial planning is and why it is important. Identify and analyse the various types of plans and show how they relate to one another. Explain the nature and purpose of strategies and policies. Describe the strategic planning process. Compare the TOWS matrix and the business portfolio matrix. Identify some major kinds of strategies and policies and the hierarchy of strategies.  “What is Management?”  What is Management? Management is defined as getting work done through others. Management (or managing) is the administration of an organization, whether it is a business, a not-for-profit organization, or government body. The term "management" may also refer to those people who manage an organization - individually: managers.  Managerial Planning Planning means looking ahead and chalking out future courses of action to be followed. It is a preparatory step. It is a systematic activity which determines when, how and who is going to perform a specific job. Planning is a detailed programmed regarding future courses of action. “Well plan is half done”.  Managerial Planning According to Urwick, “Planning is a mental predisposition to do things in orderly way, to think before acting and to act in the light of facts rather than guesses”. According to Koontz & O’Donell, “Planning is deciding in advance what to do, how to do and who is to do it. Planning bridges the gap between where we are to, where we want to go. It makes possible things to occur which would not otherwise occur”.  Managerial Planning Steps in Planning Function 1.Establishment of Objectives 2.Establishment of Planning Premises 3.Choice of Alternative Course of Action 4.Formulation of Derivative Plans 5.Securing Co-operation 6.Follow up/Appraisal of Plans  Steps in Planning Function 1. Establishment of objectives Planning requires a systematic approach. Planning starts with the setting of goals and objectives to be achieved. Objectives provide a rationale for undertaking various activities as well as indicate direction of efforts. Objectives can be stated in quantitative and qualitative terms.  Steps in Planning Function 2. Establishment of Planning Premises Planning premises are the assumptions about the lively shape of events in future. Establishment of planning premises is concerned with determining where one tends to deviate from the actual plans and causes of such deviations. Planning premises may be internal or external. Internal includes capital investment policy, management labor relations, philosophy of management, etc. Whereas external includes socio- economic, political and economic changes. Internal pre mi s e s a re c o nt ro l l a bl e w he r e a s e x t e r n a l a r e n o n - controllable.  Steps in Planning Function 3. Choice of alternative course of action When forecast is available and premises are established, a number of alternative course of actions have to be considered. For this purpose, each and every alternative will be evaluated by weighing its pros and cons in the light of resources available and requirements of the organization. After objective and scientific evaluation, the best alternative is chosen. The planners should take help of various quantitative techniques to judge the stability of an alternative.  Steps in Planning Function 4. Formulation of derivative plans Derivative plans are the sub plans or secondary plans which help in the achievement of main plan. Secondary plans will flow from the basic plan. These are meant to support and expedite the achievement of basic plans. Derivative plans indicate time schedule and sequence of accomplishing various tasks.  Steps in Planning Function 5. Securing Co-operation After the plans have been determined, it is necessary rather advisable to take subordinates or those who have to implement these plans into confidence. The purposes behind taking them into confidence are: Ø Subordinates may feel motivated since they are involved in decision making process. Ø The organization may be able to get valuable suggestions and improvement in formulation as well as implementation of plans. Ø Also the employees will be more interested in the execution of these plans.  Steps in Planning Function 6. Follow up/Appraisal of plans After choosing a particular course of action, it is put into action. After the selected plan is implemented, it is important to appraise its effectiveness. This is done on the basis of feedback or information received from departments or persons concerned. This step establishes a link between planning and controlling function. The follow up must go side by side the implementation of plans so that in the light of observations made, future plans can be made more realistic.  ACTIVITY No. 1 How would you integrate the six steps in the planning function into both your work and academic activities? Provide specific examples for each step.  Management Theories Management theories are a collection of ideas that recommend general rules for how to manage an organization or business. Management theories address how supervisors implement strategies to accomplish organizational goals and how they motivate employees to perform at their highest ability.  SCIENTIFIC MANAGEMENT THEORY SCIENTIFIC MANAGEMENT THEORY This theory is introduced by Frederick W. Taylor, who is also known as “The Father of Scientific Management”. Scientific management theory applies scientific approach in doing a task. It follows a step-by- step procedure in performing a specialized task in order to expedite the process that will increase worker’s productivity and establish the “best way” of doing the task. SCIENTIFIC MANAGEMENT THEORY Scientific management theory introduce the concept of a “Fair Day’s Pay for Fair Day’s Work”. This means that workers must be paid according to the amount produced. Taylor wants to encourage improved productivity through monetary compensation. (piece rate system)  Principles of Scientific Management 1. “Time and Motion” study- it is a systematic approach performed in order to determine how jobs are being done and identify which way will only take a little time and a little motion to finish a task. This replace the rule of thumb method (Hit or Miss Approach).  Principles of Scientific Management 2. Scientifically select and then train, teach and develop the workers. Workers are being chosen and train based on their abilities and skills to perform a specialized task that will eventually makes them to become experts of the job.  Principles of Scientific Management 3. Heartily cooperate with the workers so as to ensure that all work is done in accordance with principles of science that has been developed. The managers work closely with the workers to supervise their performance and to ensure increase in productivity by following the required process.  Principles of Scientific Management 4. Divide work and responsibility almost equally between the management and the workers. This only means that both manager and the workers shares equal amount of responsibility wherein the managers handles the planning functions as the workers will be performing the tasks. Do you have any questions about Scientific Management Theory?  Review…Review…Review… Steps in Planning Function Scientific Management Theories Administrative Management Theories  ADMINISTRATIVE MANAGEMENT THEORY ADMINISTRATIVE MANAGEMENT THEORY This theory is developed by Henri Fayol, who is known as “The Father of Modern Management”. Administrative Management Theory focuses on the efficient implementation of organizational management practices. It emphasizes on how managers perform his m a n a g e r i a l fu n c t i o n s t h a t w i l l b o t h b e n e f i t t h e organization and the employees. ADMINISTRATIVE MANAGEMENT THEORY Administrative Management Theory promotes top-down approach. This means that the command will come from the top m a n a g e m e n t downwards to the last l e v e l o f t h e organizational structure. ADMINISTRATIVE MANAGEMENT THEORY Fayol’s 14 Principles of Management 1. Division of Labor Dividing the full work of the organization among individuals and creating departments is called the division of work. 2. Authority and Responsibility Authority must be equal to Responsibility. According to Henri Fayol, there should be a balance between Authority (Power) and Responsibility (Duties). The right to give orders should not be considered without reference to responsibility. Fayol’s 14 Principles of Management 3. Discipline Discipline means respect for the rules and regulations of the organization. Discipline may be Self-discipline, or it may be Enforced discipline. 4. Unity of Command According to this principle, a subordinate (employee) must have and receive orders from only one superior (boss or manager). Fayol’s 14 Principles of Management 5. Unity of Direction One head and one plan for a group of activities with the same objective. All activities which have the same objective must be directed by one manager, and he must use one plan. 6. Subordination of Individual Interest The interest of one individual or one group should not prevail over the general good. The interest of the organizational goal should not be sabotaged by the interest of an individual or on the group. Fayol’s 14 Principles of Management 7. Remuneration Remuneration is the price for services received. Pay should be fair to both the employee and the firm. 8. Centralization In centralization, the authority is concentrated only in a few hands. However, in decentralization, the authority is distributed to all the levels of management. No org ani zat i on c an be c om pl e t e l y c e nt ral i ze d o r decentralized. Fayol’s 14 Principles of Management 9. Scalar Chain of Authority The chain of command, sometimes called the scalar chain, is the formal line of authority, communication, and responsibility within an organization. The chain of command is usually depicted on an organizational chart. 10. Maintenance of Order There should be an Order for material/things and people in the organization. Order for things is called Material Order and order for people is called ‘Social Order’. Material Order refers to “a place for everything and everything in its place.” Social Order refers to the selection of the “right man in the right place.” Fayol’s 14 Principles of Management 11. Equity/Fairness Equity is a combination of kindness and justice. It creates loyalty and devotion in the employees toward the organization. 12. Stability/Security of Tenure Employees need to be given fair enough time to settle into their jobs. An employee needs time to learn his job and to become efficient. Fayol’s 14 Principles of Management 13. Employee Initiative to General Interest Equity is a combination of kindness and justice. It creates loyalty and devotion in the employees toward the organization. 14. Promotion of Team Spirit or Esprit de Corps The management should create unity, co-operation, and team-spirit among the employees. Harmony, cohesion among personnel. It’s a great source of strength in the organization.  Do you have any questions about Administrative Management Theory? Organization and Management Ms. Lovely P. Miranda, LPT  BUREAUCRATIC THEORY BUREAUCRATIC THEORY This theory is introduced by Max Weber management is defined by clear set of rules division of labor promotes formal and impersonal relations develops a clear hierarchical structure of authority follows a legal-rational approach Do you have any questions about Bureaucratic Theory?  ORGANIZATIONAL BEHAVIOR (OB) APPROACH ORGANIZATIONAL BEHAVIOR (OB) APPROACH This theory is supported by Robert Owen, Mary Parker Follett, Hugo Munsterberg, and Chester Barnard. focus on analyzing and understanding the behavior of people within their groups and at work re c o g n i ze t h e p s yc h o - s o c i a l a s p e c t s o f e ve r y employees promotes human relations that helps people to learn how to get along well with others Do you have any questions about Organizational Behavior Approach?  TOTAL QUALITY MANAGEMENT (TQM) TOTAL QUALITY MANAGEMENT (TQM) This theory is proposed by quality experts, W. Edwards Deming and Joseph M. Juran focus on customer satisfaction both external and internal This theory give emphasis on how to meet the needs and demands of the external customers in terms of providing quality products and services and at the same time the internal which are the employees through providing continuous development and rewards system.  TOTAL QUALITY MANAGEMENT (TQM) TQM promotes the continuous improvement in the quality of both the products and services as well as the people. Total quality management is a much broader concept than just controlling the quality of the product itself. Total quality management is the coordination of efforts directed at improving c u s t o m e r s a t i s fa c t i o n , i n c r e a s i n g e m p l o ye e participation, strengthening supplier partnerships, and facilitating an organizational atmosphere of continuous quality improvement.  TOTAL QUALITY MANAGEMENT (TQM) Fourteen Points in TQM 1.Create constancy of purpose for improvement of product and service. 2.Adopt a new philosophy. 3.Cease dependence on mass inspection. 4.End awarding business on price. 5.Improve the system of production and service constantly. 6.Institute training. 7.Institute leadership.  TOTAL QUALITY MANAGEMENT (TQM) Fourteen Points in TQM 8.Drive out fear. 9.Break down barriers between departments. 10.Eliminate slogans, exhortations, and numerical targets for the workforce. 11.Eliminate numerical quotas or work standards. 12.Remove barriers that prevent workers from taking pride in their workmanship. 13.Institute a vigorous program of education. 14.Take action to accomplish the transformation. Do you have any questions about Total Quality Management?  THEORY Z Theory Z Of Ouchi Is Dr. William Ouchi's so called "Japanese Management" style popularized during the Asian Economic Boom Of The 1980s. 'Theory Z' focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job. T h e o r y Z m a n a g e m e n t t e n d s t o p r o m o t e s t a b l e employment, high productivity, and high employee morale and satisfaction. "Japanese Management" and Theory Z itself were based on Dr. W. Edwards Deming's famous "14 points". PLURALISTIC SOCIETY  PLURALISTIC SOCIETY Do you belong to any clubs or groups? Have you ever joined a local basketball team, participated in a Model UN program, or helped fundraise for your child's school? These are all ways that we are a part of a pluralistic society.  PLURALISTIC SOCIETY E Pluribus Unum, which is Latin for ''out of many, one.'' A pluralistic society is defined as a place where different religious, ethnic and cultural groups live together.  PLURALISTIC SOCIETY Cultural pluralism is a term used when smaller groups within a larger society maintain their unique cultural identities, and their values and practices are accepted by the wider dominant culture provided they are consistent with the laws and values of the wider society.  PLURALISTIC SOCIETY Philosopher Horace Kallen is widely credited as being the originator of the concept of cultural pluralism. Kallen's 1915 essay in The Nation, Democracy versus the Melting Pot, was written as an argument against the concept of the "Americanization" of European immigrants.  PLURALISTIC SOCIETY Diversity and pluralism How can people live together peacefully?  PLURALISTIC SOCIETY In an authoritarian system – one-party rule, theocracy, or even dictatorship – this problem is solved by giving one player (for example, a party or leader) the power to decide on everyone’s behalf what lies in the common interest.  PLURALISTIC SOCIETY In a democracy, citizens basically agree on a set of principles, on rules of procedure and rights that allow them to disagree on many issues, but which also offer the tools to enable them to reach agreement by non- violent means.  PLURALISTIC SOCIETY Such a social contract includes the principle of rule by the majority. This is why it is important to have legislation for human rights and freedoms built into the constitutions of democratic countries.  PLURALISTIC SOCIETY Every generation must understand this complex set of challenges in pluralist societies and how they may be met in a democratic community. ETHICAL and SOCIAL RESPONSIBILITY Ethical And Social Responsibility What is ethical behavior? Are you the type of person who usually ‘does the right thing’? How do you know what the ‘right thing’ is? Ethical And Social Responsibility Ethical Behavior The branch of philosophical study that focuses on ‘ethics’ is concerned with studying and/or building up a coherent set of ‘rules’ or principles by which people ought to live. Ethical And Social Responsibility There are three broad areas of ethical study 1.Meta-ethics, which focuses on the meaning of ethical terms themselves (for instance, ‘what is goodness?’), and on questions of how ethical knowledge is obtained (for instance, ‘how can I distinguish what is good from what is bad?’), rather than on the more applied question of ‘what should I do in a particular situation?’ Ethical And Social Responsibility There are three broad areas of ethical study 2.Normative ethics, in contrast, is the study of ethical acts. It therefore focuses explicitly on questions of ‘what is the right thing to do?’ in general. Normative ethics is concerned with questions of what people ought to do, and on how people can decide what the ‘correct’ moral actions to take are. Ethical And Social Responsibility There are three broad areas of ethical study 3.Applied ethics, which is concerned with how people can achieve moral outcomes in specific situations. Therefore, it is concerned with the philosophical examination of particular – and often complex – issues that involve moral judgments. MANAGEMENT ETHICS  MANAGEMENT ETHICS Meaning of Management Ethics: ‘Management Ethics’ is related to social responsiveness of a firm. It is “the discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation. It is a standard of behavior that guides individual managers in their works”.  Management Ethics Management Ethics: ‘“It is the set of moral principles that governs the actions of an individual or a group.” Business ethics is application of ethical principles to business relationships and activities.  Management Ethics Managerial ethics are standards of conduct or moral judgment used by managers of organizations in caring out their business. Archi B Carroll notes that three major levels of moral or ethical, judgment characterize managers: immoral management, amoral management, and moral management.  Management Ethics Immoral Management Immoral management not only lacks ethical principles but also is actively opposed to ethical behaviour. Moral Management In contrast to immoral management, moral management strives to follow ethical principles and percepts. Amoral Management The amoral management approach is neither immoral nor moral but, rather, ignores or is oblivious to ethical considerations.  Management Ethics Two Types Of Amoral Management 1.Intentional: Amoral managers do not include ethical concerns in their decision - making, or behavior. 2.Unintentional: The se m anag e rs are basi c al l y inattentive or insensitive to the moral implications of their decision-making, actions, and behaviour.  Learning Objectives Our objectives for Lesson 1 are the following: Examine what managerial planning is and why it is important. Identify and analyse the various types of plans and show how they relate to one another. Explain the nature and purpose of strategies and policies. Describe the strategic planning process. Compare the TOWS matrix and the business portfolio matrix. Identify some major kinds of strategies and policies and the hierarchy of strategies.  International Business What is International Business? International business refers to the trade of goods, services, technology, capital and/or knowledge across national borders and at a global or transnational scale. It involves cross- border transactions of goods and services between two or more countries.  International Business Means Of Businesses Entry modes: Export/import, wholly owned subsidiary, merger or acquisition, alliances and joint ventures, licensing Modes: importing and exporting, tourism and transportation, licensing and franchising, turnkey operations, management contracts, direct investment and portfolio investments. Functions: marketing, global manufacturing and supply chain management, accounting, finance, human resources. Overlaying alternatives: choice of countries, organization and control mechanisms  International Business Geographical influences: There are many different geographic factors that affect international business. Social factors: Political policies: political disputes, particularly those that result in the military confrontation, can disrupt trade and investment. Legal policies: domestic and international laws play a big role in determining how a company can operate overseas. Behavioral factors: in a foreign environment, the related disciplines such as anthropology, psychology, and sociology are helpful for managers to get a better understanding of values, attitudes, and beliefs. Economic forces: economics explains country differences in costs, currency values, and market size. International Business Types of International Business 1.Global Corporations 2.Countertrade  International Business 1. Global Corporations A g l obal c om pany i s g e ne r a l l y r e f e r r e d t o a s a multinational corporation (MNC). An MNC is a company that operates in two or more countries, leveraging the global environment to approach varying markets in attaining revenue generation. https://business.inquirer.net/261558/globalizing-corporate-philippines  International Business These challenges can loosely be defined through four factors 1.Public Relations: Public image and branding are critical components of most businesses. 2.Ethics: Arguably the most substantial of the challenges faced by MNCs, ethics have historically played a dramatic role in the success or failure of global players. 3.Organizational Structure: International expansion requires enormous capital investments in many cases, along with the development of a specific strategic business unit (SBU) in order to manage these accounts and operations. 4.Leadership: The final factor worth noting is attaining effective leaders with the appropriate knowledge base to approach a given geographic market.  International Business Combining these four challenges for global corporations with the inherent opportunities presented by a global economy, companies are encouraged to chase the opportunities while carefully controlling the risks to capture the optimal amount of value.  International Business 2. Countertrade Countertrade is a system of exchange in which goods and services are used as payment rather than money.  International Business There are five main variants of countertrade: Barter: Exchange of goods or services directly for other goods or services without the use of money as means of purchase or payment. Switch trading: Practice in which one company sells to another its obligation to make a purchase in a given country. Counter purchase: Sale of goods and services to one company in another country by a company that promises to make a future purchase of a specific product from the same company in that country.  International Business There are five main variants of countertrade: Buyback: This occurs when a firm builds a plant in a country, or supplies technology, equipment, training, or other services to the country, and agrees to take a certain percentage of the plant’s output as partial payment for the contract. Offset: Agreement that a company will offset a hard currency purchase of an unspecified product from that nation in the future.  Multinational Corporation What is a Multinational Corporation? A multinational corporation is a company that operates in its home country, as well as in other countries around the world. It maintains a central office located in one country, which coordinates the management of all other offices such as administrative branches or factories.  Multinational Corporation Characteristics of a Multinational Corporation 1. Very high assets and turnover to become a multinational corporation 2. Network of branches multinational companies keep production and marketing operations in different countries. 3. Control, the source of command is found in the home country. 4. Continued growth, multinational corporations keep growing. 5. Sophisticated technology 6. Right skills 7. Forceful marketing and advertising 8. Good quality products  Multinational Corporation Advantages of Being a Multinational Corporation 1.Efficiency 2.Development 3.Employment 4.Innovation  SEMESTRAL OUTPUT Class will be divided into groups, 6 members each group. You are task to make a research paper regarding Global/Multinational Corporations. Format for Research: – Long Bond paper, Margin: Normal – Font: Times New Roman, size 12, Line Spacing 1.5 Submission: Nov. 24, 2022 (Thursday)  SEMESTRAL OUTPUT Instructions: A.Give a brief background of the company. How the company has started? What is their products or services? What is their current market standing in the Philippines? What other companies they acquired or affiliated with? B. Discuss their journey in global market. How they started their venture in global market? What countries they are engaged in? What is their current standing in global market?  PLANNING Planning is a detailed program regarding future courses of action. Planning is outlining a future course of action in order to achieve an objective, organization often fails not because of lack of resources but because of poor planning. Essentials of Planning “Planning is about managing resources and priorities in an organized way”. “Management is related to leadership, and it’s related to productivity.”  PLANNING The following steps can help businesses plan better. 1.Devise a Plan: Write important details down and focus on strengths. 2.Define Success: Define long-term goals and be specific. 3.Put It in Motion: Track and analyze numbers to help you manage the work behind the numbers.  PLANNING Types of Planning 1.S t r a t e g i c p l a n s a r e d e s i g n e d w i t h t h e e n t i r e organization in mind and begin with an organization's mission. Strategic plans are all about why things need to happen,” 2.Tactical plans support strategic plans by translating them into specific plans relevant to a distinct area of the organization. “Tactical plans are about what is going to happen,”  PLANNING Types of Planning 3.Operational plans they are the plans that are made by frontline, or low-level, managers. Operational plans are about how things need to happen,” Operational plans can be either single-use or ongoing plans. Single-use plans are those plans that are intended to be used only once. Ongoing plans include policies for approaching problems, rules for specific regulations and procedures for a step-by- step process for accomplishing.  PLANNING Types of Planning 4.Contingency planning can be helpful in circumstances that call for a change. Contingency plans are made when something unexpected happens or when something needs to be changed. PLANNING  PLANNING PROCESS 1. Recognizing Need for Action An important part of the planning process is to be aware of the business opportunities in the firm’s external environment as well as within the firm. 2. Setting Objectives The most important step of the planning process. Organizational objectives provide a general direction, objectives of departments will be more planned and detailed. 3. Developing Premises In the function of management certain assumptions will have to be made. These assumptions are the premises.  PLANNING PROCESS 4. Identifying Alternatives. The fourth step is to identify the alternatives available to the managers. 5. Examining Alternate Course of Action. The alternative plans need to be evaluated in light of the organizational objectives. 6. Selecting the Alternative. The decision-making stage of the planning process. Now the best and most feasible plan will be chosen to be implemented.  PLANNING PROCESS 7. Formulating Supporting Plan. Managers will have to come up with one or more supporting plans. These secondary plans help with the implementation of the main plan. 8. Implementation of the Plan. This is when all the other functions of management come into play and the plan is put into action to achieve the objectives of the organization.  PLANNING PROCESS Objectives or Goals The intended goal prescribes definite scope and suggests direction to maximize the efforts of a manager. It is also synonymous to aim, purpose, goal and mission. Mission It is the purpose or reason for the existence of an organization. The mission can be defined in terms of an organization's product/services or markets/customers.  PLANNING PROCESS Long-Range and Short-Range Objectives Long-range objectives generally go beyond the current fiscal year of the organization. Short-range objectives should be derived from an in-depth evaluation of the organization's long-range objectives. Such an evaluation should result in a listing of priorities. Objectives should be clear, concise, and quantified when possible. Management by Objectives (MBO) Management by Objectives (MBO) is a strategic management model that aims to improve the performance of an organization by clearly defining objectives that are agreed to by both management and employees. Management by objectives (MBO) is the establishment of a management information system to compare actual performance and achievements to the defined objectives. Management by Objectives (MBO) Management by Objectives Steps 1. To either determine or revise organizational objectives for the entire company. 2. To t ransl at e t he org ani zat i onal o b j e c t i v e s t o employees. SMART (specific, measurable, acceptable, realistic, time-bound) 3. Stimulating the participation of employees in setting individual objectives. 4. Monitoring the progress of employees. 5. To evaluate and reward employee progress. The Nature And Purpose Of Strategies And Policies STRATEGY: The determination of the mission or purpose and the basic long-term objectives of an enterprise, followed by the adoption of courses of action and allocation of resources necessary to achieve these aims. POLICIES General statements or understandings that guide managers’ thinking in decision making. They ensure that the decisions fall within certain boundaries. The Nature And Purpose Of Strategies And Policies SIMILARITIES MAJOR DIFFERENCES They give direction T h e e s s e n c e o f p o l i c y i s discretion They are frame work for Strategy concerns the plans discretion, in which human and They are the basis of material resources will be operational plans applied in order to increase the chance of achieving selected They affect all areas of objectives managing T a c t i c s : t h e a c t i o n p l a n s through which strategies are executed. THE STRATEGIC PLANNING Strategic planning is a management activity often used by businesses to better focus their energy, establish priorities, and strengthen operations to achieve targeted goals. THE STRATEGIC PLANNING What is the Strategic Planning Process? The strategic planning process is essentially a list of steps that managers should follow to complete and implement a strategy within a company.  THE STRATEGIC PLANNING STAGES OF STRATEGIC PLANNING PROCESS 1. Identify Your Strategic Position 2. Gather People and Information 3. Perform a SWOT Analysis 4. Formulate a Strategic Plan 5. Execute Your Strategic Plan 6. Constantly Monitor Performance TOWS MATRIX THE STRATEGIC PLANNING THE STRATEGIC PLANNING THE STRATEGIC PLANNING THE STRATEGIC PLANNING  THE PORTFOLIO MATRIX THE PORTFOLIO MATRIX: A TOOL FOR ALLOCATING RESOURCES This tool was developed by Boston consulting group in 1970s. This is a relationship between Market Growth and Market share of a company/ its business unit or a product. This was developed for large corporations with several divisions, called as Strategic Business Units (SBUs) for the allocation of resources in the right place. THE PORTFOLIO MATRIX  THE PORTFOLIO MATRIX Four Types of Strategic Business Units (SBU’s) 1.Stars - are high growth businesses or products competing in markets where they are relatively strong compared with the competition. 2.Cash cows - are low-growth businesses or products with a relatively high market share. These are mature, successful businesses with relatively little need for investment.  THE PORTFOLIO MATRIX Four Types of Strategic Business Units (SBU’s) 3.Question marks - are businesses or products with low market share but which operate in higher growth markets. 4.Dogs - the term "dogs" refers to businesses or products that have low relative share in unattractive, low-growth markets. Dogs may generate enough cash to break-even, but they are rarely, if ever, worth investing in. PORTER’S GENERIC COMPETITIVE STRATEGY Michael Porter's Generic Strategies are a useful fram e w ork for organizations to identify a potential niche in which they can gain a competitive advantage in any industry. PORTER’S GENERIC COMPETITIVE STRATEGY Cost Leadership This strategy generally consists of an organization attempting to gain a market share by appealing to cost- conscious or cost-restricted customers or consumers. Differentiation The general focus is to make their products different or more attractive than any other within the industry to achieve a competitive advantage. PORTER’S GENERIC COMPETITIVE STRATEGY Cost Focus Refers to organizations who seek to develop a lower- cost advantage, but only within a small market segment. Differentiation Focus The organization will look to develop product differentiation, but only within one or a smaller number of market segments.  PLANNING PREMISES Planning Premises The forecast or the assumptions about future which provide a base for planning in present. They are “the anticipated environment in which plans are expected to operate. They include assumptions or forecasts of the future and known conditions that will affect the operation of plans.  PLANNING PREMISES Process of Planning Premises 1.Selection of the Premises. In order to analyze the factors that affect developing the premises, two factors have to be considered: a. The probability of impact of factors: It represents whether the factors under study affect or do not affect the planning premises. b. The degree of impact of factors: Given the factors which have the probability of developing planning premises, it represents the degree to which these factors affect the planning premises.  PLANNING PREMISES Process of Planning Premises 2.Development of alternative premises: Since factors affecting organizational plans cannot be perfectly predicted, managers should develop alternative premises i.e., plans under different sets of assumptions about the future events. 3.Verification of premises Planning staff at different levels of different departments makes plans according to their judgment. 4.Communication of premises After the premises are developed, they are supported by budgets and programs and communicated to all those concerned with development of plans at different levels in different departments.  PLANNING PREMISES Different types of planning premises are: 1. Internal and external Premises Internal premises originate from factors within the enterprise. External premises originate from factors outsi de t he organization. 2. Controllable, semi-controllable and non-controllable premises Controllable premises are within the control of a business enterprise, such as, men, money, materials, policies, procedures, programs etc. Semi-controllable premises are those which can be partially controlled by a business enterprise like, labor position in the market, prices of the product, market share of the company etc. Non-controllable premises lie beyond the control of the business enterprise.  PLANNING PREMISES Different types of planning premises are: 3. Tangible and intangible premises Tangible premises can be estimated in quantitative terms like, production units, cost per unit etc. Intangible premises cannot be quantified, for example, goodwill of the firm, employer-employee relationships, leadership qualities of the managers, motivational factors that affect employees’ performance etc.  DECISION MAKING Decision Making The process of deciding about something important, especially in a group of people or in an organization. - Oxford Advanced Learner’s Dictionary “Decision-making involves the selection of a course of action from among two or more possible alternatives in order to arrive at a solution for a given problem”. - Trewatha & Newport  DECISION MAKING The Importance and Limitations of Rational Decision Making Decision making was considered a major part of planning. Thus, in this context the process leading to a decision may be thought of a 1.premising 2.identifying alternatives 3.evaluating alternatives in terms of the goal sought 4.Choosing an alternative, that is making a decision.  DECISION MAKING Rationality in Decision Making People seldom achieve complete rationality, particularly in managing. Why? 1.No one can make decisions affecting the past, decisions must operate for the future, and the future almost invariably involves uncertainties. 2.It is difficult to recognize all alternatives that might be followed to reach a goal: this is particularly true when decision making involves doing something that has been done before.  DECISION MAKING Limited or Bounded Rationality A manager must settle for limited or bounded rationality, a limitation of information, time, and certainty limit rationality, even if the manager earnestly to be completely rational. Decision Making in an Organizational Context 1.the right kind of information, 2.the complete information, and 3.The ability to synthesize and make sense of the information.  DECISION MAKING Steps in Decision Making Process 1. Defining the problem 2. Gathering information and collecting data 3. Developing and weighing the options 4. Choosing best possible option 5. Plan and execute 6. Take follow up action DECISION MAKING Individual Decision Making  DECISION MAKING The Process of Corporate Decision Making Top down Decision Making Decision making is done at the higher levels of the hierarchy and the decisions are passed down the corporate ladder to be implemented. Bottom Up Decision Making Decision making is done by giving autonomy to the middle managers and the line managers to take decisions based on the conditions and circumstances existing in their teams.  DECISION MAKING Sandwich Layer The middle management is often called the “sandwich” layer because they have to implement the decisions made above and at the same time have to decide about how to run the teams and have to communicate them to the lower levels. Corporate decision making is successful as long as there is a “glue” to bind the organization together in the form of charismatic leaders or an organizational culture that values coherence and imposes stability. Development of Alternatives and the Limiting Factor Development of Alternatives and the Limiting Factor SELECTING AN ALTERNATIVES: THREE APPROACHES 1.Experience Reliance, on past experience, probably plays a larger part than it deserves in decision making. 2.Experimentation This is often used in scientific inquiry. 3.Research and Analysis One of the most effective techniques for selecting for alter n a t i v e s. T h i s m e a n s s o l v i n g a p r o b l e m f i r s t b y comprehending. Development of Alternatives and the Limiting Factor PROGRAMMED AND NONPROGRAMMED DECISIONS PROGRAMMED DECISIONS This are used for structured or routine work, it also used for routine or repetitive works e.g. reordering of standard inventory items. NONPROGRAMMED DECISIONS This are used for unstructured, novel and ill-defined situations of non-recurring. Development of Alternatives and the Limiting Factor BRAINSTORMING A popular technique in enhancing creativity developed by Alex F. Osborne, the Father of brainstorming. The purpose of this approach is to improve problem solving by finding new and unusual solutions, it emphasizes group thinking. RULES IN BRAINSTORMING 1.No ideas are ever criticized 2.The more radical the ideas are, the better 3.The quantity of idea production is stressed 4.The improvement of ideas of others is encouraged