Planning and Decision Making PDF

Planning and Decision Making  Planning 1. discuss the benefits and pitfalls of planning 2. describe how to make a plan that works 3. discuss how companies can use plans at all management levels, from top to bottom  Planning Planning is the primary fu...

Planning and Decision Making  Planning 1. discuss the benefits and pitfalls of planning 2. describe how to make a plan that works 3. discuss how companies can use plans at all management levels, from top to bottom  Planning Planning is the primary function of management that involves formulating a future course of action for accomplishing a specific purpose. https://www.youtube.com/watch?v=yibNEcn-4yQ  Concept of planning Managers at all levels of an organization have to ensure that organizational planning meets the requirements. Planning enables managers to decide what task to do, how to do the task, when to do the task and by whom the task has to be done. A plan is an expression of a wish to accomplish specific objectives drawn on the basis of the best predictions of what may take place in the future.  Why should managers plan Managers have several reasons for formulating plans for themselves, their employees and various organizational units. – To offset uncertainty and change – To focus organizational activity on a set of objectives – To provide a coordinated, systematic road map for future activities. – To increase economic efficiency – To facilitate control by establishing a standard for later activity  Benefits of Planning Intensified effort Persistence Direction Creation of task strategies  Pitfalls of Planning Impedes change and prevents or slows adaptation Creates a false sense of certainty Detachment of planners How To Make a Plan That Works  Setting Goals S.M.A.R.T. Goals Specific Measurable Attainable Realistic Timely  Group Activity “S.M.A.R.T. Objectives” Divide the class into small groups (3–4 students). Each group identify an objective developed by real-world companies. Have each group critique the objectives and determine if they meet S.M.A.R.T. guidelines. For every objective that does not meet the criteria, have students indicate why and rewrite the objective. Developing Commitment to Goals Goal commitment – the determination to achieve a goal Set goals collectively Make the goal public Obtain top management’s support  Developing Effective Action Plans An action plan lists… Specific steps (how) People (who) Resources (what) Time period (when) …for accomplishing a goal  Tracking Progress Proximal goals and distal goals Performance feedback Effects of Goal Setting, Training, and Feedback on Safe Behavior in a Bread Factory  Maintaining Flexibility Options-based planning – keep options open by making, small simultaneous investments in many alternative plans. Slack resources – a cushion of resources, like extra time or money, that can be used to address and adapt to unanticipated changes.  Forecasting: A Critical Element of Planning Forecasting involves: forecasting the demand for labour forecasting the supply of labour balancing supply and demand considerations http://www.hrreporter.com/videodisplay/144- 1–17 solutions-to-the-looming-labour-shortage  Formulating Strategy Growth and Mergers and Diversification Acquisitions Corporate Strategy Strategic Alliances 1–18 and Joint Ventures  Business Strategy Value Creation What the firm adds to a product or service by virtue of making it; the amount of benefits provided by the product or service once the costs of making it are subtracted (value = benefits − costs) ▪ Low-cost strategy: competing on productivity and efficiency – Keeping costs low to offer an attractive price to customers (relative to competitors) ▪ Differentiation strategy: competing on added value – Involves providing something unique and distinctive to customers that they value 1–19  Business Strategy Differentiation strategy Competing on unique value added. A differentiation strategy is often based on delivering a high quality product, innovative features , speed to market or superior service.  Business Strategy Functional Strategy: Ensuring Alignment ▪ Vertical Fit/Alignment – Focuses on the connection between the business objectives and the major initiatives in HR ▪ Horizontal Fit/Alignment – Aligning HR practices with one another internally to establish a configuration that is mutually reinforcing 1–21 Class activity Focus on McDonald’s. What HR practices does McDonald’s use to support its low-cost strategy?  Strategy Implementation Taking Action: Reconciling Supply and Demand ▪ Balancing demand and supply considerations – Forecasting business activities (trends) – Locating applicants ▪ Organizational downsizing, outsourcing, offshoring – Reducing “head count” ▪ Making layoff decisions – Seniority or performance? – Collective agreements 1–23  Evaluation and Assessment Evaluation and Assessment Issues ▪ Benchmarking: The process of comparing the organization’s processes and practices to those of other companies ▪ Human capital metrics – Assess aspects of the workforce ▪ HR metrics – Assess the performance of the HR function itself 1–24  Ensuring Strategic Flexibility for the Future Organizational Capability Capacity of the organization to continuously act and change in pursuit of sustainable competitive advantage Coordination Flexibility The ability to rapidly reallocate resources to new or changing needs Resource Flexibility Having human resources who can do many different things in different ways 1–25 Managers’ Role in Strategic Planning Devising the company’s overall strategic plan is top management’s responsibility. However, few top executives formulate strategic plans without lower-level managers’ input. Strategy Map A strategic planning tool that shows the “big picture” of how each department’s performance contributes to achieving the company’s overall strategic goals. In creating your own strategy map, it is important to know that financial metrics are determined by how well a firm meets its customer metrics, and customer metrics are determined by how well the firm meets its operational and people metrics, and operational metrics are influenced by the people scores.  Group activity Prepare strategy map for any company on the four parameters.  Need for a product like – Chotu Kool https://www.youtube.com/watch?v=NZIlo5VeE Pk&t=190s  Godrej as the GE of India https://www.wipo.int/wipo_magazine/en/2013/06/article _0003.html https://www.jica.go.jp/india/english/office/topics/100517. html https://economictimes.indiatimes.com/godrej-boyce-is- getting-sexier-in-a-hurry/articleshow/49241727.cms https://cdn.godrej.com/godrejandboyce/Resources/chang e-mags/2002/novdec/ind_wonderland2.htm  Godrej – Chotu Kool https://www.newsvoir.com/release/godrej-appliances-launches- chotukool-india-s-first-and-only-mobile-food-and-beverage-cooler- 5831.html http://www.smetimes.in/smetimes/news/pr_newswire/2015/Dec/16/ Godrej-Appliances-launches-ChotuKool-India-s-first.html https://brandequity.economictimes.indiatimes.com/news/marketing /heres-how-godrejs-chotukool-is-planning-to- unhungryindia/56216547 https://economictimes.indiatimes.com/industry/cons- products/electronics/godrej-to-take-chotukool-fridge-to-more- markets-this-year/articleshow/8512245.cms  Chotu kool – case study https://www.youtube.com/watch?v=IUADltOgj3w  Important questions to ponder What were the various Environmental factors affecting Godrej. Which business strategy did the company choose. What do you think were the important launch strategies. How this product of the company was different from any other product before this?  Stage 4 Planning – Determining course of action Planning for a low-cost Refrigerator Decision to reduce the cost of conventional compressor based refrigerator. Low cost technology – Peltier cooling Change in design strategy Intensive field research Visit homes to understand their All feedback from the living market were taken to Everyday cooking design the first version of Water bath Chotu Kool Just right technique Chotu kool – Version 1 Low weight – 16 pounds Capacity – 35 litres Temperature – 15 C Electricity – Consumed only half the electrical power Colour – Cherry red Price: $69 Grabbed many innovation awards People initially resistant got convinced because of top management commitment  Results – 2009 launch (Stage 5 – making changes and re-launch) Technical problems – Business model not blended well Cooling did not meet with reaching out to customers. customers needs Branding was missing. Previous strategy with A new market with most other refrigerators did not enthusiastic potential customers match here. was discovered which earlier was not identified – ‘Mom n Pop’ shops. REPLANNING RELAUCH Chotu Kool Version 2 Cooling improved by 35% Attractive look and stylish Wide range of colors and patterns FOCUS ON SELLING STRATEGY Partner with India Post, Microfinance banks and retailers like ‘Sakhi Retail’ CHALLENGES Value of the brand Investment on new sales and distribution segment. Planning, Implementation and Controlling Planning from Top to Bottom  Starting at the Top Strategic plans – make clear how the company will serve customers and position itself against competitors in the next 2 to 5 years Purpose statement – a statement of a company’s purpose or reason for existing Strategic objective – a more specific goal that unifies company-wide efforts, stretches and challenges the organization, and possess a finish line and a time frame.  Bending in the Middle Tactical plans – specify how a company will use resources, budgets, and people to accomplish specific goals related to its strategic objective – time frame: 6 months to 2 years Management by Objectives (MBO) – discuss possible goals – collectively set goals – jointly develop tactical plans – meet regularly to review progress  Finishing at the Bottom Operational plans Single-use plans Standing plans – policies – procedures – rules and regulations Budgets  What Is Rational Decision Making? 4. explain the steps and limits to rational decision making 5. explain how group decisions and group decision-making techniques can improve decision making  Steps to Rational Decision Making 1. Define the problem 2. Identify decision criteria 3. Weight the criteria 4. Generate alternative courses of action 5. Evaluate each alternative 6. Compute the optimal decision  Define the Problem Existing state PROBLEM Desired state  Identify Decision Criteria The standards used to guide judgments and decisions.  Weight the Criteria Absolute comparisons Relative comparisons Absolute Weighting of Decision Criteria for a Car Purchase Relative Comparison of Home Characteristics  Generate Alternative Courses of Action After identifying and weighting the criteria that will guide the decision-making process, the next step is to identify possible courses of action that could solve the problem. The idea is to generate as many alternatives as possible.  Evaluate Each Alternative The next step is to systematically evaluate each alternative against each criterion. The key is to use information to systematically evaluate each alternative against each criterion. Criteria Ratings Used to Determine the Best Location for a New Office  Compute the Optimal Decision (rating for criterion A) x (weight for criterion A) + (rating for criterion B) x (weight for criterion B) + (rating for criterion C) x (weight for criterion C) etc.  Limits to Rational Decision Making In theory, fully rational decision makers maximize decision by choosing the optimal solution. In practice, limited resources make it nearly impossible to maximize decisions.  Advantages of Group Decision Making Groups do a better job than individuals at Defining the problem Generating alternative solutions  Pitfalls of Group Decision Making Groupthink – occurs in highly cohesive groups when group members feel intense pressure to agree with each other so that the group can approve a proposed solution Takes considerable time Strong willed members  Class Activity “Campus Decisions” Divide the class into groups of 3 to 4 students to work through deciding where to live as a new college student. Each group should generate a list of decision criteria, weight the criteria both in an absolute and relative fashion, and then generate a list of alternatives (like apartment, house, dorm, Greek house, parents’ house). Depending on the amount of time you have available, you may want to assign students to work independently out of class to evaluate the options and compute the final decision.