Management 1: Principles of Management
Planning
Planning
•
deciding in advance what to do and how to do it
•
involves setting objectives and developing appropriate course of actions to achieve them
•
considered as the most basic of all managerial functions
•
without it, other managerial functions cannot be done effectively and efficiently
•
first function of management, requires decision-making
Nature of Planning
a. Primary – logically performed before all the other managerial functions
b. Goal-oriented – it must contribute to the achievement of objectives and overall purpose of an
organization
c. Pervasive – it is a function of all managerial position, although the scope may differ from one authority to
the other
d. Efficient – it is done to avoid wastage of resources, especially time
Types of Plans
I. Based on Organizational Levels
1. Strategic Plan – designed for the overall vision by top-level management for the
organization
2. Tactical Plan – designed for the achievement of a particular undertaking usually by
middle-level management
3. Operational Plan – designed for the regular activities of a unit by first-line management
II. Based on Frequency
1. Single Plan – used only once; made for unique circumstances
2. Standing Plan – used continuously
III. Based on Time Frame
1. Long-Term Plan – designed for an undertaking which usually takes five (5) years or more,
strategic plans are usually long-term plans
2. Medium-Term Plan – designed for an undertaking which usually takes one (1) to three (3)
years
3. Short-Term Plan – designed for an undertaking which usually takes less than a year
Planning Techniques and Tools
1.
Forecasting
•
an attempt to predict the future of the components of the business environment from known
data
•
allows preparation for expected changes in the environment
•
many decisions are based on estimates
a. Survey Method – probing customer or respondents through questionnaires or interviews
b. Trend (Time-Series) Analysis – using of past date or information (usually in a form of graphs)
c. Econometric Models – using statistical methods of analyzing data and making predictions
2.
Scheduling
•
•
Planning time for various activities
Two basic concepts:
i. Events – identifiable accomplishments that occur at a definite point
in time
ii. Activities – work required to complete the event
•
Three (3) types of Timing
i. Optimistic – minimum time a work can take
ii. Pessimistic – maximum time a work can take
iii. Probable – possible time a work will take given current conditions
3.
MBO (Management by Objectives)
•
Objectives are set by both the managers and their members.
•
Members are regularly evaluated and they receive feedback concerning their performance.
•
Members are rewarded on the basis of the achievement of objectives.
Planning Process
1.
Identifying Opportunities
•
•
•
•
2.
Establishment of Objectives
•
•
•
3.
Market
Competition
Customer needs and wants
Company Strengths and Weaknesses
Where do we want to be?
What do we want to accomplish?
When do we want to accomplish it?
Determining Limitations or Premises
•
In what environment (internal and external) will our plan operate?
(Assumptions relating to future conditions and events which are likely to affect the
achievement of goals.)
4.
Identifying Alternative Courses of Action
•
5.
What are the other ways in which we can still achieve our objectives?
Evaluating Alternative Courses of Action
•
Which alternative will give us the best chance of meeting our goals at the lowest cost and
highest profit?
6.
Choosing Alternative Course of Action
•
7.
Formulating Supporting Plans
•
8.
A back-up plan is made from the selected alternative.
Implementation
•
9.
Alternatives will be evaluated and compared based on their expected costs and benefits.
Plan is clearly and positively communicated by the manager to all members.
Follow up and action
•
•
Comparison of actual performance with planned performance
Shortcomings are noted and suitable remedial actions are taken
Decision Making
•
Decision making is the core of planning.
•
A plan cannot be said to exist unless a decision (a commitment of resources, direction, or
reputation) has been made.
•
In decision-making process managers respond to opportunities and
threats by analyzing options, and making decisions about goals and courses of action.
Types of Decision Making
•
Programmed (Structured) Decision
Example: Deciding to reorder office supplies
o These decisions are made by operational managers.
o Used for structured or routine work.
o Managers have made decisions many times before.
o There are rules or guidelines to follow.
o
•
It involves operational issues and has a very short time effect.
Non-Programmed (Unstructured) Decision:
Example: Should the firm invest in a new technology?
o the decisions are made by senior management
o used for unstructured, novel, and ill-defined situations of a nonrecurring nature. It is
a non-routine type decision
o no rules to follow since the decision is new
o These decisions are made based on information, and a manager’s intuition, and
judgment.
o It includes strategic issues and long-term effect of decision
•
Semi-Programmed (Semi-Structured) Decision:
Example: Allocate resources to managers; develop a marketing plan.
o Decisions are made by middle management.
o It is both routine and non-routine type decisions.
o Usually it gives a clear-cut solution of a problem.
o There is both structured and unstructured procedure for decision making
Decision Making Process Steps
1.
Recognize the need for a decision:
Managers must
made.
2.
first
realize
the
need
for
which
a
decision
must
be
Frame the problem:
Managers must frame the problem for which decision is to be made.
3.
Generate & assess alternatives:
Managers must develop feasible alternative courses of action. If good alternatives are
missed, the resulting decision is poor. It is hard to develop creative alternatives, so
managers need to look for new ideas. Managers should specify criteria, then evaluate.
4.
Choose among alternatives:
Managers rank alternatives and decide. While ranking, all information needs to be
considered.
5.
Implement chosen alternative:
Managers must now carry out alternatives. Often a decision is made and not implemented.
6. Learn from feedback:
Managers should consider what went right and wrong with the decision and learn for the
future. Without feedback, managers never learn from experience and might repeat
the same mistake.