By the end of this class you will have

Gained an understanding of the decision making and planning process

Considered your own decision making preferences

Considered different decision making models Considered strategic and operational

planning

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A Very Simple View of the Management Process

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Planning

Organising

Leading

Controlling

. ..the direction

...the resources to coordinate

...getting the people to make the effort

...ensuring all goes well

But what did you find out in A Day in the Life exercise?

Did the labels describe the reality of managerial work? Did your DIL manager talk about their ‘planning’ and

leading’ roles? Do managers act out such roles, putting on different

hats? e.g. on goes the planning hat? Of course they set aside time for planning, say a

project meeting but how often?Do they look to see if their plans are on course ie

control?Managing in SME is informal, talking, developing

relationships, ‘fighting fires’, trying to motivate the ‘reluctant.’

3

Individual decision-making

Starts with need to know e.g. How are we going to present our case? What alternative ways could we use?

Consider the optionsCriteria for making our decision e.g. time availableRank optionsDecide

Did we set out to satisfice or optimise?Then the Doing stage

How do you make decisions?What is your ‘plan’ for the rest of the day?What decisions do you have to make today? This

week?What are your plans for the next six weeks?For the exams?For the coming summer ( it will arrive)?What is your plan for your degree?For 2012? Beyond?What career plans do you have?What criteria do you apply?How do you go about planning?

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How do you pull information together to make decisions?

Are you a ‘picture person’ or a list ‘person’?Do you use a wall planner?Do you use a spreadsheet like Excel? Or do you keep it all in your head or rely on your

diary?How do you weigh up different alternatives? What

criteria do you use? For example, holiday vs chance to earn cash for next semester?

Are you an ‘intuitive’ decision makers or a ‘rational’ decision maker?

How do you go about making personal decisions? e.g. alcohol?

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Steps in the Decision Making ProcessSteps in the Decision Making Process

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Identifythe problem [or opportunity]

Generate alternativesolutions

Evaluate possible solutions

Choose an alternative

Implement

Evaluate results (decision effectiveness)

The Rational Decision Making ModelThe Rational Decision Making Model

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Identify the problem and list alternatives

& consequences

Rank each alternative from low to high

Select bestalternative

Assumes all informationis available to manager

Assumes manager canprocess information

Assumes manager knowsthe best future course of

the organization

Classical DM model see text p 75

Behavioural Model: SatisficingBehavioural Model: Satisficing

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Identify the problem

Seek an alternativeonly until finding onethat is satisfactory

May not beOptimal decision

Time constraints

Limited ability to understand all factors

Inadequate base of information

Limited memory of Decision makers

Poor perception of factorsTo be considered

In decision process

Administrative DM model

Limitations to Decision-making

Bounded Rationality: the ability of managers to make rational decisions is limited by factors such as cognitive ability and time constraints

Incomplete information: always inaccurate, ambiguous or incomplete

Satisficing model: manager seeks alternatives until find one “good enough” rather than finding the optimal alternative

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The Planning Process

Planning is about deciding what to accomplish and how to do it

SMART objectives: Specific Measurable Attainable Realistic Time bound

Types of Plans

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Short-Range

Long-RangeStrategic

Operational

Objectives drive everything. . .ExampleYour tutorial case presentationWhat are our objectives?1. Your COMMUNICATION objectives2. Your ACTION objectivesWhat do you want the other students to go away

knowing?What objectives drive your analysis and

presentation?They are the ‘acid’ test: were we successful, did

we achieve our objectives?Do we need to state them? YES. 12

Types of plansStrategic

Long-term e.g. 5-10 yearsConcerned with overall direction, the ‘big

picture’Impact of the environment on the organisation Top drivenNeeds accurate, comprehensive information

based on researchLong lead time before feedback

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OperationalTurning the strategy into realitye.g. production planning

human resource planningLower levelMore immediate feedback e.g. customer

satisfaction

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Why is planning difficult?

Incomplete informationCost of obtaining additional informationAssumptions we make e.g. rationalityLack of control over externalities e.g.

earthquakePower dynamics in organisations e.g. a

difficult student in your groupThe human element e.g. never certainty

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Is planning more difficult today than 20 years ago?

Rapid change Turbulent environments e.g global warming Changing technology e.g information

revolutionIncreased competition e.g FTA with ChinaGlobalisation e.g Fisher & Paykel decision to

relocate to Thailand

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What the planning process is not…

‘A plan is not a strategy, an intention is not a plan.’

Critically discuss this statement with the regard to the planning process