BBA102 Lecture Notes - Lecture 4: Strategic Planning, Bounded Rationality, Oxymoron
12 May 2018
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Managers Planning: The Predicament of Planning
o When asked what particular part of their duties the executives themselves regarded as
neglected, they almost without exception answered the long-range planning of their business
(1951:106 in Mintzberg, 2009, p. 161)
o Planning is conundrum because it pits the dynamic characteristics of managerial work (the
heti pae, the iterruptios, the orietatio to atio, et. agaist the aagers
responsibilities for articulating direction and overseeing decisions made in the unit (p. 161):
– Eah day I go ito the offie ith soe preplaed atio ad at the ed of the day, I hae
to regret that all the various things I [did] are very different. . . .
Dimensions of Formal Planning
1. Provides Direction and facilitates coordinated effort.
2. Reduces the impact of change by minimizing uncertainties
3. Minimizes waste and redundancy
4. Sets the Standards to facilitate control.
Fallacies of Strategic Planning
Is Strategic Planning a Linear Process?
▪ The fallacy of prediction - that prediction is possible
▪ The fallacy of detachment - that strategies can be detached from the subjects of their
strategies.
▪ The fallacy of formalization - that strategy-making process can be formalized.
Formal systems could certainly process more information, at least hard information. But
they could never internalize it, comprehend it, synthesize it. In a literal sense, planning
could not learn (Mintzberg, 1993, p. 111)
Managing by Objectives (MBO)
1. Joint set objectives
2. Develop an action plan
3. Periodically review performance
4. Give performance appraisal and rewards
What is decision making?
• Deisios are oitets to atio Mitzerg, , p.
• Decision making is the process of identifying and choosing a course of action.
Non-Rational models of Decision Making: Bounded Rationality
o Suggests that the ability of decision makers to be rational is limited by numerous
constraints.
o These include: complexity, time and money and cognitive capacity.
• Other Models
o Satisficing model
Managers seek alternatives until they find one that is satisfactory, not optimal
o Incremental model
Managers take small, short-term steps to alleviate a problem, rather than steps that will
accomplish a long- term solution
o Intuition
Making a choice without the use of conscious thought or logical inference.
Sources are expertise and feelings
find more resources at oneclass.com
find more resources at oneclass.com
