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Chapter 5

MGT 1000 Chapter Notes - Chapter 5: Brainstorming, Delphi Experiment, Groupthink

Course Code
MGT 1000
Clark Jim

of 4
Mgmt 1000-Chapter 5
Planning and decision Making
Choosing a goal, and developing a method or strategy to achieve that goal
Benefits Of Planning
1st benefit of planning: Managers and employees put out greater effort when following a plan.
2nd benefit of planning: Planning encourages persistence when there may be little chance of
short-term success.
3rd benefit of planning: direction. Plans encourage managers/employees to direct persistent
efforts toward activities that help accomplish goals and away from activities that don’t.
4th benefit of planning: encourages the development of task strategies.
5th benefit of planning: Planning has proven to work for both companies and individuals.
Companies with plans have larger profits and grow faster than companies that don’t.
Pitfalls of Planning
1. Impede change
2. False sense of certainty: Planners sometimes feel that they know exactly what the
future holds for their competitors, their suppliers, and their companies. However, all
plans are based on assumptions.
3. Detachment of planners: detachment leads planners to plan for things they don’t
understand. Plans are meant to be guidelines for action, not abstract theories.
Consequently, planners need to be familiar with the daily details of their businesses if
they are to produce plans that can work.
1. Set Goals
-SMART(Specific, Measurable, Attainable, Realistic, Timely)
2. Developing commitment Goals
-Committing to a goal is the determination to achieve a goal. Commitment to
achieve a goal is not automatic. Managers/workers must choose to commit
themselves to a goal.
Way to increase goal commitment: obtain top management’s support. Top
management can show support for a plan/program by providing funds, speaking
publicly about the plan, or participating in the plan themselves.
3. Developing effective Action plans
Who People, What – Resources, When – Time period , How – Specific steps
4. Tracking Progress
There are two accepted methods of tracking progress toward goal achievement:
Proximal goals: short-term goals/subgoals
Distal goals: long-term/primary goals.
5. Maintaining Flexibility
Options-based planning: keep options open by making small, simultaneous
investments in alternative plans. When one plan or a few plans emerge as likely
winners, invest more in these plans while discontinuing/reducing investment in
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others. Options-based planning is the opposite of traditional planning. The
purpose of an action plan is to commit people/resources to a particular course of
action; the purpose of options-based planning is to leave commitments open.
Slack resources: a cushion of resources such as extra time, people, money, or
production capacity can be used to address/adapt unanticipated changes,
problems, opportunities. Holding options open gives you choices, and choices,
combined with slack resources, gives you flexibility.
Strategic Plans
Clarify how the
company will serve
customers and
position itself against
statement of an
Overall goal that unifies
efforts toward its vision,
stretches and challenges the organization, and possesses a finish line and time frame;
responsible for developing/carrying out tactical plans to accomplish an organization’s mission
Tactical plans: specify how a company will use resources, budgets, and people to accomplish
goals within its mission (6 months to 2 years)
Management by Objectives (MBO)
Discuss possible goals.
Collectively select goals.
Develop tactile plans.
Review progress.
responsible for developing/carrying out operational plans
Operational plans: day-to-day plans for producing/delivering an organization’s products and
services. Plans direct behaviour, efforts, and priorities of operative employees for periods
ranging from 30 days to six months.
Three Kinds of Operational Plans
1. Single-use plans: deal with unique, one-time-only events
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2. Standing plans save managers time because they are created once and used repeatedly to
handle frequently recurring events. If a worker encounters a problem that has been seen
before, someone in company has probably written a standing plan that explains how to address
it. There are three kinds of standing plans: policies, procedures, and rules/regulations.
3. Budgets: quantitative planning that forces managers to decide how to allocate available
money to best accomplish company goals
Policy: Standing plan that indicates the general course of action that should be taken in
response to a particular event.
Procedure: Standing plan that indicates the specific steps that should be taken in response to a
particular event
Rules and regulations: standing plans that describe how a particular action should be
performed or what must happen or not happen in response to a particular event
Decision Making: The process of choosing a solution from available alternatives
Systematic process of defining problems, evaluating alternatives, choosing optimal solutions.
1. Identify and define the problem. Problem exists when there is a gap between a desired
state (what managers want) and an existing state (the situation that managers are
2. Identify the decision criteria. Standards used to guide judgments/decisions. The more
criteria that the potential solution meets, the better the solution should be.
3. Weight the criteria. Decide which criterion is more/less important.
4. Generate alternative courses of action. Generate as many alternatives as possible to
solve the problem.
5. Evaluate each alternative. Systematically review each alternative against the criterion.
Because of the amount of information that must be collected, this step can take
longer/be more expensive than the other steps in the decision-making process.
6. Compute the optimal decision. Determine each alternative’s optimal value by
multiplying the rating for each criterion (Step 5) by the weight for that criterion (Step 3),
then summing up scores for each alternative course of action that you generated(Step 4
Fully rational decision makers maximize decisions by choosing optimal solutions. Limited
resources make it impossible for managers to maximize decisions.
Satisficing: choosing a “good enough” alternative
Absolute comparison: each criterion is compared to a standard or ranked on its own merit
Relative comparison: each criterion is compared directly to each other
1. View problems from multiple perspectives.
2. Find and access more information.
3. Generate more alternative solutions.
4. Be more committed to making chosen solutions work.
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