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Principles of Management > Chapter 2: Planning > Flashcards

Chapter 2: Planning Flashcards

1
Q

key issue in management

A

high difficulty in predicting the future of human affairs

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2
Q

planning

A

involves setting goals and figuring out ways to reach them

involves the following overlapping elements:
- strategic planning: firm’s overall master plan that shapes its destiny

  • tactical planning: translates strategic plans into specific goals for organizational units
  • operational planning: requires specific procedures and actions at lower levels in an organization.

both tactical + operational planning support the strategic plan

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3
Q

rational framework for planning (8)

A

define current situation (critical to establish goals)
set goals/strategies
evaluate environment + possible barriers (int/external)
develop action plan to reach targets (specific steps)
develop budgets
implement plans
control implementation of plans

make contingency plans (if plan goes sideways)
eg. exit strategy

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4
Q

define business strategy

A

organization’s plan for achieving its vision, mission, and goals in its environment.

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5
Q

four components of business strategy

A

devised my Michael Porter

  1. strategy involves more than operational effectiveness
    • not enough for sustained profitability
  2. fit drives both competitive adv + sustainability
    • combine activities for making product + service
  3. strategy rests on unique activities
    • deliver unique value (USP)
  4. sustainable strategic position requires trade-offs
    • when activities are incompatible
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6
Q

vision statement

A

idealized picture of organization’s future

great perspective

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7
Q

mission statement

A

identifies firm’s purpose and where it fits in the world

mission is more grounded in present realities than vision
- some companies use the terms interchangeably.

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8
Q

inputs needed to formulate strategy (5)

A
  1. advise with a large group of individuals
  2. receive info from various sources (quantitative + qualitiave reports, meeting, survey…)
  3. define + comprehend competitive environment
  4. analyze realities of business situation
  5. define key assumptions as to: environment, clients, skills, suppliers, competitors
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9
Q

SWOT analysis

A

method of considering the strengths, weaknesses, opportunities, and threats in a given situation
- useful visual tool

limitations:
- might overly simplify complex issues
- only a current snapshot, needs to be updated regularly

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10
Q

five competitive forces

A

Michael Porter conclude that business-level strategies are the result of five competitive forces in the company’s environment

  • power of customers to affect pricing + profits
  • power of suppliers to affect prices
  • threat of similar or substitute products
  • competition impacting investment in marketing + research
  • threat of new market entrants (impact profits)
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11
Q

three major levels of business strategy

A

corporate: concerned with total direction of enterprise and selection of specific businesses
business: how to compete in each of the businesses
functional: actions required to implement the two strategies (corporate and business level)

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12
Q

examples of the major levels of business strategy

A

corporate level strategy: strategic alliance + diversification + sticking to core competences

business level strategy: product differentiation + cost leadership + focus on specific markets

functional level strategy: finding and retaining best people + higher speed

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13
Q

vehicles through which strategic plans and strategy are converted into action (4)

A

operating plans: means through which strategic plans out to be used to alter firm’s future

policies: general guidelines to follow for decision making
procedures: establish customary method of handling future activities
rules: specific courses of action/conduct that must be followed

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14
Q

management by objectives (MBO)

A

systematic application of goal setting and planning to help individuals and firms be more productive

  1. establish organization goals
  2. establish unit objectives
  3. review subordinates proposals
  4. negotiate or agree
  5. create action plan
  6. review performance
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15
Q

degree of change

A 
stability
incremental change (moderate applications)
disruptive change (new tech)
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16
Q

product/company life cycle (4)

A

launching
growth
maturity
decline

possible to renew lifecycle: cut prices, product enhancement, redesigning packaging, exporting…

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17
Q

first mover advantages + disadvantages

A 
first mover:
\+ leadership
\+ reputation 
\+ brand loyalty
\+ market knowledge

second mover:

  • uncertainty
  • financial risks
  • higher development costs
  • risk of facing faster competitors
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18
Q

difference between a programmed and non-programmed decision

A

programmed decision is a decision you know you need to take and can made into a procedure, whereas, a non-programmed decision is not expected

  • difficult because of its complexity and the fact that the person faces it infrequently
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19
Q

rational decision making model (also suitable for non-programmed decisions) (5)

A 
identify + make diagnostic of problem
develop alternative solutions
evaluate alternative solutions
implement the decision
evaluate and control
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20
Q

factors affecting decision making (8)

A

intuition (related to your: ethics, instinct, values, emotions)

personality (pattern of systematic behaviour) + cognitive intelligence (capacity of solving problems)

emotional intelligence: self awareness, self management if emotions, social awareness and relationship management

crisis + conflict
quality of information (bias)
political considerations (favouritism, alliances, revenge...)
degree of certainty/uncertainty
procrastination
21
Q

advantages + disadvantages of group decision making

A 
\+ many contributions > high quality solutions 
\+ enhance creativity
\+ often leads to commitment to decision
- slower decision progress
- groupthink
22
Q

ways to reduce groupthink

A

nominal group technique:

  • members are selected
  • leader presents specific question
  • member write their ideas independently
  • present ideas to group without discussion
  • each suggestion is evaluated at end of presentation
  • meeting ends with independent rating
  • best-rated one is chosen
23
Q

most common decision making errors (11)

A 
excess of confidence
need for immediate gratification
anchoring effect (focus on initial info received) 
selective perception
confirmation bias
framing bias (decisions based on positive or negative connotations)
availability bias (mental shortcut)
randomness
historical costs
hindsight bias
self-serving bias
24
Q

conditions for creativity

A

expertise, creative thinking skills and internal motivation

environment needs conflict + tension (stimulating)

encouragement from others

25
Q

characteristics of creative organizations

A 
atmosphere encourages creative expression (no punishment)
financial rewards for creative suggestions
open-minded atmosphere
freedom
allocating time for creative thinking
greater diversity in groups
resources 
challenge
26
Q

programs to enhance creativity

A

training programs
brainstorming
systematically gathering ideas
appropriate physical surrounding

27
Q

self-help techniques for improving creativity

A

specific: keep track of ideas, be curious, improve sense of humour, take risks and pause when facing a creativity block

play roles of explorer, artist, judge and lawyer: explorer speaks to people in different fields, artist stretch their imagination, as a judge evaluate your own ideas and as a lawyer negotiate to have them implemented

engage in appropriate physical exercise: to help boost cognitive skills, keep body stimulated…

28
Q

forecasting methods

A

qualitative approach: based on subject hunches, judgements and subjective opinions

quantitative approach: based on past trends

29
Q

most common forecasts

A

economic forecasting

sales forecasting

technological forecasting

30
Q

delphi technique

A
  • panelists receive each other’s forecasts + comment

- the forecasts are refined and the facilitator submits the final forecast

31
Q

scenario planning

A

process of preparing responses to predicted changes in conditions

32
Q

Two basic tools for monitoring the progress of scheduled projects

A

Gantt chart

milestone chart

33
Q

Gantt chart

A

depicts the planned and actual progress of work during the life of the project

+ easy to check if progress is on track
- doesn’t provide enough details

34
Q

Milestone chart

A

extends the Gantt chart by providing list of sub activities needed for the major activities

35
Q

PERT

A

program evaluation and review technique

model used to track the planning activities required to complete a large- scale non-repetitive project

depicts all of the interrelated events that must take place.

36
Q

steps involved in preparing a PERT network

A
  1. list activities and events needed to complete project
  2. design the network, relating activities in a sequence
  3. estimate the expected time for each activity
  4. calculate critical path (most time-consuming events)
  5. monitor if critical events occur on time
37
Q

what is the formula for the expected time in PERT

A

O : optimistic time
M : most probable time
P : pessimistic time

            (O + 4M + P) / 6
38
Q

advanced considerations in complex applications of PERT

A

refined calculation of expected times: optimistic and pessimistic times become upper and lower ten percentiles

resources + cost estimates

39
Q

problem-identification technique

A

Pareto diagram

40
Q

Pareto diagram

A

bar graph that ranks types of output variations by frequency of occurrence

identify the most important problems or causes of problems that affect output quality

cause of a problem is plotted on the x-axis
cumulative effects both in frequency and percent are plotted on the y-axis

  • Pareto principle: generally 20 percent or fewer of the causes contribute to 80 percent or more of the effects
41
Q

break even analysis

A

method of determining the relationship between total costs and total revenues at various levels of production or sales activity

tells managers the point at which it is profitable to go ahead with a new venture

BEP : TR=TC
BE: TFC / P - VC

42
Q

advantages + disadvantages of break even analysis

A

+ help decide whether to drop an existing product, replace equipment, or to buy
+ simple

  • too simplistic, does not consider many factors
  • it is only as valid as the estimates of costs and revenues that managers use to create it
  • relationship between variable costs and sales may be complicated
43
Q

decision trees

A

graphic illustration of the alternative solutions available to solve a problem

  • quantitative tool
  • estimates the outcome of a series of decisions

circle: chance node & square: decision

44
Q

advantages and disadvantages of decision trees

A

+ great to visualize options
+ shows financial risks of each option

  • qualitative factors are ignored (external factors + non-financial info)
  • data are only forecasts, can be inaccurate
  • data can become out of date by time decision is taken
45
Q

name the two inventory control techniques

A

just in time system (JIT)

economic order quantity (EOQ)

46
Q

JIT advantages and disadvantages

A

stock control system that avoids holding inventory. Stocks are only supplied and delivered when needed for production

+ no need for stock pilling
+ cost of stock management decreases
- requires very close communication with supplier
- implementation costs are high
- inability to meet unexpected changes in demand

47
Q

JIT techniques + procedures (6)

A

Kanbans (cards to communicate production requirements)

demand-driven pull system (producing exactly
what is needed to match the demand)

short production lead times

high inventory turnover

designated areas for receiving

neatness counts (immaculate)

48
Q

Economic Order Quantity (EOQ)

A

inventory level that minimizes both administrative costs and carrying costs

  • helps managers decide how much stock to have
  • most useful when a company has repetitive purchasing and demand for an item
D = annual demand in units for the product
O = fixed cost of placing and receiving an order
C = annual carrying cost per unit (taxes, insurance, storage cost, interest...)

EOQ = square root of (2DO/C)

Principles of Management (6 decks)

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