chapter 7 Flashcards
planning definition
The process of determining how an organization can get where it wants to go and what it will do to accomplish its objectives
purpose of planning
-Minimize risk by reducing uncertainties
-Increase degree of organizational success
-Establish a coordinated effort within the organization
-Facilitate the accomplishment of the organization and its objectives
advantages of planning
– Helps managers to become future-oriented
– Enhances decision coordination
– Emphasizes organizational objectives
– Helps ensure sustainability of the firm
– Helps managers to identify and deal with problems that arise as the firm conducts its business
disadvantages of planning
– Managerial time involvement
– Rigidity and lack of adaptability
– Balance of time spent on organizing, influencing, and controlling
primacy of planning
– Planning is the primary management function
– Planning serves as the basis for the other management functions
types of plans
standing and single-use
standing plan
Exist for routine guidelines and actions that occur repeatedly (policies, procedures, rules)
single use plan
Exist for single purpose only (budgets, programs)
planning process
state organizational objectives, List Alternative Ways of Reaching Objectives, Develop Premises on Which to Base Each Alternative, Choose the Best Alternative for Reaching Objectives, Develop Plans to Pursue the Chosen Alternative, Put the Plans into Action
org objectives includes and involves
• The target toward which the organization’s open management system is directed
druckers 8 areas to set objectives
Market Standing, Innovation, Productivity, Physical & Financial Resources, Profitability, Managerial Performance & Development, Worker Performance & Attitudes, Public Responsibility
Market standing
Management should set objectives indicating where it would like the company to be in relation to its competitors.
Innovation
Management should set objectives outlining its commitment to the development of new methods of operation
Productivity
Management should set objectives outlining the target levels of production
Physical and financial resources
Management should set objectives regarding the use, acquisition, and maintenance of capital and monetary resources
Profitability
Management should set objectives that specify the profit the company would like to generate
Managerial performance and development
Management should set objectives that specify rates and levels of managerial productivity and growth
Worker performance and attitudes
Management should set objectives that specify rates of worker productivity as well as desirable attitudes for workers to possess
Public responsibility
Management should set objectives that indicate the company’s responsibilities to its customers and society and the extent to which the company intends to live up to those responsibilities
types of objectives
short term, intermediate, long- term
short term objective
one year or less
intermediate term objectives
one to five years
long term objective
five to seven years
Management by Objectives (MBO)
Management approach based exclusively on objectives
step 1 of MBO process
Review organizational objectives: The manager gains a clear understanding of the organization’s overall objectives.
step 2 of MBO process
set worker objectives: The manager and the worker meet to agree on worker objectives to be reached by the end of the normal operating period
step 3 of MBO
Monitor progress: At intervals during the normal operating period, the manager and the worker check to see whether the objectives are being reached.
step 4 of MBO
Evaluate performance: At the end of the normal operating period, the worker’s performance is judged by the extent to which the worker reached the objectives
step 5 of MBO
Give rewards Rewards given to the worker are based on the extent to which the objectives were reached
advantages of MBO
– Emphasize what should be done in an organization to achieve organizational goals
– Secures employee commitment to attaining
organizational goals
disadvantages of MBO
– Time-consuming
– Increased paperwork
– Difficult to go beyond a year under a MBO
forecasting
The process of predicting future environmental
happenings that will influence the operations of the organization
importance of forecasting
helps managers understand the future makeup of the environment, which in turn helps managers formulate more effective plans
qualitative sales forecast
Jury of Executive Opinion Method, Delphi Method, Sales Force Estimation Method
Jury of Executive Opinion Method
appropriate managers give their opinions on what will happen to sales in the future.
Delphi Method
gaining consensus from a group of experts while maintaining their anonymity
Sales Force Estimation Method
predicts future sales levels primarily by asking appropriate salespeople for their opinions of what will happen to sales in the future.
quantitative sales forecasting
moving average, regression, product stages
moving average method
utilizes historical data to predict future sales levels
regression method
predicts future sales by analyzing the historical relationship between sales and time
product stages method
predicts future sales by using the product life cycle to better understand the history and future of a product
best way to use the forecasting methods
- A combination of methods is best, particularly using both qualitative and quantitative methods
-The best methods fit the needs of the organization and can be adapted to changes in the environment
scheduling
process of formulating a detailed listing of activities that must be accomplished to attain an objective, allocating the resources necessary to attain the objective, and setting up and following time tables for completing the objective
Gantt charts
bar graphs used for scheduling
Program Evaluation and Review Technique (PERT)
- Evolved from the Gantt chart
- Estimate the time necessary to complete each activity
affirmative purpose of planning
increase the degree of organizational success
protective purpose of planning
minimize risk by reducing the uncertainties surrounding business conditions and clarifying the consequences of related management actions
fundamental purpose of planning
help the organization reach its objectives
procedure
outlines a series of related actions that must be taken to accomplish a particular task
policy
furnishes broad guidelines for taking action that is consistent with reaching organizational objectives
rule
designates specific required actions
stage 1 of product life cycle
introduction: when a product is brand new, sales are just beginning to build
stage 2 of product life cycle
growth stage: the product has been in the marketplace for some time and is becoming more accepted, so product sales continue to climb
stage 3 of product life cycle
maturity stage: competitors enter the market, and although sales are still climbing, they are climbing at a slower rate than they did in the growth stage
stage 4 product life cycle
saturation stage: when nearly everyone who wanted the product has it; Sales during the saturation stage typically are due to the need to replace a worn-out product or due to population growth
stage 5 of product life cycle
decline: finds the product being replaced by a competing product
Critical Path PERT
The sequence of events and activities requiring the longest period of time to complete
