3. mgt_management planning and decision making

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Management planning and decision making

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Question:

Decision Making is the primary task of the managers. Explain.

Answer:

Decision Making- A Primary Task Of The Managers, yes it's true. A manager is faced constantly with choices in which a good

decision will advance the fortunes of the enterprise and a bad decision will not. The manager who understands the nature and

principles of decision making will cope with this problem more effectively than the manager who does not.

If there is one universal mark of an effective manager, it is decision-making. All matters relating to planning, organizing, staffing,

directing and controlling are settled through decisions made by managers. Decisions are required both to solve problems as

well as to take advantage of opportunities.

Based on the decision making a manager gives direction to the behaviour of his subordinates. Consciously or unconsciously,

every executive has to take several decisions everyday irrespective of the nature of job and the level of authority.

Managers are chiefly concerned with making decisions that will influence the actions of others. A manager is by profession a

decision-maker. Thus, decision making is the heart of management planning. It is the vehicle for carrying out managerial

workload and discharging managerial responsibilities.

Question:

Discuss the steps involved in the decision making process.

Answer:

Decision making is the process of choosing a particular course of action from among the alternatives available.

Arriving at a decision implies that a manager has gone through a series of systematically relate steps. These steps of the

decision making process includes:

1. Identify the problem2. Develop alternative solutions3. Evaluate alternative solution4. Make a choice

1: Decision Making Process

Step 1 (Identify the problem): The first step towards a decision-making process is to define the problem. Obviously, there

would be no need to make a decision without having a problem. So, the first thing one has to do to identify the problem.

Step 2 (Develop alternative solutions): After the problem has been defined, diagnosed on the basis of relevant information, the

manager has to determine available alternative courses of action that could be used to solve the problem at hand. Only realistic

alternatives should be considered. It is equally important to take into account time and cost constraints and psychological

barriers that will restrict that number of alternatives.

Step 3 (Evaluate alternative solution): After develop the alternatives, the next step in the decision-making process is to analyze

the problem in depth. This is necessary to classify the problem in order to know who must take the decision and who must be

informed about the decision taken. Here, the following four factors should be kept in mind:

Futurity of the decision, The scope of its impact, Number of qualitative considerations involved, and Uniqueness of the decision.


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Step 4 (Make a choice): Final step in the decision-making process is to select an alternative that seems to be most rational for

solving the problem. The alternative thus selected must be communicated to those who are likely to be affected by it.

Acceptance of the decision by group members is always desirable and useful for its effective implementation. However a

manager can use the following factors as his guideline to make a choice that is to make a decision:

Concentrate on differences Identify your must & should No compromise with must Relate recourse requirement to resource available Consider time as a great factor


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Question:

List and explain various types of plans we find in a business organization.

Answer:

The nature of plans may be expressed as a hierarchy, as shown in Figure.

Purpose or Missions: The mission or purpose identifies the basic purpose of function or tasks of an enterprise or agency or any

part of it. Every organization should have a mission or purpose.

Objects or Goals: Objects or goals are the ends toward which activity is aimed. They represent not only the end point of

planning but also the end toward which organizing, staffing, leading and controlling are aimed.

Strategies: While the term sill usually has a competitive implication, managers increasingly use it to reflect broad areas of an

enterprises operation.

Policies: Policies also are plans in that they are general statements or understandings which guide or channel thinking and

action in decision making. Policies delimit an area within which a decision is to be made and assure that the decision will be

consistent with a contributive to objective.

Procedure: Procedures are plans in that they establish a customary method of handling future activities. They are truly guides

to action, rather than to thinking, and they detail the exact manner in which a certain activity must be accomplished.

Rules: Rules are plans in that they are required actions which, like other plans, are chosen from among alternatives. They are

usually the simplest type of plan. Rules are frequently confused with policies or procedures. A rule, however, may or may not

be part of a procedure.

Programmes: Programmes are a complex of goals, policies, procedures, rules, task assignments, steps to be taken, resources to

be employed and other elements necessary to carry out operating budgets. A primary programme may call for many derivative

programmes. Thus one seldom finds that a programme of any importance in enterprise planning stands by itself.

Budgets: Budget as a plan is a statement of expected results expressed in numerical terms. It may be referred to as a

Numberized programme. As a matter of fact, the financial operating budget is often called aprofit plan.

Question:

What are the steps involved in the planning process?

Answer:

The practical steps listed below and in practice; however, one must study the feasibility of possible courses of action at eachstage.

1. Being aware of opportunities: Although it precedes actual planning and is therefore not strictly a part of the planningprocess and awareness of opportunities in the external environment as well as within the organization is the real

starting point for planning. Setting realistic objectives depends on this awareness.

2. Establishing objectives: The second step in planning is to establish objectives for the entire enterprise and then foreach subordinate work unit. This is to be done for the long term as well as for the short range.


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3. Developing premises: The next logical step in planning is to establish, circulate and obtain agreement to utilize criticalplanning premises such as forecasts, applicable basic policies and existing company plans. Premises are assumptions

about the environment in which the plan is to be carried out.

4. Determining alternative: The fourth step in planning is to search for and examine alternative courses of action,especially those not immediately apparent. There is seldom a plan for which reasonable alternatives do not exist and

quite often an alternative that is not obvious proves to be the best.

5. Evaluating alternative courses: Having sought out alternative courses and examined their strong and weak points, thefifth step is to evaluate them by weighing the various factors in the light of premises and goals.

6. Selecting a course: This is the point at which the plan is adopted the real point of decision making. Occasionally ananalysis and evaluation of alternative courses will disclose that two or more are advisable and the manager may

decide to follow several courses rather than the one best course.

7. Formulating derivative plans: At the point where decision is made, planning is seldom complete and a seventh step isindicated. There are almost invariably derivative plans required to support the basic plan.

8. Numbering plans by budgeting: After decisions are made and plans are set, the final step to give the meaning is tonumberise them by converting them to budgets. The overall budgets of an enterprise represent the sum total of

income and expenses with resultant profit or surplus and budgets of major balance sheet items such as cash andcapital expenditures. If done well budget becomes a means of adding together the various plans and also important

standard against which planning progress can be measured.

3. mgt_management planning and decision making

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