PLANNING AND DECISION MAKING

INTRODUCTION OF PLANNING

• Primary function of management

• Goal oriented

• Related to future

• Decision making process• Decision making process

• Intellectual process

• Directed towards efficiency

• Continuous process

• Pervasiveness

TYPES OF PLANNING

• On the Basis of breadth

1. Strategic planning

2. Tactical planning

3. Operational planning

• On the basis of time

1. Long term

2. Short term

3. Mid term3. Operational planning

• On the Basis of

Specificity

1. Flexible planning

2. Specific planning

3. Mid term

• On the Basis of

frequency of use

1. Single use planning

2. Standing planning

Planning as a basic function

• First function of management

• Related with Other functions of management

• In the absence of planning

• Guide book while implementation• Guide book while implementation

Hierarchy of planning

1. Mission

2. Goal

3. Strategy

4. Policy4. Policy

5. Procedure

6. Rule

7. Program

8. Budget

Planning process

• Analyze opportunities

• Setting goals

• Determination of premises

• Determination of alternatives, evaluation and • Determination of alternatives, evaluation and

selecting a course of action

• Formulation of derivative plans

• Implementation of plans

• Reviewing the planning process

Advantages

• Focus on objectives

• Minimizes uncertainty

• Maintain effective control

• Innovation and creativity

Limitations

• Time consuming

• Costly process

• Boundary

• Lack of flexibility• Innovation and creativity

• Organizational effectiveness

• Economy in operation

• Facilitates coordination

• Avoids business failure

• Lack of flexibility

• Problem of accurate

information

• Practical problem

• Unnecessary delays

• Unsuitable for big and

regular changes.

Decision making

• Selective process

• Rational process

• Dynamic process

• Goal oriented process• Goal oriented process

• Continuous process

• Freedom to managers

• Positive or negative impact

Types of Decisions

• Programmed and non programmed

• Basic and routine

• Organizational and personal

• Individual and group• Individual and group

• Policy and operational

Rational model of decision making

• Classical approach

1. prescriptive, normative or rational model.

2. Directed towards single and stable goals

3. Applied in certainty condition3. Applied in certainty condition

4. It is scientific, systematic and step by step

process

5. Decision maker is assumed as a rational

economic man

6. Rarely found in practice

• Behavioural approach

1. Descriptive approach

2. Herbert A Simon, Economist

3. Managers have to make decision in uncertainty

4. Scarce resources

Bounded rationality:Bounded rationality:

Bounded by limited mental capacity,

environmental factors, real life challenges,

political pressure, time and resource constraints

resulting not a perfect rational decisions.

Satisfying:

• Only good enough decisions rather than ideal.

• Rational but within the limit of managers

ability and available informationability and available information

• Satisfactory alternative as decision