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Week 4
The head of operations of a pharmaceutical plant realized that the quantity of output was less than the input. He called meeting of production engineers, supervisors and workers to solve the problem and then brain storm on possible causes. All ideas were jotted down with list of possible causes. Small groups were formed to assess the suitability of causes. Based on recommendations of groups the decision were taken
How effective was the approach?
Decision making is the essence of management All managers want to make good decisionswhy? Managers at all levels take decisions but of what kind?
Managerial decision making : The rationality How rational they can be ? Reasons ?
Bounded rationality
Suffice Escalation of commitment Why?
The situation and their impact on decision making: Certainty Risk Uncertainty psychological makeup
Overconfidence Immediate gratification Anchoring effect Selective perception Confirmation Framing Availability Randomness Sunk costs Self serving Hindsight bias
Decision-Making Approach Rationality Bounded rationality Intuition Type of Problems and Decisions Well structured programmed Unstructured non programmed Decision-Making Process Decision-Making Conditions Certainty Risk Uncertainty
Decision making in todays world Cultural differences Know when its time to call it quits Use effective decision making process subjective and objective Build an organization that can spot the unexpected and quickly adapt to the changed env.
Think. How organizational culture influence the way managers make decisions ?
Consider this Your company is advertising for a new employee to work in your area of responsibility. The person in this position will be important because the work directly impacts the quality and quantity of your performance. One of your friends from college needs a and you think he is qualified for position. But you feel you could find a better qualified and more experienced candidate if you keep looking. What would you do? Which factors would influence your decisions? Could org develop any rules, procedures or policies to deal with such situation?
Boeing called its new 787 aircraft, the dreamliner, but the project turned out to be a nightmare for the managers. The new plane was the companys most popular product ever, mostly because of its innovations, especially in fuel efficiency. However, one month before its delivery date , the company announced delay in delivery date for about 15 months. The company admitted that the projects timeline was way too ambitious, even though every detail had been meticulously planned. What happens if Boeings customers get tired of waiting and cancel their orders? Could the managers have planned better?
What is planning ? Involves defining orgs goals, establishing strategies for achieving those goals and developing plans to integrate and coordinate work activities. Concerned with both ends and means
Associated with positive financial results Planning and execution no matter how much planning is done External forces the culprit
Elements of planning
Objectives Actions
Resources
Implementation
Lets take look at diagram
Types of Plans
Specificity
Frequency of use
Lets take look at diagram
Type of Plans
Breadth
Time Frame
Specificity
Frequency of Use
Strategic
Long term
Directional
Single use
Operational
Short term
Specific
Standing
1. Traditional goal setting: Set by top managers communicated below , translated into responsibilities
I want to sea a
significant improvement in this divisions profits. Top Managements Objective Division Managers Objective Dont worry about quality; just work fast.
Developing plans . Cater for - managerial level, uncertainty, time frame (not too short term nor too long term)
Criticism on planning : Planning create rigidity Plans cant be developed for dynamic env Formal plans cant replace intuition creativity Just planning isnt enough
What to do then.
Develop flexible plans its an ongoing process and serve as road map although destination may change Managers need to stay alert to env. Changes Involve employees to make it quicker (avoid flow from top), flexible and best ones to provide input