Chapter 5-8 Study Guide

1) Planning is a vital and necessary management function. This point is

made in the Managing today opening vignette illustrating how some
organizations are addressing planning and forecasting problem solving.
The functions of organizing, leading, and controlling all carry out the
objectives and goals determined through planning. The importance of
planning can be seen readily in the great number of executive
conferences, workshops, and writings on the subject.
2) Although some environments are less predictable than others, all
organizations operate in uncertain environments. For an organization
to succeed, management somehow must cope with and adapt to
change and uncertainty. Planning is one tool management has to help
it adapt to change.
3) Understanding the Need for Planning:
Increasing Time Spans Between Present Decisions and Future
Results
Increasing Organization Complexity
Increasing External Change
Planning and Other Management Functions
4) Strategic planning-the activities that lead to the definition of
objectives for the entire organization and to the determination of
appropriate strategies for achieving those objectives
5) Operational planning-translates the broad concepts of a strategic
plan into clear numbers, specific steps, and measurable objectives for
the short term
6) Tactical planning-planning that deals more with issues of efficiency
than with long-term effectiveness
7) Single-use plans-plans with a clear time frame for their usefulness;
includes detailed goals and objectives concerning quality, primary
markets, rollout schedule, and so on
8) Standing plan-a plan that has ongoing meaning and applications for
an organization
9) Elements of Planning:
Objectives-are integral to plans because they specify future
conditions that the planner deems satisfactory
Actions-are the specified, preferred means to achieve the
objectives
Resources-are constraints on the courses of action; a plan should
specify the kinds and amounts of resources required, as well as the
potential sources and allocations of those resources
Implementations-involves the assignment and direction of
personnel to carry out the plan; a plan must include ways and
means to implement the intended actions
10)
Forecasting-an important element of the planning function that
must make two basic determinations (1) what level of activity can be

expected during the planning period and (2) what level of resources
will be available to support the projected activity; in a business
organization, the critical forecast is the sales forecast
11)
Scenario Construction-is a technique for combining possible
environmental developments in a systematic way to help managers
assess possible consequences of alternative courses of action
12)
A close relationship exists between budgeting as a planning
technique and budgeting as a control technique.
13)
Implementation of Plans:
Authority-the legitimate right to use assigned resources to
accomplish a delegated task or objective; the right to give orders
and to exact obedience
Persuasion-a process of selling a plan to those who must
implement it and communicating relevant information so individuals
understand all implications
Policy-are usually are written statements that reflect the basic
objectives of the plan and provide guidelines for selecting actions to
achieve the objectives
14)
The ultimate test of the effectiveness of a policy is whether the
objective is attained. If the policy does not lead to the objective, the
policy should be revised. Thus, policies must be subjected to
reexamination continually.
15)
However, present-day managers increasingly recognize that
wisdom and intuition alone are not sufficient to guide the destinies of
organizations todays ever-changing environment. These managers are
turning to strategic planning to help them chart a course for the future.
16)
A major criticism of the business portfolio matrix centers on its
focus on market share and market growth as the primary indicators of
profitability.
17)
BCG matrix-an approach developed by the Boston Consulting
Group that evaluates strategic business units with regard to the firms
growth rate and market share
18)
Strategic business units (SBUs)-divisions within an
organization by product or service to establish goals and objectives
that are in harmony with the firms overall mission and to assign
responsibility for profits and losses
19)
SBU Classification:
Star-SBU that has a high share of a high-growth market, needs a
great deal of financial resources because of their rapid growth
Cash cow-SBU that has a high share of a low-growth market; they
produce a lot of cash for the organization but since the market isnt
growing they dont require a great amount of additional financial
resources for growth and expansion
Question mark-SBU has a low share of a high-growth market, the
organization must decide whether to spend more financial resources
to build it into a star, to phase it down, or eliminate it altogether

Cash trap-SBU has a low share of a low-growth market, it may

generate enough cash to maintain itself or it may drain money from
other SBU
20)
Strategic Planning Process:
Assessing the organizations environments-a systematic
thorough analysis requires attention to four things: internal
strengths and weaknesses, and external opportunities and threats
Establishing a mission statement-answers the question What is
the organizations purpose? for employees customers, and other
constituents
Establishing goals and objectives-end points or targets
stemming from the organizations mission
Establishing an operating plan-goals and objectives must be put
into action through an operating strategy
21)
Mission-a long-term vision of what an organization is trying to
become; the unique aim that differentiates one organization from
similar organizations; the basic questions that must be answered to
determine an organizations mission are What is our business? What
should it be?
22)
Characteristics of a Mission Statement:
Customer-focused
Achievable
Motivated
Specific
23)
Operating strategy-a broad plan for action for pursuing and
achieving a firms goals and satisfying its mission
24)
Establishing Operating Strategies:
Differentiation-an organizations policy to offer a higher-priced
product with more product-enhancing features than those of its
competitors
Cost Leadership-means low costs, low prices, high volume, and
low profit margins on each item
Niche-when a firm provides a product or service in a special area
25)
Decision-a conscious choice among alternatives followed by
action to implement the choice
26)
Types of Managerial Decisions:
Programmed decision-response to repetitive and routine
problems, which is handled by a standard procedure that has been
developed by management
Nonprogrammed decision- a decision for novel and unstructured
problems or for complex or extremely important problems; deserves
special attention of top management
Proactive decision-a decision made in anticipation of an external
change or other condition
Reactive decision-a decision made in response to changes that
have already occurred

Intuitive decision making-basing decisions on the use of

estimates, guesses, or hunches to decide among alternative course
of action
Systematic decision making-an organized exacting, data driven
decision-making process that requires a clear set of objectives, a
relevant information base, and a sharing of ideas among key
managers and other employees
27)
Problem-the realization that a discrepancy exists between a
desired state and current reality
28)
Decision Making Steps:
1. Identify the problem/opportunity/situation
2. Gather information
3. Develop alternatives
4. Evaluate the alternatives
5. Implement the one chosen
6. Follow-up/Check results
29)
Influences on Individual Decision Makers:
The importance of the decision
Time pressures
The managers values
The managers propensity for risk
30)
In most organizations, however, a great deal of decision making
is achieved through committees, teams, task forces, and other kinds of
groups, including virtual teams or employees linked electronically
who may or may not ever have met in person.
31)
In fact, a great deal of research has shown that consensus
decisions with five or more participants are superior to individual
decision making, majority vote, and leader decisions.
32)
In decision-making situations, managers cant possibly use all
available information.
33)
Attributes of Useful Information:
Accessible
Timely
Relevant
Accurate
Verifiable
Complete
Clear
34)
Job design-the result of job analysis that specifies job range,
depth, and relationships
35)
Job analysis-a process of determining what tasks make up the
job and what skills, abilities, and responsibilities are required of an
individual to successfully accomplish the job
36)
Job analysis makes up job description and job specification.
37)
Job design is the result of job analysis.
38)
Job range-the number of tasks assigned to a particular job

39)
Job depth-the relative freedom that a jobholder has in the
performance of assigned duties
40)
Job relationship-are determined by managers decisions
regarding departmentalization bases and spans of control
41)
The purpose of job design is to encourage job performance.
42)
Job rotation-rotating an individual from one job to another to
enable the individual to complete more job activities because each job
includes different tasks
43)
Job enlargement-a job strategy that focuses on
despecialization, or increasing the number to tasks that an employee
performs
44)
Job sharing-a job arrangement in which two part time
employees perform the job duties and tasks that otherwise would be
completed by one full-time employee
45)
Flextime-a job arrangement that permits employees the option
of selecting their starting and quitting times, provided that they work a
certain number of hours per week
46)
Job enrichment-a strategy that seeks to improve performance
and satisfaction by building more responsibility, more challenge, and a
greater sense of achievement into jobs