Foundations of Planning
Chapter 7 Sumeyye KUSAKCI, MSc
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Decision-Making Conditions
Certainty
A situation in which a manager can make an accurate decision because the outcome of every alternative choice is known. A situation in which the manager is able to estimate the likelihood (probability) of outcomes that result from the choice of particular alternatives. Limited information prevents estimation of outcome probabilities for alternatives associated with the problem and may force managers to rely on intuition, hunches, and gut feelings.
Risk
Uncertainty
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Partnership
owned and run by one individual and where there is no legal distinction between the owner and the business. Formed by two or more persons The owners are all personally liable for any legal actions and debts the company may face Distinction of ownership and management Separate legal entity independent from its owners Private Limited Company (Ltd.) Public Limited Company (PLC)
Corporation
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Sole Trader
Partnership Corporation Public Limited C. (PLC) Private Limited C. (Ltd.)
One individual
More than one individual More than one individual Offered to the public (Mostly on a stock exchange) Offered to private persons
Not separated
Not separated Separated Separated
Unlimited
Unlimited Limited Limited
Separated
Limited
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What Is Planning?
Henry Fayol defined planning in terms of forecasting future conditions, setting objectives, and developing means to attain objectives. A primary managerial activity that involves:
Defining the organizations goals Developing plans for organizational work activities
Formal planning
Specific goals covering a specific time period Written and shared with organizational members
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Plans
Documents that outline how goals are to be accomplished Describe how resources are to be allocated and establish activity schedules Answer the question of HOW
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Tactical Level
Translates strategic plans into specific goals
Operational Level
Translates tactical plans into specific goals and actions
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Levels of Planning
Time Horizon Strategic Level Tactical Level Operational Level Long Term Medium Term Short Term Scope Whole Organization Specific Parts of Organization Small Units of Organization Who? Top M. Middle Level M. FirstLine M. Specifcity Directional Specific Frequency of Use Single Use Standing Complexity High Middle Impact High Middle
Specific
Standing
Low
Low
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Types of Plans
Specific Plans
Directional Plans
Single-Use Plan Standing Plans
Plans that are clearly defined and leave no room for interpretation Flexible plans that set out general guidelines and provide focus, yet allow discretion in implementation
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Well-Written Goals
Written in terms of outcomes, not actions
Focuses on the ends, not the means.
Written down
Focuses, defines, and makes goals visible.
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Approaches to Planning
Top-Down Approach with a formal planning department
A group of planning specialists who help managers write organizational plans. Planning is a function of management; it should never become the sole responsibility of planners.
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