Planning and
Decision Making
Lecture 6
Learning goals
Understand the purpose of planning and why formal planning is less relevant to today’s organisations





Describe the strategic planning process and identify factors  relevant to an organisation’s internal and external analysis that may affect this strategy formulation





Identify the steps in the rational decision-making process and understand how it may be affected and understand how it may be affected by the managers bounded rationality and intuition




Question and discuss why some companies adopt corporate social responsibility (CSR) as a corporate strategy
Purposes of planning
Provides direction – goals
Reduces uncertainty
anticipate changes and develop responses
Minimises waste and redundancy
means and ends clearer
how did we do?
Establishes goals/standards for controlling
Goals
Plans
Major Elements 
of Planning
Formal Vs Informal Planning
TYPES OF PLANS
Strategic plans
Operational plans
Planning may create rigidity.

Plans cannot be developed for dynamic environments.

Formal plans cannot replace intuition and creativity.

Planning focuses managers’ attention on today’s competition not tomorrow’s survival.

Formal planning reinforces today’s success, which may lead to tomorrow’s failure.
Criticisms of planning
Specific but flexible
Continuous improvements
Planning in dynamic environments
Increase participations from lower level of mangement
Techniques for assessing the environment
Environmental scanning
Benchmarking
Forecasting
Revenue
Technology
Quantitative
Qualitative
Strategic
Decision Making
What is strategic mangement?
The set of managerial decisions and actions that determines the long-run performance of an organisation.

Forms the basis for a business model – i.e. how a company intends to profit from its strategies, work processes and work activities.
Why is Strategic Management Important?
It results in higher organisational performance
It requires that managers examine and adapt to business environment changes
It coordinates diverse organisational units, helping them focus on organisational goals
It is very much involved in the managerial decision-making process
Strategic management process
Planning
The process of defining goals, establishing strategies for achieving those goals and developing plans to integrate and coordinate activities.
is a management function
Decision making is the process of choosing between two or more alternatives
Decision are made about:
Planning
Leading
Organising
Controlling
Photo by: http://www.sxc.hu/photo/732366
(Objectives (What))
(How)
GOALS (Mission)
To be an international leading financial services company
PLANS
Provide a comprehensive and integrated range of banking services to the public
Develop and maintain an presence in Australia, Europe and New Zealand
Create and deliver consistently superior value to shareholders, customers, employees and communities
National Bank Australia
Assessing what we are and where we are
Deciding and implementing: 
        - What we intend to be
        - How are going to get there
Strategic management is process of:
Strategic management provides the theme and focus of the future direction of the firm
Responding to changes – environmental scanning
Allocating scarce resources
Internal response to new action programs
Formulate Strategies
Competitive Advantage
What sets the an organisation apart: its distinctive edge!
Examples: Quality, low-cost, unique products, use of e-business techniques, customer service, innovation, environmentally sustainability/corporate social responsibility etc
To provide products, services and solutions of the highest quality and deliver more value to our customers that earns their respect and loyalty.
There are more places we can contribute than we will be capable of contributing: We must focus. 
To be average in the marketplace is not good enough, we play to win. 
We must be No. 1 or No. 2 in our chosen fields.
Mission (Goals):
Plans - to achive competitive advantage:
The rational decision-making process
Identification of decision criteria
Identification of  a problem
Implementation of alternatives
Selection 
alternatives
Analysis of alternatives
Development alternatives
Allocation of weights to criteria
Evaluation of decision effectiveness
1
My sales people need new computers
2
Decision Criteria:
Price 
Brand Name and Model
Warranties and Support
Reliability
Repair Record
3
Price 
Brand Name and Model
Warranties and Support
Reliability
Repair Record
10 
8
6
4
2
4
5
HP
Acer
Dell
IBM
Compaq
Price (10) 

Brand Name & Model (8)

Warranties & Support(6)

Reliability(4)

Repair Record(2)

TOTAL SCORE
HP
IBM
ACER
DELL
COMPAC
3      4      4     4     3
1      5      3     4     4
5      2      1      1     2
4      3      3     4     3
3      4      4     2     3
*1=worst  5=best
108
92
80
104
100
6
Based on the analysis 
HP is selected
7
8
is behaviour that is rational within the parameters of a simplified model that captures the essential features of a problem;

     i.e. finding satisficing solutions that are“good enough”.
Bounded rationality
Assumptions of rationality
Making decisions = Rational analysis + Intuition
Assignment 2
Presentation Slides
Thank you!
Management
Planning and
Decision Making
Dealing with Employee empowerment in organization
Groups should submit compiled presentation slides to the tutors by week 11
 
Keep and maintain your weekly slides and compile into one slide
Topic Readings:
Chapter 6,7,8
Eisendhardt (2001)
Compare and contrast the rational and bounded rationality perspectives on decision making!
Identify the purpose of strategic planning and describe the strategic planning process
Describe the steps in rational decision making. Give an example of the rational decision making process.
Make sure you are focusing on an 'organisation' as defined by the text.

Find evidence in your organisation's  environment and show how employee empowerment is very important issues
Choose an organisation
Environmental scanning
Define the problem or overarching scenario
Choo 2 functions and apply
A good decision is:
a high in quality,
timely,
accepted by those who have to implement it
Intuitive decision making
a subconscious process of making decisions