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Benefits of Planning

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•Intensified effort •Persistence •Direction •Creation of task strategies

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Pitfalls of Planning

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•Impedes change and prevents or slows adaptation •Creates a false sense of certainty •Detachment of planners

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How to Make a Plan that Works

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1. Set Goals 2. Develop commitment 3. Develop effective action plans 4. Track progress toward goal achievement 5. Maintain flexibility

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S.M.A.R.T. Goals

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•Specific •Measurable •Attainable •Realistic •Timely

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One of the benefits of planning is how it _______.

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encourages people to work harder for extended periods

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Options-based planning (contingencies)

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-keep options open by making small, simultaneous investments in many alternative plans

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Slack resources (buffers)

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-a cushion of resources, like extra time or money, that can be used to address and adapt to unanticipated changes

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Top Managers

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Vision, Mission

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Middle Managers

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Tactical plans, management by objectives

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First-level managers

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Operation plans, standing plans, single-use plans

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Rational Decision-making process

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1. Identification of a problem 2. Identification of decision criteria 3. Allocation of weights to criteria 4. Development of alternatives 5. Analysis of alternatives 6. Selective of an alternative 7. Implementation of the alternative 8. Evaluation of decision effectiveness

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Assumptions of Rational Model

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•Problem clarity •Clear/constant preferences •Actors have sufficient creativity to identify all possible issues/ options •No time or cost constraints on information gathering

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Bounded rationality

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-Focus on few essential features of problem -Satisfice: accepting solutions that are "good enough"

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Intuitive decision making

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-Unconscious process -Uses experience, feelings, and accumulated judgment -See Blink by Gladwell

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Directive = efficient, logical

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-Make decisions fast -Use minimal information -Assess few alternatives -Focus on short-term

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Analytic

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-Careful decision makers -Able to adapt/cope with new situations

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Conceptual

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-Broad outlook, consider many alternatives -Creative

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Behavioral

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-Work well with others -May not pick best alternative for company in order to pick best alternative for avoiding conflict/pleasing others

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Common Decision-Making Errors and Biases

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-Overconfidence -Hindsight -Self-serving -Sunk costs -Randomness -Representation -Availability -Framing -Confirmation -Selection Perception -Anchoring Effect -Immediate Gratification

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Structured Problems

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-Involve clear goals -Familiar (have occurred before) -Easily and completely defined information about the problem is available and complete

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Programmed Decision

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-Repetitive decision -Can be handled by a routine approach

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Types of Programmed Decisions

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•A Policy -General guideline for making a decision about a structured problem •A Procedure -Series of interrelated steps that can be used to respond (applying a policy) to a structured problem •A Rule -Explicit statement that limits what you can or cannot do

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Unstructured Problems

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-New or unusual -Information ambiguous or incomplete -Requires custom solutions

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Nonprogrammed Decisions

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-Unique and nonrecurring -Generate unique responses

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Organizational Constraints on Decision Makers

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• Performance evaluation • Reward systems (risk tolerance) • Policies/Regulations - programs decisions at cost of limiting decision-makers choices • System-imposed time constraints (budgets) • Historical Precedents - ghosts that haunt current choices • Anti-precedent - never been done before

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Six Characteristics of an Effective Decision-Making Process

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1. Focuses on what is important 2. Logical and consistent 3. Acknowledges both subjective and objective thinking and blends analytical with intuitive thinking 4. Straightforward, reliable, easy to use, and flexible 5. Requires only as much information and analysis as is necessary to resolve a particular dilemma 6. Encourages and guides gathering of relevant information and informed opinion

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At what level of management are most of the problems you deal with unstructured?

answer

??? Top Middle Bottom

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From 1980 to 2005, firms less than five years old account for ____ net job growth in the United States.

answer

ALL

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How do Angel investors differ from Venture Capital investors?

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-Angel investment may vary in size depending on the company and the investment group but are usually smaller. - Angel investors are not likely to become board members at the portfolio company especially because they work at their own free will. Venture capitalists always require a confirmed seat on board of director position.

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Venture Capitalists Differ in that...

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-Raise large amounts of capital from investors who run big institutions -Gather a set of experienced partners or individuals like the CEOs of companies et cetera who can provide hand-on expertise in building the product followed by the company. -Arrange for evaluating each deal with close attention with the help of extensive due diligence as well as broad partner consensus. -Employ a space for strong governance in order to protect the large amount of capital that is deployed in each deal. This also included board seats as well as complex deal terms, which help in controlling financings. -Arrange space for managing own resources in an effective manner by measuring and keeping a track of the amount of capital, number of partners or maximum number of board seats per partner so as to derive a minimum amount of capital that is needed to invest in each deal.

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Examples of companies backed by American Angels

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Myspace, Best Buy, Facebook, Yahoo, Costco, Starbucks, Google, PayPal, Cisco, Amaxzon

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A greal angel helps an entrepreneur:

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1. See around the corner 2. Gain a sober second opinion 3. Network with people who can help build business 4. By being an ambassador 5. Gain credibility in a field

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Premise on Angel Groups

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- Creating new class of invest that is entrepreneur-friendly, develops sophistication/ excellent process, grows geographic diversity -Market efficiencies developing, entrepreneurs locate more easily, investors get better quality deal flow, individuals remain anonymous, builds partnerships with other angel groups -Beginning to close capital gap

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Finding an Angel

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- Business plan top shape -Referral -Website - exercise caution -Find local -Directories

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Investment Expectations

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Investor -ROI -Company involvement Company -Find or provide follow-on investments -Introduction to potential partners or customers -very little interaction

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Elevator Pitch

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Two minute verbal summary: product, opportunity, differentiation attract interest

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Executive summary

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2-4 page written summary Balanced presentation Attract interest

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PowerPoint

answer

20 Minute verbal presentation cover whole plan Find serious investors

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Full Business Plan

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20-50 pages plus appendices Validation scorecard (due diligence) Basis for all other plan forms

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There are three kinds of ____ plans. They are single-use plans, standing plans, and budgets.

answer

operational

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The term decision making is used to refer to the process of choosing a solution from available alternatives.

answer

True

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Standing plans deal with unique, one-time-only events.

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False

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Budgeting is a critical management task, one that most managers could do better.

answer

True

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One method of weighing decision criteria uses ____, which is a process where each decision is compared directly to every other criterion.

answer

Relative comparisons

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Planning consists of a total of five steps:

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(1) setting goals, (2) developing commitment to the goals, (3) developing effective action plans, (4) tracking progress toward goal achievement, and (5) maintaining flexibility in planning. (6) Revise exisiting plan or begin planning process anew.

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A strategic objective is a statement of a company's purpose or reason for existing.

answer

False

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Neither Chile nor Peru have a mass-market café culture, but that fact has not stopped Starbucks from engaging in ____ to determine how best to expand into those markets.

answer

Decision making

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The process of rational decision making emphasizes the use of systematic procedures to arrive at optimal solutions. Not all processes of decision making follow suit.

answer

true

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All decision making by management is rational.

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False

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Satisficing

answer

a decision-making strategy or cognitive heuristic that entails searching through the available alternatives until an acceptability threshold is met.

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Strategic objective

answer

flows from the vision, is a more specific goal that unifies company-wide efforts, stretches and challenges the organization, and possesses a finish line and a timeframe.

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Purpose statement

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a statement of a company's purpose or reason for existing.

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Relative comparisons

answer

assigns weights to different aspects by comparing the importance of each factor to the importance of every other factor

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A-type conflict

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emotional reactions can get in the way of solving problems

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Tactical Planning

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Strategy involves the future vision of the business; tactics involve the actual steps needed to achieve that vision.

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Strategic Planning

answer

Strategic management provides overall direction to the enterprise. Strategy formulation requires examining where the company is now, deciding where it should go, and determining how to get it there

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Operational Planning

answer

Operational control regulates day-to-day output relative to schedules, specifications, and costs.

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Compliance Program Steps:

answer

1. Establish standards and procedures 2. Assign upper-level managers to be in charge 3. Delegate decision-making authority only to ethical employees 4. Encourage employees to report violations 5. Train employees on standards and procedures 6. Enforce standards consistently and fairly 7. Improve program after violations

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Hierarchy of Social Responsibility

answer

1. Discretionary 2. Ethical 3. Legal 4. Economic

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A manager _____ the status quo.

answer

maintains

question

A manager _____ the status quo.

answer

maintains

question

A manager _____ the status quo.

answer

maintains

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