ORGANIZATION AND MANAGEMENT CONCEPTS

CHAPTER 1-MANAGING AND PERFORMING

Organization - is a group of people working together in a structured and coordinated fashion to achieve a set of goals.
Managers - are responsible for using the organization’s resources to help achieve its goals.
Good managers can propel an organization into unprecedented realms of success, whereas poor managers can
devastate even the strongest of organizations
Management guru, Peter Drucker, says the basic task of management includes both marketing and innovation.
According to him, “Management is a multi-purpose organ that manages a business and manages managers, and
manages workers and work.”

Harold Koontz defined management as “the art of getting things done through and with people in formally organized
groups.”

In the words of Kimball and Kimball, “Management embraces all duties and functions that pertain to the initiation of an
enterprise, its financing, the establishment of all major policies, the provision of all necessary equipment, the outlining
of the general form of organization under which the enterprise is to operate and the selection of the principal officers.
The group of officials in primary control of an enterprise is referred to as management”

Management can be defined as a set of activities (including planning and decision making, organizing, leading, and
controlling) directed at an organization’s resources (human, financial, physical, and information), with the aim of
achieving organizational goals in an efficient and effective manner.

Manager - is someone whose primary responsibility is to carry out the management process.

efficient, we mean using resources wisely, in a cost-effective way.

effective, we mean making the right decisions and successfully implementing them.

Managing can be called "art of arts" because it organizes and uses human talent, which is the basis of every artistic
activity.

BASIC MANAGEMENT FUNCTIONS

1. Planning and Decision Making- planning means setting an organization’s goals and deciding how best to
achieve them. Decision making, a part of the planning process, involves selecting a course of action from a set of
alternatives.
2. Organizing - determining how activities and resources are to be grouped.
3. Leading - used to get/ motivate members of the organization to work together to further the interests of the
organization.
4. Controlling - controlling, or monitoring the organization’s progress toward its goals. Performing in such a way
as to arrive at its “destination” at the appointed time
THE ROLES MANAGER’S PLAY

1. Informational roles. Managers are required to gather, collate, analyze, store, and disseminate many kinds of
information
Monitors, managers are constantly scanning the environment for information, talking with liaison
contacts and subordinates.
Disseminator role, managers pass privileged information directly to subordinates, who might otherwise
have no access to it.
Spokesperson role, managers send information to people outside of their organizations: an executive
makes a speech.
2. Interpersonal roles. Managers are required to interact with a substantial number of people in the course of a
workweek.
figurehead role. manager must perform some ceremonial duties.
Their actions in this regard are directly related to their role as a leader. Leadership determines, in large
part, how much power they will realize.
liaison role, in which managers establish and maintain contacts outside the vertical chain of command
3. Decisional roles. Ultimately, managers are charged with the responsibility of making decisions on behalf of
both the organization and the stakeholders with an interest in it.
entrepreneur, managers seek to improve their businesses, adapt to changing market conditions, and
react to opportunities as they present themselves.
 disturbance or crisis handler, Crises can arise because bad managers let circumstances deteriorate or
spin out of control, but just as often good managers find themselves in the midst of a crisis that they
could not have anticipated but must react to just the same.
resource allocator involves managers making decisions about who gets what, how much, when, and
why. Resources, including funding, equipment, human labor, office or production space
negotiator. Managers spend considerable amounts of time in negotiations: over budget allocations,
labor and collective bargaining agreements,
ACTIVITIES PERFORMED BY MANAGERS
According to our definition, managers are involved in planning, organizing, directing, and controlling. Managers have
described their responsibilities that can be aggregated into nine major types of activity. These include:
1. Long-range planning. Managers occupying executive positions are frequently involved in strategic Chapter 1
Managing and Performing 13 planning and development.
2. Controlling. Managers evaluate and take corrective action concerning the allocation and use of human,
financial, and material resources.
3. Environmental scanning. Managers must continually watch for changes in the business environment and
monitor business indicators such as returns on equity or investment, economic indicators, business cycles, and
so forth.
4. Supervision. Managers continually oversee the work of their subordinates.
5. Coordinating. Managers often must coordinate the work of others both inside the work unit and out.
6. Customer relations and marketing. Certain managers are involved in direct contact with customers and
potential customers.
7. Community relations. Contact must be maintained and nurtured with representatives from various
constituencies outside the company, including state and federal agencies, local civic groups, and suppliers.
8. Internal consulting. Some managers make use of their technical expertise to solve internal problems, acting as
inside consultants for organizational change and development.
9. Monitoring products and services. Managers get involved in planning, scheduling, and monitoring the design,
development, production, and delivery of the organization’s products and services.

VARIATIONS IN MANAGERIAL WORK

1. Management by Level. We can distinguish three general levels of management: executives, middle management, and
first-line management. Executive managers are at the top of the hierarchy and are responsible for the entire
organization, especially its strategic direction. Middle managers, who are at the middle of the hierarchy, are responsible
for major departments and may supervise other lower-level managers. Finally, first-line managers supervise rank-and-file
employees and carry out day-to-day activities within departments

1. Technical skills. Managers must

have the ability to use the tools,
procedures, and techniques of their
special areas. An accountant must
have expertise in accounting principles,
whereas a production manager must
know operations management. These
skills are the mechanics of the job.

2. Human relations skills. Human

relations skills involve the ability to
work with people and understand
employee motivation and group
processes. These skills allow the
manager to become involved with and
lead his group.

3. Conceptual skills. These skills represent a manager’s ability to organize and analyze information in order to
improve organizational performance. They include the ability to see the organization as a whole and to
understand how various parts fit together to work as an integrated unit. These skills are required to coordinate
the departments and divisions successfully so that the entire organization can pull together.
2. Management by Department or Function. In addition to level in the hierarchy, managerial responsibilities also differ
with respect to the type of department or function. There are differences found for quality assurance, manufacturing,
marketing, accounting and finance, and human resource management departments.

1. Manufacturing department managers will concentrate their efforts on products and services, controlling, and
supervising.
2. Marketing managers, in comparison, focus less on planning, coordinating, and consulting and more on
customer relations and external contact.
3. Managers in both accounting and human resource management departments rate high on long-range
planning, but will spend less time on the organization’s products and service offerings.
4. Managers in accounting and finance are also concerned with controlling and with monitoring performance
indicators, while human resource managers provide consulting expertise, coordination, and external contacts.

TYPES OF MANAGERS IN DIFFERENT AREAS OF THE ORGANIZATION

Regardless of their level, managers may work in various areas within an organization. In any given firm, for example,
these areas may include marketing, financial, operations, human resources, administrative, and others.
1. Marketing manager’s work in areas related to the marketing function—getting consumers and clients to buy
the organization’s products or services. These areas include new product development, promotion, and
distribution. Given the importance of marketing for virtually all organizations, developing good managers in this
area is critical.
2. Financial managers deal primarily with an organization’s financial resources. They are responsible for
activities such as accounting, cash management, and investments. In some businesses, especially banking and
insurance, financial managers are found in large numbers.
3. Operations managers are concerned with creating and managing the systems that create an organization’s
products and services. Typical responsibilities of operations managers include production control, inventory
control, quality control, plant layout, and site selection.
4. Human resources managers are responsible for hiring and developing employees. They are typically involved
in human resource planning, recruiting and selecting employees, training and development, designing
compensation and benefit systems, formulating performance appraisal systems, and discharging low-performing
and problem employees.
5. Administrative, or general, managers are not associated with any particular management specialty. Probably
the best example of an administrative management position is that of a hospital or clinic administrator.
Administrative managers tend to be generalists; they have some basic familiarity with all functional areas of
management rather than specialized training in any one area.

CHAPTER 2- FOUNDATIONS OF DECISION MAKING

Decision-making is the action or process of thinking through possible options and selecting one. It is important to
recognize that managers are continually making decisions, and that the quality of their decision-making has an impact—
sometimes quite significant—on the effectiveness of the organization and its stakeholders. Stakeholders are all the
individuals or groups that are affected by an organization (such as customers, employees, shareholders, etc.).

Poor decision-making by lower-level managers is unlikely to drive the entire firm out of existence, but it can lead to
many adverse outcomes such as:
• reduced productivity if there are too few workers or insufficient supplies,
• increased expenses if there are too many workers or too many supplies, particularly if the
supplies have a limited shelf life or are costly to store, and
• frustration among employees, reduced morale, and increased turnover (which can be costly
for the organization) if the decisions involve managing and training workers.

TWO SYSTEMS OF DECISION-MAKING IN THE BRAIN

The human brain processes information for decision-making using one of two routes: a reflective system and a reactive
(or reflexive) system. The reflective system is logical, analytical, deliberate, and methodical, while the reactive system is
quick, impulsive, and intuitive, relying on emotions or habits to provide cues for what to do next. Research in
neuropsychology suggests that the brain can only use one system at a time for processing information [Darlow &
Sloman] and that the two systems are directed by different parts of the brain. The prefrontal cortex is more involved in
the reflective system, and the basal ganglia and amygdala (more primitive parts of the brain, from an evolutionary
perspective) are more involved in the reactive system.
1. Reactive Decision-Making: fight-or-flight response kicks in that leads to immediate action without methodically
weighing all possible options and their consequences. Manager has faced a similar situation in the past and has figured
out how to deal with it, the brain shifts immediately to the quick, intuitive decision-making system.
2. Reflective Decision-Making: better to process available information logically, analytically, and methodically.

THE ROLE OF EMOTIONS

Emotions can serve as powerful signals about what we should do, especially in situations with ethical implications.
Effective decision-making, then, relies on both logic and emotions.
Emotional intelligence is the ability to recognize, understand, pay attention to, and manage one’s own emotions and the
emotions of others.
- It involves self-awareness and self-regulation
- also involves empathy—the ability to understand other peoples’ emotions (and an interest in doing so).
- involves social skills to manage the emotional aspects of relationships with others.

PROGRAMMED AND NON-PROGRAMMED DECISIONS

have structure and routine applied to them (called programmed decisions) and decisions that are novel and require
thought and attention (non-programmed decisions)
1. Programmed decisions are those that are repeated over time and for which an existing set of rules can be developed
to guide the process.
- managers often develop heuristics, or mental shortcuts, to help reach a decision
2.Non-programmed Decisions. In contrast, non-programmed decisions are novel, unstructured decisions that are
generally based on criteria that are not well-defined. With non-programmed decisions, information is more likely to be
ambiguous or incomplete, and the decision maker may need to exercise some thoughtful judgment and creative thinking
to reach a good solution.

THE DECISION-MAKING PROCESS

While decisions makers can use mental shortcuts with programmed decisions, they should use a systematic process with
non-programmed decisions. The decision-making process is illustrated in Exhibit 2.3 and can be broken down into a
series of six steps, as follows:
1. Recognize that a decision needs to be made.
2. Generate multiple alternatives.
a. Talk to other people.
b. Be creative.
3. Analyze the alternatives.
Four components to ethical decision-making
1. Moral sensitivity—recognizing that the issue has a moral component;
2. Moral judgment—determining which actions are right vs. wrong;
3. Moral motivation/intention—deciding to do the right thing; and
4. Moral character/action—actually doing what is right.
4. Select an alternative.
5. Implement the selected alternative.
6. Evaluate its effectiveness.

BARRIERS TO EFFECTIVE DECISION-MAKING

1. Bounded rationality is the idea that for complex issues we cannot be completely rational because we cannot
fully grasp all the possible alternatives, nor can we understand all the implications of every possible alternative.
Our brains have limitations in terms of the amount of information they can process.
2. Escalation of commitment is the tendency of decision makers to remain committed to poor decision, even
when doing so leads to increasingly negative outcomes.
3. Time Constraints: there is little time available to collect information and to rationally process it
4. Uncertainty: they cannot know the outcome of each alternative until they’ve actually chosen that alternative.
5. Conflict: effective decision-making can be difficult because of conflict.

GROUP DECISION-MAKING
Involving more people in the decision-making process can greatly improve the quality of a manager's decisions and
outcomes. However, involving more people can also increase conflict and generate other challenges.
Advantages of Group Decisions
1. An advantage to involving groups in decision-making is that you can incorporate different perspectives and ideas. For
this advantage to be realized, however, you need a diverse group. In a diverse group, the different group members will
each tend to have different preferences, opinions, biases, and stereotypes. Because a variety of viewpoints must be
negotiated and worked through, group decision-making creates additional work for a manager, but (provided the group
members reflect different perspectives) it also tends to reduce the effects of bias on the outcome.
2. Having more people involved in decision-making is also beneficial because each individual brings unique information
or knowledge to the group, as well as different perspectives on the problem.
3. Additionally, having the participation of multiple people will often lead to more options being generated and to
greater intellectual stimulation as group members discuss the available options. Brainstorming is a process of generating
as many solutions or options as possible and is a popular technique associated with group decision-making. All of these
factors can lead to superior outcomes when groups are involved in decision-making. Furthermore, involving people who
will be affected by a decision in the decision-making process will allow those individuals to have a greater understanding
of the issues or problems and a greater commitment to the solutions.

Disadvantages of Group Decisions

1. Group decision-making is not without challenges. Some groups get bogged down by conflict, while others go to the
opposite extreme and push for agreement at the expense of quality discussions.
2. Groupthink occurs when group members choose not to voice their concerns or objections because they would rather
keep the peace and not annoy or antagonize others.
3. Sometimes groupthink occurs because the group has a positive team spirit and camaraderie, and individual group
members don’t want that to change by introducing conflict. It can also occur because past successes have made the
team complacent.
4. Often, one individual in the group has more power or exerts more influence than others and discourages those with
differing opinions from speaking up (suppression of dissent) to ensure that only their own ideas are implemented. If
members of the group are not really contributing their ideas and perspectives, however, then the group is not getting the
benefits of group decision-making.

How to Form a Quality Group?

1. Effective managers will try to ensure quality group decision-making by forming groups with diverse members so that a
variety of perspectives will contribute to the process. They will also encourage everyone to speak up and voice their
opinions and thoughts prior to the group reaching a decision.
2. Sometimes groups will also assign a member to play the devil’s advocate in order to reduce groupthink. The devil’s
advocate intentionally takes on the role of critic. Their job is to point out flawed logic, to challenge the group’s
evaluations of various alternatives, and to identify weaknesses in proposed solutions. This pushes the other group
members to think more deeply about the advantages and disadvantages of proposed solutions before reaching a
decision and implementing it.

CHAPTER 3: THE ORGANIZATION’S ENVIRONMENT

The organization’s environment is classified into two major environments namely: external and internal environment.

The external environment is everything outside an organization’s boundaries that might affect it. There are two separate
external environments: the general environment and the task environment.

The general environment is an inclusive concept that involves all outside factors and influences that impact the
operation of a business that an organization must respond or react to in order to maintain its flow of operations.
1. The Economic Dimension. The economic dimension of an organization’s general environment is the
overall health and vitality of the economic system in which the organization operates.
2. The Technological Dimension. The technological dimension of the general environment is made up of
the methods available for converting resources into products or services.
3. The Political–Legal Dimension. The political–legal dimension of the general environment consists of
government regulation of business and the relationship between business and government.
This dimension is important for three basic reasons. First, the legal system partially defines what an
organization can and cannot do. Second, pro- or anti-business sentiment in government influences
business activity. Finally, political stability has ramifications for planning.
Task environment provides useful information more readily than the general environment because the manager
can identify environmental factors of specific interest to the organization, rather than deal with the more
abstract dimensions of the general environment.
1. Competitors - An organization’s competitors are other organizations that compete with it for
resources.
 2. Customers - A second dimension of the task environment is customers, or whoever pays money to
acquire an organization’s products or services.

3. Supplier - Suppliers are organizations that provide resources for other organizations. Some businesses
strive to avoid depending exclusively on particular suppliers. Others, however, find it beneficial to create
strong relationships with single suppliers.
4. Regulators - Regulators are elements of the task environment that have the potential to control,
legislate, or otherwise influence an organization’s policies and practices. There are two important kinds
of regulators. Regulatory agencies are created by the government to protect the public from certain
business practices or to protect organizations from one another
5. Strategic Partners – It is also called strategic allies—two or more companies that work together in
joint ventures or other partnerships.

On the other hand, organization’s internal environment consists of conditions and forces within the organization.
- consists of their owners, board of directors, employees, and physical work environment.
1. Owners. The owners of a business are, of course, the people who have legal property rights to that business.
Owners can be a single individual who establishes and runs a small business, partners who jointly own the business,
individual investors who buy stock in a corporation, or other organizations.
2. Board of Directors. A corporate board of directors is a governing body that is elected by the stockholders and
charged with overseeing a firm’s general management to ensure that it is run to best serve the stockholders’
interests. Some boards are relatively passive: They perform a general oversight function but seldom get actively
involved in how the company is really run.
3. Employees. An organization’s employees are also a major element of its internal environment. Of particular
interest to managers today is the changing nature of the workforce, which is becoming increasingly more diverse in
terms of gender, ethnicity, age, and other dimensions. Workers are also calling for more job ownership—either
partial ownership in the company or at least more say in how they perform their jobs.
4. Physical Work Environment. A final part of the internal environment is the organization’s actual physical
environment and the work that people do. Some firms have their facilities in downtown skyscrapers, usually spread
across several floors. Others locate in suburban or rural settings and may have facilities more closely resembling a
college campus.

THE ETHICAL AND SOCIAL ENVIRONMENT OF MANAGEMENT

1. Managerial Ethics - Managerial ethics consists of the standards of behavior that guide individual managers in
their work. One important area of managerial ethics is the treatment of employees by the organization. It
includes, for example, hiring and firing, wages and working conditions, and employee privacy and respect.
2. Managing Ethical Behavior - Spurred partially by increased awareness of ethics scandals in business and
partially by a sense of enhanced corporate consciousness about the distinction between ethical and unethical
behaviors, many organizations have reemphasized ethical behavior on the part of employees.
3. Emerging Ethical Issues -Ethical scandals have become almost commonplace in today’s world. Ranging from
business and sports to politics and the entertainment industry, these scandals have rocked stakeholder
confidence and called into question the moral integrity of our society.
4. Ethical Leadership - In recent years, the media have been rife with stories about unscrupulous corporate
leaders. For every unethical senior manager, of course, there are many highly ethical ones. This leadership, in
turn, is expected to help set the tone for the rest of the organization and to establish both norms and a culture
that reinforce the importance of ethical behavior.
5. Corporate Governance - A related area of emerging concern is ethical issues in corporate governance. As
discussed earlier in this chapter, the board of directors of a public corporation is expected to ensure that the
business is being properly managed and that the decisions made by its senior management are in the best
interests of shareholders and other stakeholders.
6. Ethics and Information Technology - A final set of issues that has emerged in recent times involves
information technology. Among the specific focal points in this area are individual rights to privacy and
individuals’ potential abuse of information technology. Indeed, online privacy has become a hot topic as
companies sort out the related ethical and management issues.

Social Responsibility in Organizations

Social responsibility is the set of obligations an organization has to protect and enhance the societal context in which it
functions.
 1. Arguments for Social Responsibility - People who argue in favor of social responsibility claim that—because
organizations create many of the problems that need to be addressed, such as air and water pollution and
resource depletion—organizations should play a major role in solving them.
2. Arguments Against Social Responsibility - Some people, however, including the famous economist Milton
Friedman, argue that widening the interpretation of social responsibility will undermine the U.S. economy by
detracting from the basic mission of business: to earn profits for owners.

Managing Social Responsibility

1. Formal Organizational Dimensions- Some dimensions of managing social responsibility are formal and
planned activities on the part of the organization. The formal organizational dimensions through which
businesses can manage social responsibility include legal compliance, ethical compliance, and philanthropic
giving.
2. Legal compliance is the extent to which the organization conforms to local, state, federal, and international
laws. The task of managing legal compliance is generally assigned to the appropriate functional managers. For
example, the organization’s top human resource executive is responsible for ensuring compliance with
regulations concerning hiring, pay, and workplace safety and health.
3. Ethical compliance is the extent to which the organization’s members follow basic ethical (and legal) standards
of behavior. We noted earlier that organizations have increased their efforts in this area—providing training in
ethics and developing guidelines and codes of conduct, for example.
4. Whistle-blowing is an employee’s disclosure of illegal or unethical conduct by others within the organization.
How an organization responds to this practice often indicates its values as they relate to social responsibility.
Whistle-blowers may have to proceed through a number of channels to be heard, and they may even get fired
for their efforts.

THE INTERNATIONAL ENVIRONMENT OF MANAGEMENT

1. Trends in International Business -The stage for today’s international business environment was set at the end
of World War II. Businesses in war-torn countries such as Germany and Japan had no choice but to rebuild from
scratch. Consequently, they had to rethink every facet of their operations, including technology, production,
finance, and marketing.
2. Levels of International Business Activity- Firms can choose various levels of international business activity as
they seek to gain a competitive advantage in other countries. The general levels are exporting and importing,
licensing, strategic alliances, and direct investment.
a. Exporting and Importing - Exporting, or making a product in the firm’s domestic marketplace and selling it in
another country, can involve both merchandise and services
b. Licensing - is an arrangement whereby a firm allows another company to use its brand name, trademark,
technology, patent, copyright, or other assets. In return, the licensee pays a royalty, usually based on sales.
Franchising, a special form of licensing, is also widely used in international business.
c. Strategic Alliances - In a strategic alliance, two or more firms jointly cooperate for mutual gain. For example,
Unisys and Oracle have a strategic alliance that provides customers with the service and technology of Unisys
and the enterprise software of Oracle. A joint venture is special type of strategic alliance in which the partners
actually share ownership of a new enterprise. Strategic alliances have enjoyed a tremendous upsurge in the past
few years.
d. Direct Investment - Another level of commitment to internationalization is direct investment. Direct
investment occurs when a firm headquartered in one country builds or purchases operating facilities or
subsidiaries in a foreign country. The foreign operations then become wholly owned subsidiaries of the firm.

The Context of International Business

1. The Cultural Environment - One significant contextual challenge for the international manager is the cultural
environment and how it affects business. A country’s culture includes all the values, symbols, beliefs, and
language that guide behavior. Cultural values and beliefs are often unspoken; they may even be taken for granted
by those who live in a particular country. Cultural factors do not necessarily cause problems for managers when
the cultures of two countries are similar.
2. Controls on International Trade - Another element of the international context that managers need to
consider is the extent to which there are controls on international trade. These controls include tariffs, quotas,
export restraint agreements, and “buy national” laws. A tariff is a tax collected on goods shipped across national
boundaries. Tariffs can be collected by the exporting country, by countries through which goods pass, or by the
 importing country. Import tariffs, which are the most common, can be levied to protect domestic companies by
increasing the cost of foreign goods.
3. Economic Communities - Just as government policies can either increase or decrease the political risk that
international managers face, trade relations between countries can either help or hinder international business.
Relations dictated by quotas, tariffs, and so forth can hurt international trade.

4. The Role of the GATT and WTO - The context of international business is also increasingly being influenced by
the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO).

The GATT was first negotiated following World War II in an effort to avoid trade wars that would benefit
rich nations and harm poorer ones. Essentially, the GATT is a trade agreement intended to promote
international trade by reducing trade barriers and making it easier for all nations to compete in
international markets.
The World Trade Organization (WTO) came into existence on January 1, 1995. The WTO replaced the
GATT and absorbed its mission. The WTO is headquartered in Geneva, Switzerland, and currently
includes 140 member nations and 32 observer countries. Members are required to open their markets
to international trade and to follow WTO rules. The WTO has three basic goals:
1. To promote trade flows by encouraging nations to adopt nondiscriminatory and predictable
trade policies
2. To reduce remaining trade barriers through multilateral negotiations
3. To establish impartial procedures for resolving trade disputes among its members

THE ORGANIZATION’S CULTURE

Organizational culture is the set of values, beliefs, behaviors, customs, and attitudes that helps the organization’s
members understand what it stands for, how it does things, and what it considers important.

1. The Importance of Organizational Culture. Culture determines the organization’s “feel.” A strong and clear
culture can play an important role in the competitiveness of a business. At the same time, though, there is no
universal culture that will help all organizations.
2. Determinants of Organizational Culture- Where does an organization’s culture come from? Typically, it
develops and blossoms over a long period of time. Its starting point is often the organization’s founder.
3.Managing Organizational Culture- How can managers deal with culture, given its clear importance but
intangible nature? Essentially, the manager must understand the current culture and then decide whether it
should be maintained or changed. By understanding the organization’s current culture, managers can take
appropriate actions. Culture can also be maintained by rewarding and promoting people whose behaviors are
consistent with the existing culture and by articulating the culture through slogans, ceremonies, and so forth.

CHAPTER 4 FOUNDATION OF PLANNING

Planning encompasses defining the organization's objectives or goals, establishing an overall strategy for achieving those
goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities It's concerned with ends
(what is to be done) as well as with means (how it's to be done)

MANAGERS PLAN FOR AT LEAST FOUR REASONS

• First, planning establishes coordinated effort. It gives direction to managers and non-managerial employees.
• Second, by forcing managers to look ahead, anticipate change, consider the impact of change, and develop
appropriate responses, planning reduces uncertainty.
Third, planning reduces overlapping and wasteful activities. Coordination before the fact is likely to uncover
waste and redundancy
• Finally, planning establishes the goals or standards that facilitate control.
Organizational Goal
Goals are critical to organizational effectiveness, and they serve a number of purposes. Organizations can also have
several different kinds of goals, all of which must be appropriately managed. And a number of different kinds of
managers must be involved in setting goals.

Purposes of Goals
 1. Goals provide guidance and a unified direction for people in the organization. Goals can help everyone
understand where the organization is going and why getting there is important.
2. Goal-setting practices strongly affect other aspects of planning. Effective goal setting promotes good planning,
and good planning facilitates future goal setting. Specifically, the firm will need to work aggressively to boost
both profits and cash flow to meet its goals.
3. Goals can serve as a source of motivation for an organization's employees. Goals that are specific and
moderately difficult can motivate people to work harder, especially if attaining the goal is likely to result in
rewards.
4. Goals provide an effective mechanism for evaluation and control. This means that performance can be
assessed in the future in terms of how successfully today's goals are accomplished.

Kinds of Goals
1. An organization's mission is a statement of its "fundamental, unique purpose that sets a business apart from other
firms of its type and identifies the scope of the business's operations in product and market terms."
2. Strategic goals are set by and for an organization's top management. They focus on broad, general issues.

KINDS OF ORGANIZATIONAL PLAN

 STRATEGIC PLANS ARE DEVELOPED TO ACHIEVE STRATEGIC GOALS

 A tactical plan, aimed at achieving tactical goals, is developed to implement specific parts of a strategic plan.
 An operational plan focuses on carrying out tactical plans to achieve operational goals

A NATURE OF STRATEGIC MANAGEMENT

A strategy is a comprehensive plan for accomplishing an organization's goals. Strategic management, in turn, is a way of
approaching business opportunities and challenges it is a comprehensive and ongoing management process aimed at
formulating and implementing effective strategies. Finally, effective strategies are those that promote a superior
alignment between the organization and its environment and the achievement of strategic goals.

COMPONENTS OF STRATEGY

1. A distinctive competence is something the organization does exceptionally well. A distinctive competence of
Abercrombie & Fitch is its speed in moving inventory. It tracks consumer preferences daily with point-of-sale computers,
electronically transmits orders to suppliers in Hong Kong, charters 747 cargo planes to fly new products to the United
States, and has those products in stores 48 hours later. Because other retailers take weeks or sometimes months to
accomplish the same things, Abercrombie & Fitch uses this distinctive competence to remain competitive.
2. The scope of a strategy specifies the range of markets in which an organization will compete. Hershey Foods has
essentially restricted its scope to the confectionery business, with a few related activities in other food-processing areas.
In contrast, its biggest competitor, Mars, has adopted a broader scope by competing in the pet food business and the
electronics industry, among others. Some organizations, called conglomerates, compete in dozens or even hundreds of
markets.
3. A strategy should also include an outline of the organization's projected resource deployment how it will distribute its
resources across the areas in which it competes. General Electric, for example, has been using profits from its highly
successful U.S. operations to invest heavily in new businesses in Europe and Asia. Alternatively, the firm might have
chosen to invest in different industries in its domestic market or to invest more heavily in Latin America. The choices it
makes as to where and how much to invest reflect issues of resource deployment.

TYPES OF STRATEGY ALTERNATIVES

1. Business-level strategy is the set of strategic alternatives from which an organization chooses as it conducts business
in a particular industry or market
2. Corporate-level strategy is the set of strategic alternatives from which an organization chooses as it manages its
operations simultaneously across several industries and several markets.
SWOT- Strength, Weakness, Opportunities, Threats

EVALUATING ORGANIZATION STRENGTH

Organizational strengths are skills and capabilities that enable an organization to create and implement its
strategies. Strengths may include things like a deep pool of managerial talent, surplus capital, a unique
reputation and/or brand name, and well-established distribution channels.
Mission - An organization's fundamental purpose
 SWOT Analysis - To formulate strategies that support the mission
Good Strategies - Those that support the mission and exploit opportunities and strengths - neutralize
threats- avoid weaknesses
Organizational weaknesses are skills and capabilities that do not enable an organization to choose and
implement strategies that support its mission. An organization has essentially two ways of addressing
weaknesses.

EVALUATING AN ORGANIZATIONS OPPORTUNITIEN AND THREATS

1. Organizational opportunities are areas that may generate higher performance.

2. Organizational threats are areas that increase the difficulty of an organization performing at a high level.

TACTICAL PLANNING
tactical plans are developed to implement specific parts of a strategic plan. You have probably heard the saying about
winning the battle but losing the war. Tactical plans are to battles what strategy is to a war: an organized sequence of
steps designed to execute strategic plans. Strategy focuses on resources, environment, and mission, whereas tactics
focus primarily on people and action.

Developing Tactical Plans

1. First, the manager needs to recognize that tactical planning must address a number of tactical goals derived from a
broader strategic goal. An occasional situation may call for a stand- alone tactical plan, but most of the time tactical plans
flow from and must be consistent with a strategic plan.
2. Second, although strategies are often stated in general terms, tactics must specify resources and time frames. A
strategy can call for being number one in a particular market or industry, but a tactical plan must specify precisely what
activities will be undertaken to achieve that goal.
3. Finally, tactical planning requires the use of human resources. Managers involved in tactical planning spend a great
deal of time working with other people. They must be in a position to receive information from others within and outside
the organization, process that information most effectively, and then passes it on to others who might use it.

OPERATIONAL PLANNING
Another critical element in effective organizational planning the development and implementation of operational plans.
Operational plans are derived from tactical plans and are aimed at achieving operational goals. Thus, operational plans
tend to be narrowly focused, have relatively short time horizons, and involve lower-level managers

TYPES OF OPERATIONAL PLANNING

1. Single-Use Plans. A single-use plan is developed to carry out a course of action that is not likely to be repeated in the
future. As Disney planned its newest theme park in Hong Kong, it developed numerous single-use plans for individual
rides, attractions, and hotels. The two most common forms of single-use plans are programs and projects.
2. Programs - A program is a single-use plan for a large set of activities. It might consist of identifying procedures for
introducing a new product line, opening a new facility, or changing the organization's mission
3. Projects - A project is similar to a program but is generally of less scope and complexity. A project may be a part of a
broader program, or it may be a self-contained single-use plan.
4. Standing Plans. Whereas single- use plans are developed for nonrecurring situations, a standing plan is used for
activities that recur regularly over a period of time. Standing plans can greatly enhance efficiency by making decision
making routine. Policies, standard operating procedures (SOPs), and rules and regulations are three kinds of standing
plans.
5. Policies - As a general guide for action, a policy is the most general form of standing plan that specifies the
organization's general response to a designated problem or situation.
6. Standard Operating Procedures - Another type of standing plan is the SOP. An SOP is more specific than a policy, in
that it outlines the steps to be followed in particular circumstances.
7. Rules and Regulations - The narrowest of the standing plans, rules and regulations describe exactly how specific
activities are to be carried out. Rather than guiding decision making, rules and regulations actually take the place of
decision making in various situations.

Contingency planning is a useful technique for helping managers cope with uncertainty and change. However, crisis
management, by its very nature, is more difficult to anticipate. But organizations that have a strong culture, strong
leadership, and a capacity to deal with the unexpected stand a better chance of successfully weathering a crisis than
other organizations.