intro to bus mgt

intro to bus mgt - Lecture 20: Mar. 12th, 2010 Planning and...

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Lecture 20: Mar. 12 th , 2010 Planning and Decision Making Planning: choosing a goal and developing a strategy to achieve that goal Generates intensified effort , as managers and employees put forth greater effort when following a plan Encourages persistence , the ability to work hard for long periods Provides direction of effort towards activities that help accomplish goals and away from activities that don’t Encourages people to create task strategies , better ways to do their jobs Can impede change and prevent or slow needed adaptation Can create a false sense of certainty Can be an exercise on planners planning things they don’t understand how to accomplish Planning Process Set Goals Develop Commitment Develop Effective Action Plans Track Progress Toward Goal Achievement Maintain Flexibility Revise Existing Plan Types of Plans Strategic Plans o Clarify how the company will serve customers and position itself against competitors (2-5 years) Tactical Plans o Specify how a company will use resources, budgets, and people to accomplish goals within its missions (6 months – 2 years) Operational Plans o Day-to-day plans for producing or delivering products and services over a 30 day period to six month period Single Use Plans Standing Plans Policies Procedures Rules and Regulations Budgets Decision Making Process Define the Problem Identify and weigh decision criteria Generate alternative courses of action
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Evaluate the alternatives Choose an alternative Problem of Rationality Maximizing o Choosing the best alternative Satisficing o Choosing a “good enough” alternative Bounded Rationality o A decision making process restricted in the real world by Limited resources Incomplete and imperfect information Managers’ limited decision making capabilities Breakeven Analysis A means of finding the point, in dollars and units, at which costs equal revenues Fixed Costs o Costs that continue even if no units are produced (aka indirect costs) Variable Costs o Costs that vary with the volume of units produced (aka direct costs or cost of goods sold) Breakeven analysis assumes the following o Constant fixed costs o Linear variable costs o No consideration of financing, interest rates, and time value of money Time Value of Money o Present value vs. Future value o FV = PV(1+i)^N (i=interest rate, N=compounding periods) Comparing Investment Strategies The difference between the present value of the cash flow generated and the present value of the investment incurred. NPV = ∑ (I(t) – O(t)) / (1 + i)^t o I(t): Annual Inflows o O(t): Annual Outflows o Interest rate o Time Calculating I o Cost of capital o Return from benchmark investments o Average returns from stockmarket, or primerate. Important Investment Strategies
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This note was uploaded on 02/23/2012 for the course MGT 3303 taught by Professor Bell during the Fall '08 term at Texas State.

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intro to bus mgt - Lecture 20: Mar. 12th, 2010 Planning and...

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