This is the most simple approach to dealing with business problems. Linear Thinking assumes that each problem has a single solution, the solution will only affect the problem area, not the rest of the organization, and, once implemented a solution will remain valid and should be evaluated only for how well it solves the problem.
|In Linear Thinking what makes up or defines a "problems"||
Problems are discrete, singular, and unique.
|What types of jobs hire in a linear thinking methodology?||
Fast Food restaurants. This is problematic because then as long as managers saw a problem as simplistic and linear, then neither the range of the solution nor the impact of these solutions on the whole organization was considered.
|Major difficulties of Linear Thinking||
1. Parts of the organization are not considered when a solution to the problem is thought up, but the entire organization might be affected by the solution.
2. Even if the results of a solution are only those desired and intended, the focus on a single problem area ignores the interrelationships among different areas of the organization.
3. Linear thinking assumes that problems, once defined, and solutions, once implemented, are always valid and ignores the rapidly changing nature of a business
Systems Thinking is a more contemporary and encompassing appraoch to problem solving that assumes that problems are complex and related to a situation, that solutions not only solve the problem but will also impact the rest of the organization and should be evaluated on how well they solve the problem AND affect the total organization
Programmed Decisions characterize those problems that are well understood, highly structured, routine, and repetitive and that lend themselves to systematic procedures and rules. The first time a problem is solved a LOT of thought is put into it because the solution will become a standard operating procedure. (Like algorithms)
|Examples of Programmed decisions||
Checking out a book from the library, processing a hospital insurance claim. Repetitive and routine!
Non-Programmed Decisions are those problems that are not well understood, not highly structured, tend to be unique, and do not lend themselves to routine or systematic procedures. These happen infrequently and because of this there is little precedent for decision making
|Examples of non programmed decisions||
A Merger, the events of 9/11, and the events of Hurricane Katrina. Managers must make use of the data from past problems and data that may help them to make this decision.
|Levels of Decision Making in an Organization||
1. Strategic Decision Making
2. Tactical Decision Making
3. Operational Decision Making
|Strategic Decision Making||
Strategic Decision Making are those that determine the goals of the entire business, its purpose and direction. This is mostly TOP MANAGEMENTs' job. They must look at the big picture. The decisions made at this level also look at how the business will relate to external environments.
|Tactical Decision Making||
Tactical Decisions are those made on a lower level than strategic decision making. Made by MIDLEVEL management such as divisional or departmental managers. These decisions concern the development of tactics to accomplish the strategic goals defined by top management. These decisions express corporate goals in a SPECIFIC departmental manner, unlike Strategic which is nonspecific.
|Operational Decision Making||
Operational Decisions are made on the lowest or supervisory level within the company and concern the course of daily operations. These decisions determine the manner in which operations are conducted. These are operations that are designed to ACCOMPLISH the tactical decisions made by mid management. Setting a production schedule or determining the level of raw materials inventory are examples of Operational Decision Making.
|Styles of Decision Making||
1. The "Smoother" or Problem Avoider
2. The Problem Solver
3. The Problem Seeker
|The "Smoother" or Problem Avoider||
The Problem Avoider seeks to preserve the status quo and acts to keep from making changes. He or she will ignore a problem or make excuses to "smooth" over the problem
A Problem Solver is the most common managerial style. Most managers expect to be confronted with problems in the normal course of doing business. There is no hesitation to make changes when there is an indication that such changes are good and necessary. However until it is determined by means of research and scientific analysis of data that change is necessary, a problem solver will not seek to solve the problem.
A Problem Seeker actively seeks out problems and attempts to deal with them before they emerge as major difficulties for a business. Enthusiastically involved in future planning. Two reasons why this is the best:
1. It is easier to deal with small problems rather than big ones
2. It is not enough for a company to change, they must change in the right direction to survive in the rapidly changing contemporary environment.
|Conditions of Certainty||
Under Conditions of Certainty all decision variable and the results of each potential course of action or solution are known in advance. The manager can confidently saw that there will be no unanticipated results. These are programmed decisions. Example of this is the relationship between the manufacturing of TV's and inventory levels of parts.
|Conditions of Risk||
Risk is defined as a condition in which the result of any decision or course of action are not definitely known but will probably fall within a known range. One describes risk in terms of probability.
|Conditions of Uncertainty||
When a manager cannot predict the outcome of a managerial decision, or if the outcome can be predicted but the probability of that outcome actually happening cannot be predicted, a condition of uncertainty exists. Why a condition of uncertainty may exist:
- Too many variables
- Few variables in the situation but not enough information about the variables
- Both too many variables and not enough information
|Steps in the Decision Making Process||
1. Situational Analysis
2. Setting Performance Standards
3. Generation of Alternatives
4. Consequences Evaluation
5. Pilot Testing and Full Implementation.
|1. Situational Analysis||
1. Situational Analysis: Helps focus on the internal organization conditions, the external factors that bear upon the business, and the relationships between the two. The internal analysis or organizational audit consists of listing the business's strengths and weaknesses. Hiring an external agent is always a good idea when doing the situational analysis because they have no personal interest in the business.
|2. Setting Performance Standards||
2. If the end result of situational analysis is an organizational goal statement, how will a manager know if the goal has been accomplished? Only by having performance standards. Performance standards help management know if it has been successful in accomplishing their goals. These performance goals must be: realistic, behaviorally based, observable, and quantifiable. Performance standards create accountability.
|3. Generation of Alternative||
3. There are always AT LEAST two options a managers can take: do something or do nothing. Brainstorming os a technique that is often used with small groups of employees to generate a large number of alternatives in a short period of time. NO CRITICISM is voiced during the Generation of ALternatives.
|4. Consequences Evaluation||
4. Each proposed alternative action has consequences if implemented. When performing this consequence avaluation three questions must be asked:
-Does this alternative achieve the organization goal?
- Are there any undersirable consequences or side effects?
- Can the organization afford this alternative?
|5.Pilot-Testing and Full Implementation||
5. Once an alternative or combination of alternatives is chosen the alternative must be pilot tested. Management should not preceded to full implementation without testing it out on a small scale. What looks good on paper might not actually work. After pilot testing and plan modification if needed then the selected course of action can be fully implemented.
1. Choosing a destination
2. Evaluating alternative routes
3. Deciding on a specific route to get to your destination
|3 perspectives of planning||
1. Strategic Planning
2. Long range planning
3. Operational planning
Planning for the direction of the organization and all its components. Focuses on broad and general ideas of the WHOLE business. Outputs include what markets to be involved with.
|Attributes of Strategic Planning||
1. Time frame: LONG time over 5 years
2. What business are we in? Should we broaden or shrink our business
3. Process: Probably several top executives or members of board of directors. GAP and SWAT analysis
4. Complexity: Many variables because of the external and internal attributes must be assessed.
5. Degree of Structure: Very little Structure
6. Output: Very general statement that puts forth the basic purpose of the business-mission statement
|Long Range Planning Attributes||
1. Time frame: 1-5 years
2. Basic question: What are the major ocmponents of our business
3. Process: Use Top executive who made strategic plan and managers
4. Complexity: Fewer variables that strategic planning since mission has been stated
5. Degree of structure: Some structure
6. Output: Written guidlines
Day to Day planning that carry out the end mission
|Operational Planning Attributes||
1. Time frame: 1 year or less
2. Basic Question: What specific tasks must be done to complete the long term plan
3. Process: Senior division chiefs
4. Complexity: More specific variables are included
5. Degree of Structure: Most structured
6. Output: Specific variables need to be taken into consideration
|5 major components of the process of planning||
1. Identify what the organization MIGHT do
2. Appraising what the organization CAN do
3. Deciding what the organization WANTS to do
4. Determing what the organization SHOULD do
5. Matching the opportunities, capabilities, and values, and obligations to society at an acceptable level of risk in the pursuit of organizational goals.
This involves assessing existing strategies, organization and environment to develop new strategies and strategic plans capable of delivering future competitive advantages.
Once strategies are created they must be acted upon successfully to achieve the desired results
A practical way to determine managerial strategy is to apply the GAP analysis to strategic planning. THis approach asks the following questions:
1. Where are we today in terms of our strategy planning?
2. Where are we going?
3. Where do we want to go?
4. How are we going to get there?
|How to fill Planning gap||
1. Improve current operations
2. Develop new products or services
3. Develop new markets
An approach to assessing organizational preparedness. You interview selected executives. Rearrange the data you have gathered using SWAY analysis
|Porter's 5 Factors||
1. Rivalry: Firms strive for a competitive advantage over their rivals.
2. Threat of Substitutes: Substitutes refers to products in other industries. The price change of a substitute can efffect your product.
2. Buyer Power: The power that buyers have on a given industry. Buyers have a lot of power when they get to set the price.
4. Supplier Power: Producing industry requires raw material, this relationship requires a supplier buyer relationship. Supplier, if powerful, can exert an influence on producing industry such as selling something for a higher price to get some of the industries profits.
5. Barriers to Entry/ Threat of Entry: When profits in an industry increase you would expect there to be more people entering the industry but barriers to entry sometimes stop this from happening.
|How do you fill the planning GAP?||
Filling the gap between momentum( or what you are currently during) and what your potential is by:
1. Improve current operations
2. Develop new products or services
3. Develop new markets
4. And Diversify
|Interviews for SWOT||
SWOT analysis is a way to plan. The first step in performing a SWOT analysis is to interview current employees on happenings within a company. When you do an analysis you do the analysis on the data gathered during interviews.