Read the text: Planning and decision making

Planning has been labeled the primary management function because it sets the stage for all other aspects of management. Recent research has uncovered the following trends in corporate planning: more planners with actual management experience; greater teamwork, customizing, and flexibility; and more translation of broad strategies into how-to-do-it plans. Along with many other practical reasons for planning, two conceptual reasons for planning are limited resources and an uncertain environment. To cope with environmental uncertainty, organizations can respond as defenders (their primary attention is devoted to efficiency of current operations), prospectors (their primary attention is devoted to searching for new market opportunities), analyzers (their emphasis is on detecting and copying competitor’s most promising ideas), or reactors (they are frequently unable to respond quickly to perceived changes in environment and make adjustments only when finally forced to do so by environmental pressures).

A properly written plan tells what, when, and how something is to be accomplished. Clearly written organizational mission statements tend to serve as a useful focal point for the planning process. Strategic, intermediate, and operational plans are formulated by top, middle, and lower-level management, respectively. Objectives have been called the single most important feature of the planning process. Well-written objectives spell out in measurable terms what should be accomplished and when it is to be accomplished. Good objectives help managers by serving as targets, act­ing as measuring sticks (they enable managers to weigh performance objectively on the basis of accomplishment rather than subjectively on the basis of personality or prejudice), encouraging commitment, and strengthening motivation. Objective setting begins at the top of the organization and filters down, thus forming a means-ends chain: supervisory-level objectives provide the means for achieving middle-level objectives (ends) which, in turn, provide the means for achieving top-level objectives (ends). Priorities affect resource allocation by assigning relative importance to objectives. Plans are formu­lated and executed as part of a more encompassing planning/control cycle.

Management by objectives (MBO) is an approach to planning and controlling that is based on measurable and participatively set objectives (the emphasis is on the participation and involvement of subordinates). MBO basically consists of four steps: (1) set objectives participatively, (2) develop action plans, (3) periodically reevaluate objectives and plans and monitor performance, and (4) conduct annual performance appraisals. Objective setting in MBO flows from top to bottom. MBO has both strengths and limitations and requires a supportive climate favorable to change, participation, and the sharing of authority.

Break-even analysis, or cost-volume-profit analysis, can be carried out algebraically or graphically. The break-even point is the level of sales at which the firm neither suffers a loss nor realizes a profit. In effect, the break-even point is the profit-making threshold. If sales are below that point, the organization loses money. If sales go beyond the break-even point, it makes a profit. Break-even analysis helps planners gauge the potential impact of price changes and profit objectives on sales volume. A major limitation of break-even analysis is that specialized accounting knowledge is required to identify relevant fixed and variable costs.

I. Reading Exercises:

Exercise 1. Read and memorize using a dictionary:

Exercise 2. Answer the questions:

1) Why has planning been labeled the primary management function?

2) What are two conceptual reasons for planning?

3) Who formulates intermediate plans?

4) What is management by objectives based on?

Exercise 3. Match the left part with the right:

Exercise 4. Open brackets choosing the right words:

Good objectives (hamper/help) managers by serving as targets, act­ing as measuring sticks, (encouraging/discouraging) commitment, and strengthening motivation.

THE SPEAKING MODULE

II. Speaking Exercises:

Exercise 1. Describe planning, objectives, MBO, cost-volume-profit analysis using the suggested words and expressions as in example:

Exercise 2. Ask questions to the given answers:

1) Question: ___________________________________________ ?

Answer: Two conceptual reasons for planning are limited resources and an uncertain environment.

2) Question: ___________________________________________ ?

Answer: Priorities affect resource allocation by assigning relative importance to objectives.

3) Question: ___________________________________________ ?

Answer: Good objectives help managers by serving as targets, act­ing as measuring sticks, encouraging commitment, and strengthening motivation.

THE WRITING MODULE

III. Writing exercises:

Exercise 1. Complete the sentences with the suggested words:

assigning, executed, top, to, more.

Objective setting begins at the _____of the organization and filters down, thus forming a means-ends chain. Priorities affect resource allocation by ______relative importance _____ objectives. Plans are formu­lated and ______as part of a ______encompassing planning/control cycle.

Exercise 2. Compose a story on one of the topics (up to 100 words):

“Management by objectives”

“Trends in corporate planning”

“Objectives and the planning process”

Date: 2015-01-12; view: 1191