Exam 2

Question	Answer
The first step in the planning process is	understanding the environment.
In order to enhance employee motivation, goals should be	moderately difficult.
A(n) ________ is a statement of the organization’s unique purpose and its scope of operations.	mission
Achieving a target level of market share for a specific product is an example of a(n)	operational goal
Tactical goals are established by	middle-level managers
Complexity makes long-range planning	difficult
Intermediate plans are especially important for	middle-level managers
A plan designed to allow a company to react to an unforeseen circumstance is referred to as a(n)	reaction plan.
One reason a firm may use a planning staff is	to reduce the workload of individual managers.
The board of directors of an organization is responsible for	mission statements
Line managers play an important role in the planning process because they	must execute plans developed by top management.
To respond to extreme economic shifts, an organization should develop	contingency plans.
Tactical plans must flow from and be consistent with	strategic plans
Plans that are narrowly focused, have short time frames, and involve lower-level managers are	operational plans.
The broadest form of single-use plans are	programs
The narrowest form of standing plans are	rules
Goals are often inappropriate because they are	unattainable
Managers must understand that effective planning will	eliminate the need for adjustments and exceptions.
Formal goal setting occasionally fails because of	too much required paperwork and record-keeping.
Under formal goal setting, yearly goals should be discussed	every three months.
Action Plan	ope-rationalizes any other kind of plan.
Two types of operational plans	are single use plans and standing plans.
Single Use plans	are developed to carry out a course of action that is not likely to be repeated in the future.
Program - Single Use plans	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.
Project - Single Use plans	similar to a program but is generally of less scope and complexity. A project may be part of a broader program or it may be self-contained single –use plan.
Standing plans	A general guide for action
Policy - Standing plans	is the most general form of standing plan. A policy specifies the organization's general response to a designated problem or situation.
Standing operating procedure - Standing plans	another type of standing plan is the standard operating procedure or SOP. An Sop is more specific than a policy, in that it outlines the steps to be followed in particular circumstances.
Rules and regulations - Standing plans	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 decisions making in various situations.
Board of directors	establishes the corporate missions and strategy. In some companies, they take an active role in the planning process.
Chief Executive Officer	usually the president or the chair of the board of directors. Single most important person in any organization is planning process. Plays a major role in the complete planning process and is responsible for implementing the strategy.
Executive Committee	usually composed of the top executives in the organization working together as a group. Committee members usually meet regularly to provide input to the CEO on the proposals that affect their own units and to review the strategic plans that develop from this input. Members of the committee are often assigned to various staff committees, subcommittees and task forces to concentrate on specific projects or problems that might confront the entire organization at some time in the future.
Line Management	Final component of most organized planning actives is line management.
Strategic Plans	is a general plan outlining decisions of resource allocation, priorities and action steps necessary to reach strategic goals. These plans are set by the board of directors and top management, generally have extended time horizon and address questions of scope, resource deployment, competitive advantage and synergy. More specific and concrete focus
Tactical Plans	Developed to implement specific parts of a strategic plan. Typically involve upper and middle managers. Concerned more with getting things done then with deciding what to do.
Operational Plans	focuses on carrying out tactical plans to achieve operational goals. Developed by middle and lower-level managers. Short term focus and relatively narrow in scope.
Inappropriate Goals	paying a large dividend to stockholder may also be inappropriate if it comes at the expense of research and development. Goals may also be inappropriate if they are unattainable.
Improper Reward System	In an improper reward system acts as a barrier to goal setting and planning. If an organization places too much emphasis on short-term performance and results, managers may ignore long-term issues as they set goals and formulate plans to achieve higher profits in the short term.
Dynamic and complex environment	The nature of an organization’s environment is also a barrier to effective goal setting and planning. Rapid change, technological innovation, and intense competition can all increase the difficulty of an organization’s accuracy assessing future opportunities and threats.
Reluctance to Establish Goals	Reluctance to establish goals of either managers or the units under their responsibility. May be due to a lack of confidence or fear of failure.
Resistance to Change	Planning essentially involves changing something about hew organization.
Constraints	Constraints that limit what an organization can do are another major obstacle. Common constraints include a lack of resources, government restrictions and strong competition.
Programmed vs. non-programmed decisions	Decision making process includes recognizing and defining the nature of a decision situation, identifying alternatives, choosing the “best” alternative, and putting it into practice.
Programmed	is one that is relatively structured or recurs with some frequency (or both). Usually based on procedures that were systematically designed.
Non-Programmed Decision	relatively unstructured and occurs much less often. (Example decision to buy a company) Each one is treated unique, investing enormous amount of time, energy and resources into exploring the situation from all perspectives. Intuition and experience are a major factor in non-programmed decisions. Most decisions made by top managers involving strategy and organization design are non-programmed.
Disadvantages	Biggest drawback of group and team decision making is the additional time and hence the greater expense entailed. May also represent undesirable compromised and hiring a compromise top manager may be a bad decision in the end because he or she may not be able to respond adequately to various sub units in the organization nor have everyone complete support.
Advantages	simply that more information is available in a group or team setting. A group represents a variety of education, experience and perspective. Can identify and evaluate better than one person alone.
Escalation of commitment	Sometimes decision makers becomes so committed to their decisions and then become so committed to the course of action suggested by those decisions that they stay with them even when the decisions appear to have been wrong.
Recognizing and defining the decision situation	The first step in rational decision making is recognizing that a decision is necessary – that is, there must be some stimulus or spark to initiate the process.
Identifying Alternatives	Once the decision situation has been recognized and defined, the second step is to identify alternative courses of defective action.
Evaluating alternatives	the third step in the decision making process is evaluating each of the alternatives.
Selecting an alternative	Even though many alternatives fail to pass the triple tests of feasibility, satisfactorily and affordable consequences, two or more alternatives may remain. Choosing the best of these is real Crux of decision-making.
Implementing the chosen alternative	after an alternative has been selected, the manager must put it into effect. Implementation is easy in some decision situations, others it’s more difficult.
Following up and evaluating the results	Final Step is decisions making process requires that managers evaluate the effectiveness of their decisions that is, they should make sure that the chosen alternative has served its original purpose.
Risk propensity	is the extent to which a decision maker is willing to gamble when making a decision.
State of Risk	the availability of each alternative and its potential payoff and cost are all associated with probability estimates.
State of Uncertainty	Most of the major decision-making in contemporary organizations is done under state of uncertainty. The decisions maker does not know all alternatives, the risk associated with each, or the likely consequences of each alternative.
State of Certainty	When decision maker knows with reasonable certainty what the alternatives are and what condition are associated with each alternative, a state of certainty exists.
Franchising	is an arrangement that permits the franchisee (buyer) to sell the product of the franchiser (seller). Franchises offer many advantage to both sellers and buyers. Franchisers benefit from the ability to grow rapidly by using the investment money provided by franchisees.
Venture Capitalist	are investors seeking to make profits on companies with rapid growth potential. Most of them do not lend money. They invest it, supply capital in return for stock. The venture capital company may also demand a representative on the board of directors.
Entrepreneur	is someone who engages in assuming the risk of a startup or new venture.
Entrepreneurship	s the process of planning, organizing, operating and assuming the risk of a startup or new venture.
Reasons for Success	#1New business owners must be committed to succeeding and be willing to put in the time and effort to make it happen. Having positive feelings and a good outlook on life may also play an important role. #2Careful analysis of market conditions can help new businesses owners assess the probable reception of their products in the marketplace. This will provide insights about market demand for proposed products and services. #3 Managerial competence also contributed to success. Successful new business owners may acquire competence through training or experience or by using the expertise of others. #4 Finally, luck also plays a role in the success of some firms.
Benefits of Specialization #1	#1 Workers performing small, simple tasks will become very proficient at each task. #2 transfer time between tasks decreases. If employees perform several different tasks, sometime is lost. #3 The more narrowly defined a job is, the easier it is to develop specialized equipment to assist with that job. #4 When an employee who performs a highly specialized job is absent or resigns, the manager can train someone new at relatively low cost.
Job Specialization	is the degree to which the overall task of the organization is broken down and divided into smaller component parts. Job specialization evolved from the concept of division of labor.
Job Rotation	Involves systematically moving employees from one job to another.
Job Enlargement	was developed to increase the total number of tasks a workers perform.
Job Enrichment	assumes that increasing the range and variety of tasks is not sufficient by itself to improve employee motivation.
Job Characteristics Approach	Alternative to job specialization that does take into account the work system and employee preferences.
Decentralization	is the process of systematically delegating power and authority across a wide variety of positions and departments.

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	Created by NILSON RODRIGUES about 7 years ago