Chapter 3 Summary is being submitted to Professor Robert Johnston on October 14, 2014 by Jamal Branco as part of his studies in Principles of Management at Mayville State University
Three Types of Uncertainty
For a long time environmental uncertainty has been a catch all term among managers and researchers but as time went on researchers discovered that there are three types of uncertainty. 1. State Uncertainty- occurs when the environment, or a portion of the environment, is considered unpredictable. 2. Effects Uncertainty- impacts of environmental changes are unpredictable. For example a manager attempts to predict the effects of specific environmental changes or events. 3. Response Uncertainty- Consequences of decisions are unpredictable. For example not knowing the consequences to a change you make with your company financially. How Individuals Handle Uncertainty
How you deal with uncertainty whether it is from a manager aspect or and employee, it has become an important dimension of human diversity when individuals gather in organization to make plans and accomplish something together. Organizational Responses to Uncertainty
There are four ways a company or individual will react when uncertainty comes into play Defenders:
Highly expert at producing and marketing a few products in a narrowly defined market. Opportunities beyond present market sought
Few adjustments in technology, organization structure, and methods of operation because of narrow focus. Primary attention devoted to efficiency of current operations. For example Harley Davidson takes a risk on the daily by possibly having their narrow focus miss the mark in an aging America. Prospectors:
Primary attention devoted to searching for new market opportunities. Frequent development and testing of new products and services Source of change and uncertainty for competitors
Loss of efficiency because of continual product and market innovation Simultaneous operations in stable and changing product/ market domains For example the Amazon has went from selling books to selling electronics, media, and other products. Analyzers:
In relatively stable product/ market domain, emphasis on formalized structure and processes to achieve routine and efficient operation In changing product/ market domain, emphasis on detecting and copying competitors most promising ideas. Reactors:
Frequently unable to respond quickly to perceived changes in environment Make adjustments only when finally forced to do so by environmental pressures For example Kodak was very slow to embrace new digital technology when it first came out.
The Essentials of Planning
Planning is an ever present feature of modern life, although there is no universal approach. Personal or informal plans give purpose and direction to our lives and in other ways allow managers to mobilize their intention with their companies. A plan is a specific, documented intention consisting of an objective and an action statement. A properly conceived plan always answers what, when and how. Organizational Mission
To some people creating an organizational mission is common sense but there are a lot of businesses and companies that do the very opposite and move on in the process without establishing that mission which in the end will make things tremendously tough. A well written mission statement should cover the following:
1. Defines your organization for key stakeholders.
2. Creates an inspiring vision of what the organization can be and can do.
3. Outline how the vision is to be accomplished.
4. Establish key priorities.
5. State a common goal and fosters a sense of togetherness.
6. Creates a philosophical anchor for all organizational activities.
7. Generates enthusiasm and a “can do” attitude.
8. Empowers present and future organization members to believe that every individual is the key to success.
Types of Planning
Planning begins at the top of the organizational pyramid and trickles down to others within the company. It is the management job to state the mission, establish strategic priorities, and draw up major policies. There are three types of planning: 1. Strategic Planning- is the process of determining how to pursue the organization’s long term goals with the resources expected to be available. 2. Intermediate Planning- is the process of determining the contribution that subunits can make with allocate resources. 3. Operational Planning- is the process of determining how specific task can best be accomplished on time with available resources. Planning Horizon refers to the time that elapses between the formulation and the execution of a planned activity. As the planning process evolves from strategic to operational, planning horizons shorten and plans become increasingly specific. Objectives
An objective is defined as a specific commitment to achieve a measurable result within a given time frame. Writing Good Objectives
An objective represent the firm commitment to accomplish something specific. Here are some examples good written objectives: To increase subcompact car production by 240,000 units during the next production year. To reduce bad debt loss by $50,000 during the next six months. To achieve an 18 percent increase in Brand X sales by December 31 of the current year. Objectives are important whether you think so or not. When thinking about planning objectives not only help out management but also the company by serving as targets and measuring sticks, fostering commitment, and enhancing motivation. Management by Objectives
MBO- is a comprehensive management system based on measurable and participatively set objectives. MBO was invented in 1954 by Peter Drucker as means of promoting managerial self-control. The MBO Cycle
1. Setting Objectives
2. Developing action plans
3. Periodic review
4. Performance appraisal
In Chapter 6 it showed me that planning really does matter. In order to get something done you need to have a planned and there are steps to anything we do in life and there is different ways to do things when planning you can choose whatever path you would like to take but you still need to make sure that you plans have objectives that challenge you but still are achievable. For example I have two more years left and I want to see if I am on track to graduate on time so I need to get with my advisor and make a plan so that I am all caught up and on track to graduate in four years. Within my planning to graduate on time I have objectives which would be I need to get my accounting classes out of the way before my last semester here at Mayville State University.