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1.7. Organizational Planning Tools (HL only)

  • Decision-making
    • Types of decisions
      • Operational (daily) – policies, practice, rules, set procedures, etc.
      • Tactical (regular/short term issues) – handled by management regarding their respective departments
      • Strategies (long term) – high level decisions made by top management on new directions, growth, and issues affecting the entire organization or with long term consequences
    • Types of decision-making
      • Intuitive decision-making
        • Making decisions based on instinct or gut-feeling
        • Less costly and time consuming
        • May sometimes be considered as irresponsible decision-making
      • Scientific decision-making
        • Basing decisions on a formal framework and data analysis
        • Greater chance of success
        • Takes longer and can be expensive
      • Decision-Making Framework
        • A guide or model that involves following certain steps to make the best and most appropriate business decision in a given situation
        • In a simple decision-making model, the following steps may be done:
          • Identify the business problem, concern or issue
          • Gather sufficient data and information
          • Analyze data and information to produce a list of possible options
          • Assess the costs and benefits of each option
          • Select the most favorable and realistically achievable option
          • Communicate this decision to the staff
          • Review and evaluate the outcome, i.e. did it help the organization’s objectives and what lessons were learned?
  • Fishbone/Ishikawa Diagram
    • Cause and effect diagram developed by Prof. Kaoru Ishikawa
    • Can usually be broken down into 6Ms (but not limited to)
      • Machine
      • Mother Nature
      • Manpower
      • Money
      • Market
      • Materials
    • And usually into the 4Ps (but not limited to)
      • People
      • Policies
      • Paraphernalia
      • Procedure
    • Stages of Fishboning
      • Agree on the problem and write this on the right as the EFFECT.
      • Brainstorm the main categories or generic ones (6Ms or 4Ps) = main bones
      • Brainstorm all of the detailed reasons why problems might occur = small bones
      • Analyze findings and investigate the main causes of the problem
      • Recommendations for the improvement of the business based on the constructed diagram.

  • Decision tree
    • Quantitative decision making tool representing available options to a business and showing probable outcomes
    • By comparing likely financial results from each option, the manager can minimize risk and maximize returns
    • Constructing a Decision Tree
      • Decisions nodes (squares) and chance nodes (circles), representing the outcomes of a decision
      • Probabilities are shown with each possible outcome
      • Economic returns are expected financial gains or losses of a particular outcome
      • Expected Value
        • Likely financial result of an outcome.
        • (Economic return – costs) * probability
        • Net EV is calculated from right to left
      • Limitations
        • Limited by the accuracy of the data used – estimate or guesstimate date and outdated probabilities
        • Merely aid the decision making process, but they cannot replace the consideration of risk or the impact of qualitative factors

  • Force field analysis
    • Decision-making tool that looks at helping or hindering forces towards a plan
    • Analyzes factors that support and oppose the plan to decide whether or not to push through with it
    • Constructing a force field analysis
      • Draw a large rectangle in the middle, write the proposed plan in it
      • List down the supporting factors on the left side
      • List down the opposing factors on the right side
      • Rate each factor based on influence (usually on 1-to-5 scale, with 1 being least significant/influential, 5 being most significant/influential)
      • Using force field analysis
        • Decide whether or not to push through with proposed plan given both supporting and opposing factors and their respective importance
        • Plan changes that may be implemented to strengthen supporting factors, weaken opposing factors, and make the proposed plan more successful/effective
      • Limitations
        • Factors and their ratings are subjective and may be biased
        • May cause a division among decision-making parties on whether or not to push through with plan

  • Gantt chart
    • A type of bar chart that illustrates a project schedule
    • Outlines the start and finish dates of important elements of a project
    • Also shows relationship of these elements (i.e. Task B starts only when Task A finishes)
    • Constructing a Gantt chart
      • Rows are the elements/tasks
      • Columns are the dates (left to right)
      • Fill in boxes corresponding to duration of each task
      • Draw vertical line to represent current date
    • Limitations
      • Relies on completed and accurate project breakdown structure (breakdown of elements and tasks of project)
      • Depicts time of tasks, but not scope or cost

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