Exam 4: Planning and Decision Making

One of the benefits of planning is how it ____.

Define the terms decision making and rational decision making. Briefly differentiate between them.

A(n)____ is a standing plan that indicates the general course of action that should be taken in response to a particular event or situation.

Which of the following is a disadvantage of face-to-face brainstorming that is overcome by electronic brainstorming?

Briefly identify and explain the two accepted methods of tracking progress toward goal achievement.

For planning to be effective, workers need a specific, challenging goal as well as regular feedback to track their progress.

WWYD DuPont The DuPont Corporation, founded in 1802, was a manufacturer of blasting powder in its first 100 years. In its second 100 years, it became one of the world's leading chemical companies, producing products such as Teflon, Lucite, and Kevlar. DuPont's last 25 years, however, have not been as successful. While profitable, DuPont's product and financial performance ranks just 16^th out of 19 comparison companies. During the recent world financial crisis, sales dropped by 20 percent, 6,500 employees lost their jobs, and the company's annual budget was cut by $1 billion. DuPont CEO Ellen Kullman's first step in restoring the company's prestige and performance was to focus on the company's reason for existing. DuPont's long-time vision was, "Better things for better living … through chemistry." However, Kullman focused on DuPont's scientific and engineering capability and declared that DuPont was in the "innovation and science" business. Consistent with that direction, Kullman decided to pay $6.3 billion to acquire Danisco, a Danish biotechnology company that uses industrial enzymes to make ethanol, food, animal feed, and textiles. From a market standpoint, acquiring Danisco makes DuPont the world's largest manufacturer of food additives and the second largest producer of the enzymes used to make biofuels. While CEO Ellen Kullman and her predecessor, Charles Holliday, Jr., repositioned the company from being a "chemical company" to being a "science company" to being an "innovation and science company," that change was pushed across the company. More specifically, while DuPont was now in the business of "innovation and science," it would be in that business across five "growth platforms," agriculture and nutrition (Pioneer seeds), coatings and color technologies (automobile finishes), electronic and communication technologies (solar panels), performance materials (resins and laminated glass), and safety and protection (fibers and materials used in body armor or firefighting). The set of businesses in each growth platform was then charged with achieving specific growth goals, for example, to decrease the amount of time it takes to bring new products to market in order to increase revenues from new products. Thomas Connelly, DuPont's chief innovation officer, says, "My rallying cry is launch hard and ramp fast." Nine years ago, new products accounted for just 22 percent of revenues. Progress on new product development time has been impressive, however, as roughly 40 percent of DuPont's revenues now come from products introduced in the last five years. That isn't enough for CEO Kullman who says, "We are challenging our teams over the next few years to move brand-new products into the 50 percent range." Kullman's top goal is for DuPont to increase its earnings per share by 20 percent per year. In most companies, this would be a super aggressive goal, but achieving this goal would return the company to price-earnings ratios that it was earning five years ago. So while this is an aggressive annual goal, it's also modest in the sense that it is returning DuPont to a previously achieved level of earnings. While CEO Kullman's top goal is to increase earnings per share by 20 percent per year, those goals will be translated into seven specific segments of the company: agriculture and nutrition; electronics and communications; performance coatings; performance materials; safety and protection; performance chemicals; and pharmaceuticals. Translating the overall goal into specific sections of the company avoids a key planning pitfall. For managers and employees, overall company goals, particularly in large companies like DuPont, can seem distant and unobtainable. Refer to WWYD DuPont. When Kullman repositioned the company to be an innovation and science company, she was altering DuPont's:

Identify the four basic steps in the management by objectives process.

Tactical plans specify how a company will use its resources, budgets, and people to accomplish specific goals within its mission.

The most popular approach to increasing goal commitment is ____.

Identify three ways of increasing goal commitment. Which one is most commonly used by managers?

____ can help organizations to maintain flexibility as they plan.

Krispy Kreme Krispy Kreme is a relatively small doughnut seller. It has only 792 stores while Dunkin Donuts has over 7,125 outlets in the United States and Canada. In spite of its size, Krispy Kreme has been described by many as "the hottest brand in America." The company's success in an environment which has made success difficult for many food operations is due in large part to the long-term vision of its top management and its establishment and achievement of S.M.A.R.T. goals. The company originated in Winston-Salem, North Carolina, in the mid-1930s when Vernon Rudolph bought a secret recipe for yeast doughnuts from a French pastry cook. Rudolph ran the company until he died in 1973 without naming a successor, which caused the company problems for the next decade. Refer to Krispy Kreme. How does Krispy Kreme benefit from planning?

Both proximal and distal goals are used to provide additional motivation and rewards for employees.

The ____ is a decision-making method in which a panel of experts responds to questions and to each other until an agreement is reached on how a specific issue should be handled.

____ plans are plans that specify how a company will use resources, budgets, and people to accomplish specific goals within its mission.

When done correctly, management by objectives (MBO)is an extremely effective method for ____.

Top management is responsible for developing long-term ____ that make clear how the company will serve customers and position itself against competitors in the next two to five years.

WWYD DuPont The DuPont Corporation, founded in 1802, was a manufacturer of blasting powder in its first 100 years. In its second 100 years, it became one of the world's leading chemical companies, producing products such as Teflon, Lucite, and Kevlar. DuPont's last 25 years, however, have not been as successful. While profitable, DuPont's product and financial performance ranks just 16^th out of 19 comparison companies. During the recent world financial crisis, sales dropped by 20 percent, 6,500 employees lost their jobs, and the company's annual budget was cut by $1 billion. DuPont CEO Ellen Kullman's first step in restoring the company's prestige and performance was to focus on the company's reason for existing. DuPont's long-time vision was, "Better things for better living … through chemistry." However, Kullman focused on DuPont's scientific and engineering capability and declared that DuPont was in the "innovation and science" business. Consistent with that direction, Kullman decided to pay $6.3 billion to acquire Danisco, a Danish biotechnology company that uses industrial enzymes to make ethanol, food, animal feed, and textiles. From a market standpoint, acquiring Danisco makes DuPont the world's largest manufacturer of food additives and the second largest producer of the enzymes used to make biofuels. While CEO Ellen Kullman and her predecessor, Charles Holliday, Jr., repositioned the company from being a "chemical company" to being a "science company" to being an "innovation and science company," that change was pushed across the company. More specifically, while DuPont was now in the business of "innovation and science," it would be in that business across five "growth platforms," agriculture and nutrition (Pioneer seeds), coatings and color technologies (automobile finishes), electronic and communication technologies (solar panels), performance materials (resins and laminated glass), and safety and protection (fibers and materials used in body armor or firefighting). The set of businesses in each growth platform was then charged with achieving specific growth goals, for example, to decrease the amount of time it takes to bring new products to market in order to increase revenues from new products. Thomas Connelly, DuPont's chief innovation officer, says, "My rallying cry is launch hard and ramp fast." Nine years ago, new products accounted for just 22 percent of revenues. Progress on new product development time has been impressive, however, as roughly 40 percent of DuPont's revenues now come from products introduced in the last five years. That isn't enough for CEO Kullman who says, "We are challenging our teams over the next few years to move brand-new products into the 50 percent range." Kullman's top goal is for DuPont to increase its earnings per share by 20 percent per year. In most companies, this would be a super aggressive goal, but achieving this goal would return the company to price-earnings ratios that it was earning five years ago. So while this is an aggressive annual goal, it's also modest in the sense that it is returning DuPont to a previously achieved level of earnings. While CEO Kullman's top goal is to increase earnings per share by 20 percent per year, those goals will be translated into seven specific segments of the company: agriculture and nutrition; electronics and communications; performance coatings; performance materials; safety and protection; performance chemicals; and pharmaceuticals. Translating the overall goal into specific sections of the company avoids a key planning pitfall. For managers and employees, overall company goals, particularly in large companies like DuPont, can seem distant and unobtainable. Refer to WWYD DuPont. As DuPont's new CEO, your planning fails when:

Planning works best when the goals and action plans at the ____ of the organization support the goals and action plans at the ____ of the organization.