Exam 5: Section 1: Planning and Decision Making

How can organizations maintain flexibility as they plan? Explain how the method for maintaining flexibility is different from traditional planning.

One of the benefits of planning is how it_______ .

On average, companies that create plans have larger profits and grow much faster than companies that don't.

List and briefly describe the three kinds of operational plans.

Which of the following is an accepted method for tracking progress toward goal achievement?

At a canning factory, new employees were instructed never to wear loose-fitting clothes when working around the canning machine. What kind of a standing plan is described in this example?

Management by objectives (MBO) is a management technique often used to develop and carry out___________ .

The term decision making is used to refer to the process of choosing a solution from available alternatives.

An Australian manufacturer of surfboards wants to increase awareness of its brand in the U.S. market. A______________plan to accomplish this objective might be to host a series of surfboard competitions in California .

Krispy Kreme Krispy Kreme is a relatively small doughnut seller. It has only 295 stores while Dunkin Donuts has over 3,600 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. Which of the following would be an example of an operational plan for Krispy Kreme?

Explain how the rational decision-making process may help to overcome predispositions and biases that a manager has in a given decision making situation.

The basic purpose of___________ planning is to leave commitments open by maintaining slack resources.

____________is a systematic process of defining problems, evaluating alternatives, and choosing optimal solutions.

D.G. Yuengling & Son With beer sales dropping around the world, you should be ecstatic that sales of Yuengling (pronounced Ying-Ling) beer are up 225 percent in the last six years. But as you walk through the caves and tunnels of Yuengling's Eagle Brewery, carved into Sharp Mountain in 1831 to maintain a perfect 50-degree temperature for storing beer, you see not only the history of America's oldest brewery everywhere you turn, but also chipped paint, rusting pipes, and an aging plant that can't keep up with the growing demand for Yuengling beer. So far, thanks to hard work, dedicated workers, and some luck, you've doubled your production capacity from 250,000 to 500,000 barrels of beer a year, but if you push for more, the old brewery will break. Yet with sales up so dramatically, the company faces a problem. Says CEO and owner Dick Yuengling, "We are sold out of beer. We run the risk of losing our customer base because we don't have any product on the shelves." Shortages are so bad that the advertising budget has been cut from $3 to $2 a barrel. Yuengling explains, "You can't fuel the fire when we can't get them beer anyway." With production stuck at 500,000 barrels a year, Yuengling beer has become harder to find even as it has become more popular. Sales representative Diane Adams said, "It was a little hairy. People were up in arms." So, rather than sacrifice sales in its home market of Pennsylvania, where Yuengling has its largest market share (10 percent), the company has temporarily stopped shipping beer to distributors in Maine, Massachusetts, and Rhode Island. Since that strategy won't help Yuengling grow outside Pennsylvania, you still face the question of how to permanently increase beer production to meet the growing demand. You've identified five options. The first is to add new storage and finishing tanks to Eagle Brewery to increase production capacity by 10 percent to 550,000 barrels a year. Though doable, this is only a short-term solution. Second, you could outsource production to another company. This would be more cost-effective, but would Yuengling beer produced in non-Yuengling factories taste different? For a specialty beer, this could be a substantial risk. Still, outsourcing would be affordable, and Yuengling has done it before, outsourcing production of its Black and Tan beer to Pabst Blue Ribbon's brewery in Lehigh, Pennsylvania, until Pabst closed that facility four years ago. The third option is to buy another brewery, but there aren't many for sale and those that are would be expensive and require significant upgrades. For example, it would cost $13 million to buy and $5 million to fix Stroh's 1.5 million­barrel brewery in Tampa, Florida, which is far from Yuengling's northeastern markets. A fourth option is to build a new factory capable of producing 1.2 million barrels per year, but that would cost $50 million and take three years. The fifth and final option is simply to do nothing. The company is already very profitable, has low overhead costs, and is very efficient. In other words, by doing nothing the company could still make a lot of money without incurring the risks inherent in the other options. And risk is a real consideration because everyone in the company remembers that Yuengling was losing money just a few years ago. -Refer to Yuengling. Yuengling's objective to pay off its loan for a new $50 million brewery within five years was an example of a____________ goal.

Planning is one of the best ways to improve organizational and individual performance.

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

Describe the management by objectives (MBO) process. Which type of manager would be responsible for MBO? What is the probable value of MBO to managers?

_________occurs when managers choose an alternative that is good enough, rather than the best possible alternative.

A manufacturer of suntan lotion could set a(n)______goal to increase revenues by 8 percent over the next five years and a(n)____________goal to increase sales next June in the Miami Beach area by 3 percent.

Which of the following is NOT one of the characteristics of S.M.A.R.T. goals?