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 leastsignificant/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