CH 3 - Planning and Goal Setting

Productivity

Output per labor hour, expressed by the formula: Productivity = Output / (Labor + Capital + Materials); can be applied to the individual, the group, and the total organization

Importance of Productivity

U.S. companies increase productivity by becoming more quality and customer oriented; increased productivity makes the economy stronger, creates jobs, enhances production dominance, encourages job security, and affords research and development efforts

Strategic Planning

Organizational planning that includes the establishment of overall goals, and positioning an organization's products or services against the competition

Tactical Planning

Organizational planning that provides specific details on how overall goals are to be achieved

Short-Term Plan

A plan that covers a period of less than one year

Intermediate-Term Plan

A plan that covers a period of one to five years

Long-Term Plan

A plan that covers a period in excess of five years

Benchmarking

The search for the best practices among competitors or non-competitors that lead to their superior performance

ISO 9000 Series

Standards designed by the International Organization for Standardization that reflect a process whereby independent auditors attest that a company's factory, laboratory, or office has met quality management standards

Six Sigma

A philosophy and measurement process that attempts to "design in" quality as a product is being made

Standing Plan

A plan that can be used over and over again by managers faced with recurring situations

Policies

Broad guidelines for supervisory action

Procedure

A standardized way of responding to repetitive problems; a definition of the limits within which supervisors must stay as decisions are made

Rule

An explicit statement that tells employees what they ought or ought not to do

Single-Use Plan

A detailed course of action used once or only occasionally to deal with a problem that doesn't occur repeatedly

Program (Single-Use Plan)

A single-use set of plans for a specific major undertaking within an organization's overall goals; may be designed and overseen by top management or supervisors

Budget

A numerical plan that expresses anticipated results in dollar terms for a specific time period; used as a planning guide as well as a control device

Scheduling

Detailed planning of activities to be done, the order in which they are to be done, who is to do each activity, and when the activities are to be completed

Gantt Chart

A bar chart with time on the horizontal axis and activities to be scheduled on the vertical axis; shows when tasks are supposed to be done and compares actual progress on each task

PERT Chart

A diagram that depicts the sequence of activities needed to complete a project, and the time or costs associated with each activity

Events (PERT Terminology)

Endpoints that represent completion of major activities

Activities (PERT Terminology)

The time or resources required to progress from one event to another

Critical Path (PERT Terminology)

The longest or most time-consuming sequence of events and activities in a PERT chart

Goal Setting

A system by which employees jointly determine specific performance goals with their supervisors; progress toward goals is periodically reviewed, and rewards are allocated on the basis of this progress

Balanced Scorecard

A strategic planning and management system used to translate and align business activities to the vision statement of a business, after review of the company's financial, customer, internal, and innovation/growth processes

Entrepreneurial

Willing to use initiative and take risks to make a profit

Entrepreneurship

The process of initiating a business venture, organizing the necessary resources, and assuming the risks and rewards

Intrapreneurs

A supervisor within an organization who promotes innovative product development and marketing approaches, and behaves similarly to the risk-taking style of an entrepreneur

Business Plan

A document that identifies the business founder's vision, and describes the strategy and operations of that business

Traditional Supervisors vs. Entrepreneurs: Primary Motivation

Traditional Supervisors are motivated by promotion and traditional corporate rewards (office, staff, power); Entrepreneurs/Intrapreneurs are motivated by independence, opportunity to create, and financial gain

Traditional Supervisors vs. Entrepreneurs: Time Orientation

Traditional Supervisors focus on achievement of short-term goals; Entrepreneurs/Intrapreneurs focus on achievement of five- to ten-year growth of the business

Traditional Supervisors vs. Entrepreneurs: Activity

Traditional Supervisors rely on delegation and supervision; Entrepreneurs/Intrapreneurs rely on direct involvement

Traditional Supervisors vs. Entrepreneurs: Risk Propensity

Traditional Supervisors have low risk propensity; Entrepreneurs/Intrapreneurs have moderate risk propensity

Traditional Supervisors vs. Entrepreneurs: View Toward Failures and Mistakes

Traditional Supervisors show avoidance; Entrepreneurs/Intrapreneurs show acceptance

Six Sigma Process Steps (Exhibit 3-3)

Select critical-to-quality characteristics; define required performance standards; validate the measurement system; establish current process capability; define upper/lower performance limits; identify sources of variation; screen potential causes of variation; discover variation relationships for vital variables; establish operating tolerances; validate measurement system's repeatability; determine process capability to control vital variables; implement statistical process control on vital variables

MCQ 1 (Regular): Which formula correctly represents productivity?

A) Output x (Labor + Capital + Materials)

B) Output / (Labor + Capital + Materials)

C) (Labor + Capital + Materials) / Output

D) Labor / Output

B) Output / (Labor + Capital + Materials)

MCQ 2 (Regular): Which type of planning establishes overall goals and positions an organization's products or services against the competition?

A) Tactical planning

B) Strategic planning

C) Standing planning

D) Single-use planning

B) Strategic planning

MCQ 3 (Regular): A plan that covers a period of one to five years is called a(n):

A) Short-term plan

B) Long-term plan

C) Intermediate-term plan

D) Standing plan

C) Intermediate-term plan

MCQ 4 (Regular): The search for the best practices among competitors or non-competitors that lead to superior performance is called:

A) Six Sigma

B) ISO 9000

C) Benchmarking

D) Balanced scorecard

C) Benchmarking

MCQ 5 (Regular): A philosophy and measurement process that attempts to "design in" quality as a product is being made is:

A) ISO 9000 series

B) Benchmarking

C) Six Sigma

D) Balanced scorecard

C) Six Sigma

MCQ 6 (Regular): Which of the following is defined as broad guidelines for supervisory action?

A) Rules

B) Procedures

C) Policies

D) Programs

C) Policies

MCQ 7 (Regular): An explicit statement that tells employees what they ought or ought not to do is a:

A) Policy

B) Rule

C) Procedure

D) Standing plan

B) Rule

MCQ 8 (Regular): A bar chart with time on the horizontal axis and activities on the vertical axis that compares actual progress to planned progress is a:

A) PERT chart

B) Balanced scorecard

C) Gantt chart

D) Business plan

C) Gantt chart

MCQ 9 (Regular): In PERT terminology, the longest or most time-consuming sequence of events and activities is called the:

A) Critical path

B) Event

C) Activity

D) Milestone

A) Critical path

MCQ 10 (Regular): A document that identifies the business founder's vision and describes the strategy and operations of a business is a:

A) Balanced scorecard

B) Budget

C) Business plan

D) Standing plan

C) Business plan

MCQ 11 (Moderate/Difficult): A supervisor within an organization who promotes innovative product development and behaves similarly to the risk-taking style of an entrepreneur, but remains an employee of that organization, is best described as a(n):

A) Entrepreneur

B) Intrapreneur

C) Traditional supervisor

D) Strategic planner

B) Intrapreneur

MCQ 12 (Moderate/Difficult): According to Exhibit 3-9, which of the following is a key difference between traditional supervisors and entrepreneurs/intrapreneurs regarding failure?

A) Traditional supervisors accept failure while entrepreneurs avoid it

B) Both groups avoid failure equally

C) Traditional supervisors avoid failure while entrepreneurs accept it

D) Neither group considers failure relevant to their role

C) Traditional supervisors avoid failure while entrepreneurs accept it

MCQ 13 (Moderate/Difficult): A company undergoes an independent audit that certifies its factory has met formal quality management standards set by an international standards body. This company has most likely achieved:

A) Six Sigma certification

B) ISO 9000 series certification

C) A balanced scorecard rating

D) Benchmarking status

B) ISO 9000 series certification

MCQ 14 (Moderate/Difficult): A manager reviews her company's performance across financial, customer, internal, and innovation/growth processes in order to align business activities with the company's vision statement. This manager is using a:

A) Gantt chart

B) PERT chart

C) Balanced scorecard

D) Business plan

C) Balanced scorecard

MCQ 15 (Moderate/Difficult): A standardized way of responding to repetitive problems that defines the limits within which supervisors must stay when making decisions is best classified as a:

A) Rule

B) Policy

C) Procedure

D) Program

C) Procedure