BBA 4003

ORGANIZATIONAL COMMUNICATION

MR. DEVARAJU JOSEPH

AUGUST 2013

Page 1 of 31
CONTENT

TOPIC PAGES

TASK 1 3-5

TASK 2 6-18

TASK 3 19-23

REFERENCE 24

COURSEWORK 25-31

Page 2 of 31
Task 1

Communication is the the imparting or exchanging of information by speaking,

writing, or using some other medium:television is an effective means of

communication. It means of sending or receiving information, such as telephone lines

or computers:satellite communications. Two-way process of reaching mutual

understanding, in which participants not only exchange (encode-decode) information,

news, ideas and feelings but also create and share meaning. In general,

communication is a means of connecting people or places. In business, it is a key

function of management--an organization cannot operate without communication

between levels, departments and employees. See also communications.

Communication is also the transfer of information and understanding from one person

to another. Communication is simply defined as the transfer of information and

understanding. Communication is an activity that when you are a manager will have

to do a lot of.

Effective communication entails the sender encoding a message and transmitting it to

the receiver where the receiver successfully decodes the message.

The nature of communication is the exchange of information between two people. It is

required that there be both a sender and a receiver for communication to take place.

Communication is reciprocal. So at any time the sender is sending a message the

receiver is also sending messages.

Page 3 of 31
The following are the natures of communication.

(a) It is behavioral interaction

(b) It is dynamic: this is because it is not static. also it is ongoing

(c) It is complex.

(d) It is receiver's phenomenon

(e) It elicits responses

There is a great deal of variation in the definitions. Some are very abstract and some

are extremely specific. Few definitions are cited below. Given the variety of ways in

which words are used and understood, we are often ill-served to search for the single,

so-called correct definition of a term.

People define terms in different ways, and those differences in definition can have a

profound impact onthe extent to which we understand each other and the way we

move forward with both academic and everyday pursuits. In other words, it is better to

evaluate definition in terms of their utility rather than in terms of their correctness. So

we should not assume that there is always a single right way to define a concept.

Communication is all of the procedures by which one mind can affect another.

Communication means that information is passed from one place to another. These

definitions are incomplete in the sense that Weaver's definition is incredibly broad; it

includes all the procedures by which one "mind" could have an effect on another,

whereas the other definitions excludes too many activities that we normally think of

as communication. However through this definitional turmoil many conceptual

Page 4 of 31
features have emerged as important points of discussion.

Page 5 of 31
Task 2

Telling is communicating. Many employees and managers feel that if they have

"said it to her" or "told him about it," they have communicated. They may have tried

to communicate, but that is no guarantee they have communicated. It is very naive to

think that this is all there is to communication. Telling is only part of

communicationoften a small part. People who believe that telling people something

is equal to communicating with them fail to acknowledge the active role of receivers.

Sources have to consider what meaning a receiver might attach to the message, what a

receiver's background is, what a receiver thinks and feels. If anything, telling is only

half of communicating. To be effective communicators, we have to be sensitive to the

other person's views and communication skills. If your boss makes this mistake/ you

can be assured you will be blamed for the boss's mistake. Consequently, you must

take an active role in communicating with your supervisor to be certain you fully

understand anything you are told. Although it is not fair to hold you responsible for

inadequate communication on the part of the boss/ that is the reality with which you

must be prepared to deal.

Communication is a tool, and like any tool, communication can be used for good or

bad purposes.

The way a person uses communication determines its goodness or badness. For

example, take a computer. If we use this tool for its intended purposeto process

informationwe can say that it is a good and useful device. Put that computer in the

hands of an irate employee and he or she can use it to destroy data and information. Is

Page 6 of 31
the computer bad? No, it is simply being used in a bad way. It is the same for

communication. We can use our communication for good or evil purposes.

Hopefully, this book will suggest ways in which to use communication as a positive

tool to

enhance our work environment and our work relationships.

Communication is a verbal process. When most people, whether they are top

management or have just taken an entry-level position, think about communication,

they think chiefly about wordswritten or spoken. How we say something is as

important as what we say, and often more important. How we act is as important as

what we say, and often more important.

Nonverbal actions often contradict verbal messages, and when they do most people

believe the nonverbal over the verbal. Thus, the process a/communication is both

verbal and nonverbal, They rarely focus on the relevance of the nonverbal aspect of

communication. Yet much of communication is nonverbal. In fact, when we talk to

someone, our verbal communication is always accompanied by nonverbal messages

as well.

Meanings are in words. The idea that meanings are in words is perhaps the most

common misconception about communication. This misconception can lead to much

misunderstanding between two people and thwart the effectiveness of communication

between supervisor and subordinate. What a particular word means to us may not be

what it means to someone else. The word stimulates a meaning in our minds that is

different from the meaning it stimulates in the mind of our colleague. For example,

the word evaluation carries different meanings for people at different levels in the

Page 7 of 31
organization. The lower-level employees might feel this means the end of them. The

upper-level management might feel this means support for their work. The point we

wish to make about words and their meanings is that no word has meaning apart from

the person using it. No two people share precisely the same meanings for all words.

Meanings are in people, not words. Therefore/ we must realize that what we say to

others in the organization might not stimulate in their minds the meaning we want or

intend to be stimulated. This requires that we adapt our ideas to the background and

experiences of our colleagues so that they can adapt to our ideas.

Communication is a good thing. Ask 10 people you encounter at work today, "Is

communication a good thing?" Probably over half, maybe all 10, will look at you a bit

strangely and answer "Certainly," or words to that effect. Since, as we noted above,

many people think communication will solve all our problems, it is reasonable they

would also think of communication as "good." In reality, communication is neither a

good nor a bad thing.

Communication is a tool, and like any tool, communication can be used for good or

bad purposes.

Communication can break down. We often communicate unsuccessfully and

sometimes we stop talking to someone, but in neither instance has communication

broken down. As one learns early in the study of non-verbal communication, one

cannot not communicate. Although this phrase is the English teacher's nightmare, it

expresses very well the nature of communication between human beings. Such

communication is ongoing, even if words are not being exchanged. Non-verbal

messages are likely to continue and, even in the extreme, silence and the absence of

Page 8 of 31
new verbal messages in itself communicates. When people feel a need to place blame

for their poor decisions, their interpersonal incompetence, their failure to consult with

wiser persons before taking action, we hear the phrase "communication breakdown."

Human communication does not break down, although electronic communication

systems can do so.

The more communication, the better. If it is a good thing/ and it will solve all our

problems, then of course the more of it the better. This myth is tied to the two

previous ones. This myth is so prevalent in American society that it has assumed the

position of a stereotype. If one meeting is good, two would be better. If one memo is

good, two would be better. If one evaluation review conference is good, two would be

better. People often do not recognize that it is the quality of communication that is

important, not the pure quantity of it. In many "white-collar" occupations, meetings

are the bane of people's existence. Some people spend more than 75 percent of their

working hours in meetings with other employees. Although much of this time no

doubt is spent productively, interviews with hundreds of such workers convince us

that a very large portion of that time is wasted. It is based on the assumption that the

more people talk to one another, the better will be the decision that is made. Not

necessarily so. Pooling ignorance does not produce intelligence.

Communication will solve all our problems. For years, people have tried to

convince us that communication will solve all our problems. If the wife and the

husband are not getting along, get them to sit down and talk it outthat will solve the

problem. If the parent and the child are not getting along, get them to sit down and

talk it outthat will solve the problem. If the supervisor and the subordinate cannot

Page 9 of 31
get along, get them to sit down and talk it outthat will solve the problem.

Unfortunately, it just is not so. Communication can either create or help overcome

problems. The parties should be separated, not forced to communicate. Yet in many

organizations, some individuals always think communication can solve problems, so

they put two people or two groups together who hate each other. They force them to

communicate and cannot understand why matters only get worse. Effective

organizational communication may allow us to solve some problems, but it cannot be

expected to solve all problems. Communication is no magic elixir. It will not cure

cancer, it will not overcome weight problems, and it will not solve all the problems in

an organization. But we can, by communicating more effectively, avoid making some

things worse.

Communication is a natural ability. Just as Myth 7 is used as a substitute for our

failures and foul-ups, this myth is used as an excuse for not trying to be a better

communicator. If people are born with or without the ability to communicate, so the

thinking goes, how can I be blamed for being a poor communicator? Sorry, no excuse.

Communication is a learned ability. While our personality and temperament may be

primarily determined by our genes, we acquire our communication skills from our

experiences and our education. If what we have acquired is inadequate, it is up to us

to see to it that we take the initiative to overcome our inadequacy. Communication

competence can be learned, and practice can help us improve.

Seven ways in which nonverbal communication is expressed are through

(a) interpersonal space

(b) eye contact

Page 10 of 31
(c) facial expressions

(d) body movements and gestures

(e) touch

(f) setting

(g) time

Barriers to successful communication include message overload (when a person

receives too many messages at the same time).

The common barriers to success include the following:

3. Attitudinal barriers come about as a result of problems with staff in an organization.

These may be brought about, for example, by such factors as poor management or

lack of consultation with employees.

5. System design faults refer to problems with the structures or systems in place in an

organization. Examples might include an organizational structure, which is unclear,

and, therefore, makes it confusing to know who to communicate with.

6. Physiological barriers may result from an individual's personal discomfort caused,

for example, by ill health, poor eyesight, or hearing difficulties.

2. Individual linguistic ability is important to consider as the use of jargon; difficult or

inappropriate words in communication can prevent the recipients from understanding

the message. Poorly explained or misunderstood messages can also result in confusion.

Page 11 of 31
4. Physical barriersare often due to the nature of the environment, such as outdated

equipment or staff shortages

1. Ambiguity of words/phrases results when the communicator uses words that sound

the same but have different meanings.

7. Presentation of informationis important to aid understanding. Simply put, the

communicator must consider the audience before making the presentation itself and in

cases where it is not possible, the presenter can at least try to simplify her vocabulary

so that the majority can understand.

There are some factors that will affect interpersonal space.

Gender. Males interacting with other males require the largest interpersonal distance,

followed by females interacting with other females, and finally males interacting with

females (Gifford, 1987). However it probably depends on the situation, or the

relationship, or the age group and so on as well.

Culture. Hall (1959) identified the importance of cultural variation. He suggested that

while all cultures use personal space to communicate, and tend to conform to the

different categories, the size of the space within the categories varies across cultures.

Hall also identified the essential issue in inter-cultural difference as the tendency to

interpret invasions of personal space as an indication of aggression.

Page 12 of 31
Age. Some evidence suggests that personal space gets bigger as we grow older

(Hayduk, 1983). Children tend to be quite happy to be physically close to each other,

something which changes as awareness of adult sexuality develops. In addition the

gender difference does tend to also appear at this time.

"The eyes are the mirror of the soul". Eyes can captivate an audience and express

what words may not be able to deliver. A word is a word, but a word expressed upon

the sincerity of the eyes will allow the words spoken to reach the minds of those they

are spoken to. This is why eye contact is important.

When you maintain eye contact, you present an air of confidence in yourself and what

you are communicating. People who are listening to what you are saying will take you

more seriously, and will take what you say as important. If you lose eye contact or

focus on everything else but the person you are speaking to, you may not be taken

seriously and the truth in your points may be lost.

Eye contact can relay our inner most intimate thoughts and desires. It can let the

person we are speaking with know our emotional connection and interest in what we

are conversing about. A longing stare or the ability to smile with your eyes like a

super model can often deliver the subtle message of interest. On the flip side, anger,

disgust, and dissatisfaction can also be easily delivered with through our eye contact.

Eye contact is a non-verbal ability to communicate, and it often equals to our ability

to verbally express a thought. Interestingly, we are least aware of our non-verbal

communication skills like body language and especially eye contact, yet these non-

Page 13 of 31
verbal skills often speak louder than our words.

The way we use our eye contact can also enhance an intimidating conversation,

making the message of the words more resounding. We have often heard stories that

recount horrific circumstances where the person describes their attacker or intimidator

as having pure evil in their eyes. Many criminals have been described as having

empty and blank stares, which is said to indicate their lack of remorse or lack of

understanding of what they took part in.

Have you thought about eye contact as a skill? As adults, using appropriate eye

contact can be difficult. What about youth? Eye contact can be tied to so many life

skills that its important for our youth to practice and learn about eye contact as a

communication skill. Consider for a moment using eye contact to show empathy,

concern for others, to manage feelings or to help with communication. Those are all

life skills that youth will grow and develop as they mature into successful adults.

Failing to maintain eye contact during a conversation can send mixed signals to the

person you are speaking with. It is often construed as a tell-tale-sign that you might

not be forthcoming or truthful in what you are saying---liars tend to not keep eye

contact. If the lack of eye contact is not construed as a lie the person may be trying to

conceal, it is often perceived as lack of interest or an indication of a short attention

span.

As a conclusion, we need to stares communicate hostility, eye contact opens and

Page 14 of 31
closes communication, high status people are looked at, and look more while talking

than listening, increased eye contact is associated with credibility and dominance and

lack of contact and blinking are interpreted as submissive.

Dont worry if eye contact is something you struggle with. Its likely that everyone

will have a conversation sometime where they can identify some characteristics of

odd eye contact, as well as characteristics of really great eye contact. Remember to

learn from that. Whichever extreme you experience take a mental note of what you

liked and didnt like.

The concept of facial expression includes :

(a) typically, some person or other perceiver that perceives and interprets the signs. (b)

a visual configuration that represents this characteristic, i.e., the signifier;

(c) a characteristic of a person that is represented, i.e., the signified;

(d) the physical basis of this appearance, or sign vehicle, e.g., the skin, muscle

movements, fat, wrinkles, lines, blemishes, etc.;

The human face is extremely expressive, able to express countless emotions without

saying a word. And unlike some forms of nonverbal communication, facial

expressions are universal. The facial expressions for happiness, sadness, anger,

surprise, fear, and disgust are the same across cultures.

Trust your instincts. Dont dismiss your gut feelings. If you get the sense that

someone isnt being honest or that something isnt adding up, you may be picking up

on a mismatch between verbal and nonverbal cues.

Page 15 of 31
Pay attention to inconsistencies. Nonverbal communication should reinforce what is

being said. Is the person is saying one thing, and their body language something else?

For example, are they telling you yes while shaking their head no?

Look at nonverbal communication signals as a group. Dont read too much into a

single gesture or nonverbal cue. Consider all of the nonverbal signals you are

receiving, from eye contact to tone of voice and body language. Taken together, are

their nonverbal cues consistentor inconsistentwith what their words are saying?

Upper body toward the audience - You might want to lean into the audience to bridge

the space of separation. Stand still without movement - If you are listening to a

question, you can stand still without movement to show your interest. Arms and

chest- If you cross your arms in front of you, what does this mean to the audience? It

could be construed as confrontational or that are you in deep thought about a question

from an audience member. Feet and legs - You may move purposefully from one side

to the other to show a transition from one point to another.

You can use your body to communicate positively with the audience by following

Hamlets advice to suit the action to the word and the word to the action through

natural, not mechanical body movements.

The gesture is subordinate to the message. Make sure that the audience can see your

hands above the lectern. Hold you hands at least waist-high and make sure to put your

notes or other objects on the lectern or podium so your hands are free to move.

Page 16 of 31
You might count off the points on your finger, you may point with your full arm

extended to some object or direction, you may outline sizes and shapes, or you might

use a gesture to show emphasis. If you are troubled by your gestures, or a lack of

gestures, attend to the cause, not the effect. It will not help matters to tack a few

mechanical movements onto your delivery.

Communication in relationship is incomplete without touch just like an eye contact or

smile. In fact, touch can establish, repair or even ruin a relationship. Touch has very

crucial importance to express feelings for other person.

Touching conveys an impression of warmth and caring and can be used to create a

personal bond between people. Be careful about touching people from diverse

cultures, however, as norms for touching may vary significantly around the world.

Gestures may be made with almost any movable part of the body. Our focus will be

speech related gestures, primarily of the hand and arm. Gestures can be categorized as

either speech independent or speech related. You may use one gesture to support your

message one day and another on a different day.

Skin covers largest part of our body and protects vital organs supported by

muscles and bones. Skin is the major part of body that is exposed to outer world. Its

the largest sensory organ. It senses temperature, humidity, pressure, and vibrations. It

regulates the temperature of body with help of hypothalamus. Most important above

all, skin can sense of pain and pleasure.

Page 17 of 31
 the one-armed hug, the manly shoulder bump, the A-frame clasp with handshake in

the middle, the mutual back-slap

Setting influences communication because emotions depend on the environment. If

you're in a dark basement with someone, odds are you'll feel a bit uncomfortable, or

even scared. If you're at a fancy restaurant, you may feel important and classy. When

you make a person feel comfortable in their setting, it's much easier to communicate

with them because of this level of comfort. A person most likely won't open up to

another if they don't feel safe or relaxed in their place.

Page 18 of 31
Task 3

1. Identification of issues and problems

a) Overview of this case study

After I realised what was going on in the case study, I think that the major and main

problem cause by the lack of communication between staff and between supervisor

and executive. First, Ravi, the staff of Bangalore office did not send any pre-alert

message to the executive at the airport, no pre-alert message has been received from

Bangalore office made the executive who checking for the load at airport worried all

the night. Ravi give a reason for why he did not send the pre-alert message as before.

The reason is there was excess booking by other logistic companies and there was no

any space which result in cargo officials of all airlines refused to accept the load. Due

to no load was send to the airport, Ravi feel its no wrong for no sending the pre-alert

message.

Actually, when this kind of things happen, Ravi should need to send a pre-alert

message to tell that there was no any load be connected through the flight. After this

will only the executive at airport did not worry about it. Second, Ravi, the staff of

Bangalore do not have any responsibility because he switch off his mobile and did not

inform the executive at airport. We need to make sure that our mobile phone is always

active. It is easy for other people to stay connected with us if there is any immediate

problems occur we can look into it at once. Aside from that, from the study case, we

can know that the job of Ravi to find a space for the cargo has become a daily routine.

The executive at airport has also used to retrieve the load and confirms the receipt of

the same to the Bangalore office. If there is anything happen like the load get into the

wrong place or the ship broken down, all the staff involved can know the situation

Page 19 of 31
through telephone. They will not get nervous or feel something amiss. In this case,

phone play a significant role to let them ask each other and find out the root cause. In

the study case, Ravi is the only one who know well about the whole incident and what

went wrong but he himself switched off the phone. He did not inform other people

involved in the job. So how come executive at airport and assistant manager know

whats went wrong.

b) identifying the problems

The major problem is the load was put to a halt and it might cause the loss by

Bargalore office since Ravi did not inform his situation.

There are minor and major problems in the case study. The minor problems of this

case are there is no any pre-alert message has been received by the executive at

airport. The problem occur was started from the person in charge who was Ravi.

Besides, Ravis phone was switched off all the night. There was no address of Ravi

stated in the personal documents.

The working experience is one of the causes and barriers to communication. Ravi did

not use the best method to solve the problem. There will also the physical barriers

such as sound, time, space and so on.

There was also underlying causes in the case study. The underlying causes are all

about the barriers to communication. The person in charge should be responsible to

inform his supervisor about the matter.

c) There are three important theory that related to the problems. The first once is

Page 20 of 31
vertical communication. The vertical communication is the flow of message down and

up the hierarchy. The problem that happended is due to upward communication

between Razi and his supervisor. It means communication from bottom to top. Razi

should tell his supervisor that the truth. There is no load was connected. He needed to

at least send a pre-alert message to tell supervisor the truth. Razi also need to inform

the executive at airport and supervisor that he had done booking for morning flight

and load will be connected through morning flight. Razi should give information and

suggestions for improvements. Razi should learn to report what had happened to the

upper part.

The second type of communication will be horizontal communication It is within and

between work units horizontal communication.flows within and between work units:

its main purpose is coordination. Ravi should ask helps from his other colleague. He

can ask the one who has the same job as Ravi which is sending the a pre-alert

message to the other party to let them know the load has sent.

External communication is the last theory about the problems. It means

communication flows between people inside and outside the organization. Ravi

should tell the staff in the airport about this matter. He should inform the staff that

carry out the job to confirm the load at the airport. When the staff can figure out the

real situation, all the things will be solve. This is to make them rest assure.

Page 21 of 31
 2. Solutions

Solutions Advantages Disadvantages

Asking another colleague Someone is there to carry The replacement might just encounter some

to replace his duty at night the responsibility and emergencies or personal reasons and things.

continue the job. He could not hold the test well. The colleague

who replace the job might not have the

thinking of misunderstanding can be solve

through communication

Explained to his supervisor He would be regarded as a Be blamed or regarded as not capable at all to

in advanced responsible staff run out the task. He will be losing many

chances of performing new task in the future.

Page 22 of 31
3. Recommentation

a) The Logistic Company

The leader or the boss of the company should educate the staff about the importance

of communication. The leader should tell them all of the misunderstanding is just

because lack of communication between each other.

Secondly, the leader or boss of company should give some method in order to

avoid next incidence happen again. If same kind of incidence still happen all the staff

can solve by they own.

Thirdly, the management section of company must set rules and regulations if

there is anyone who break the rules again.

Page 23 of 31
Reference

1. http://www.merriam-webster.com/dictionary/communication

2. http://www.businessdictionary.com/definition/communication.html

3. http://curiosity.discovery.com/question/touch-nonverbal-communication

4. http://www.helpguide.org/mental/eq6_nonverbal_communication.htm

Page 24 of 31
COURSEWORK

NAME : KOH YAN TING

NRIC : 921017-01-5468

No H/P : +60137941553

1) Explain carefully FOUR phases of strategic managements.

1. To Adapt to Change & Uncertainty Markets shift. Consumer tastes change.

New competitors appear. Technologies are reborn. New materials are invented.

Government regulations are altered. All organizations must deal with these kinds of

environmental changes and uncertainties. Control systems can help managers

anticipate, monitor, and react to these changes. Example: As is certainly apparent by

now, the issue of global warming has created a lot of change and uncertainty for many

industries. The restaurant industry in particular is feeling the pressure to become

"greener," since restaurants are the retail world's largest energy user, with a restaurant

using five times more energy per square foot than any other type of commercial

building, according to Pacific Gas & Electric's Food Service Technology Center.

Nearly 80% that commercial food service spends annually for energy use is lost in

inefficient food cooking, holding, and storage. In addition, a typical restaurant

generates 100,000 pounds of garbage per location per year. Thus, restaurants are

being asked to reduce their "carbon footprints" by instituting tighter controls on

energy use.

2. To Discover Irregularities & Errors Small problems can mushroom into big

ones.

Page 25 of 31
Cost overruns, manufacturing defects, employee turnover, bookkeeping errors, and

customer dissatisfaction are all matters that may be tolerable in the short run. But in

the long run, they can bring about even the downfall of an organization. Example:

You might not even miss a dollar a month looted from your credit card account. But

an Internet hacker who does this with thousands of customers can undermine the

confidence of consumers using their credit cards to charge online purchases at

Amazon.com, Priceline.com, and ether Web retailers. Thus, a computer program that

monitors Internet charge accounts for small, unexplained deductions can be a valuable

control strategy.

3. To Reduce Costs, Increase Productivity, or Add Value Control systems can

reduce labor costs, eliminate waste, increase output, and increase product delivery

cycles. In addition, controls can help add value to a product so that customers will be

more inclined to choose them over rival products. For example, as we have discussed

early in the book (and will again in this chapter), the use of quality controls among

Japanese car manufacturers resulted in cars being produced that were perceived as

being better built than American cars.

4. To Detect Opportunities Hot-selling products. Competitive prices on materials.

Changing population trends. New overseas markets. Controls can help alert managers

to opportunities that might have otherwise gone unnoticed.

Example: A markdown on certain grocery-store items may result in a rush of

customer demand for those products, signaling store management that similar items

might also sell faster if they were reduced in price.

5. To Deal with Complexity Does the right hand know what the left hand is

doing? When a company becomes larger or when it merges with another company, it

Page 26 of 31
may find it has several product lines, materials-purchasing policies, customer bases,

even workers from different cultures. Controls help managers coordinate these

various elements. Example: In recent years, Macy's Inc. has twice had to deal with

complexity. In 2006, it pulled together several chains with different namesMarshall

Field's, Robinsons-May, Kaufrnann's, and other local storesinto one chain

with one name, Macy's, and a much-promoted national strategy. But after losing

money in 2007, CEO Terry Lundgren began altering course from a one-size-fits-all

nationwide approach to a strategy that tailors the merchandise in local stores to cater

to local tastes.

6. To Decentralize Decision Making Facilitate Teamwork Controls allow top

management to decentralize decision making at lower levels within the organization

and to encourage employees to work together in teams. Example: At General Motors,

former chairman Alfred Sloan set the level of return on investment he expected his

divisions to achieve, enabling him to push decisionmaking authority down to lower

levels while still maintaining authority over the sprawling GM organization. Later

GM used controls to facilitate the team approach in its joint venture with Toyota at its

California plant.

The six reasons are summarized below. (See Figure 4.3.)

Page 27 of 31
 Figure 4.3 Six

Reasons Why Control Is Needed

2) Explain carefully the SIX reasons why control is needed.

Phase 1 Basic financial planning: Managers initiate serious planning when they a

requested to propose the following year's budget. Projects are proposed on the basis <

Page 28 of 31
very little analysis, with most information coming from within the firm. The sales

force usually provides the small amount of environmental information. Such

simplistic operational planning only pretends to be strategic management, yet it is

quite tin consuming. Normal company activities are often suspended for weeks while

managers t to cram ideas into the proposed budget. The time horizon is usually one

year.

Phase 2 Forecast-based planning: As annual budgets become less useful

stimulating long-term planning, managers attempt to propose five-year plans. At this

point they consider projects that may take more than one year. In addition to intern

information, managers gather any available environmental datausually on an ad he

basisand extrapolate current trends five years into the future. This phase is also tin

consuming, often involving a full month of managerial activity to make sure all tl

proposed budgets fit together. The process gets very political as managers compete fi

larger shares of funds. Endless meetings take place to evaluate proposals and justii

assumptions. The time horizon is usually three to five years.

Phase 3 Externally oriented (strategic) planning: Frustrated with highly political y

ineffectual five-year plans, top management takes control of the planning process I

initiating strategic planning. The company seeks to increase its responsiveness 1

changing markets and competition by thinking strategically. Planning is taken out of

the hands of lower-level managers and concentrated in a planning staff whose task is

develop strategic plans for the corporation. Consultants often provide the sophistical

and innovative techniques that the planning staff uses to gather information and

forecast future trends. Ex-military experts develop competitive intelligence units.

Page 29 of 31
Upper-level managers meet once a year at a resort "retreat" led by key members of the

planning staff to evaluate and update the current strategic plan. Such top-down

planning emphasizes formal strategy formulation and leaves the implementation

issues to lower management levels. Top management typically develops five-year

plans with help from consultants but minimal input from lower levels.

Phase 4Strategic management: Realizing that even the best strategic plans are

worthless without the input and commitment of lower-level managers, top

management forms planning groups of managers and key employees at many levels,

from various departments and workgroups. They develop and integrate a series of

strategic plans aimed at achieving the company's primary objectives. Strategic plans

at this point detail the implementation, evaluation, and control issues. Rather than

attempting to perfectly forecast the future, the plans emphasize probable scenarios and

contingency strategies.

The sophisticated annual five-year strategic plan is replaced with strategic thinking

at all levels of the organization throughout the year. Strategic information, previously

available only centrally to top management, is available via local area networks and

intranets to people throughout the organization. Instead of a large centralized planning

staff, internal and external planning consultants are available to help guide group

strategy discussions. Although top management may still initiate the strategic

planning process, the resulting strategies may come from anywhere in the

organization. Planning is typically interactive across levels and is no longer top down.

People at all levels are now involved. General Electric, one of the pioneers of strategic

planning, led the transition from strategic planning to strategic management during

the 1980s. By the 1990s, most other corporations around the world had also begun the

conversion to strategic management.

Page 30 of 31
Page 31 of 31