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THE NATURE AND IMPORTANCE OF PLANNING Learning Outcome 01:
Explain the nature and importance
▪ Planning: the process of coping with uncertainty by formulating future courses of action to achieve of planning
specific results
▪ Planning:
1. Determines a business's vision, mission and goals
2. Identifies ways of attaining them & finding resources needed for the task in a complex environment
▪ The formulation of the vision, mission and goals is based on the business's values — referred to as the
'planning premises'
▪ Business values describe the core principles a business will adhere to
○ They inspire employees' best efforts & constrain their actions
○ Strong, clearly articulated values should be a true reflection of a business's aspirations
▪ 3 Components of planning:
1. Determine the values, vision, mission and goals of the business
2. Identify ways of reaching these goals
3. Find the resources needed for the task in a complex environment
Determine the values, vision, mission and goals of the business
• Business vision
- Vision statement: a statement of what the business wants to become and where it wants to be in
future
○ Its 'dream' for the future
- The vision should provide a clear sense of what the business hopes to become — an anchor for
decision-making
- The vision statement is the end, not the means to the end
○ E.g. A university providing tertiary education (the means) should see their business as cultivating
mindful and soulful graduates (the end)
○ When formulating a vision statement, the means should not be confused with the end
- The success of a vision statement largely depends on how well it is shared
• Mission statement
- Mission statement: aligns the business with its vision regarding its products/services, market and
technology
- A well-written mission statement does the following for a business:
a. Defines the business for key stakeholders in terms of its product and/or services, market and
technology
b. Outlines the manner in which the vision is to be accomplished
c. Enables a business to identify key performance areas (KPAs)
○ Those areas critical to the attainment of business goals and objectives
d. States a common goal
e. Creates a philosophical anchor for all business activities
f. Generates enthusiasm, buy-in and a 'can do' attitude among all stakeholders
• Business goals
- Business goals: the commitment of the business to achieving a measurable result within a given time
frame
- Goals are the targets the a business works towards
- It's important for managers to:
a. Formulate good goals
b. Be aware of their importance
c. Understand how goals combine to form a means-ends chain
• Criteria for goal-setting
- Goals should meet the following criteria:
1. Be expressed in quantitative terms
○ Goals should be measurable so that they can be evaluated or quantified objectively
2. Be expressed in specific terms; they should indicate what they are related to
3. State desired results
○ Should focus on the KPAs of a business — those areas crucial to accomplishing the business's
goals
4. Attainable and realistic
○ But also provide a challenge to management and employees
5. Be acceptable
○ People pursue goals that are consistent with their preferences and perceptions
○ The collaboration of managers at all levels of a business is important when formulating goals
6. State the results to be achieved within a given time
○ The time frame for accomplishing goals should be clearly stated
7. Be congruent with one another
○ Attaining one goal should not preclude attaining another goal
○ Incongruent goals can lead to friction, uncertainty and conflict
8. Be flexible
○ It's necessary to allow for goals to be modified or adapted as circumstances change
• Prioritising goals
- When determining business goals, its important to rank them in order of importance
- Priorities play a special role in the planning process
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