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Summary Varsity College BCOM Year 1 Business Management 1A LU 7
Varsity College BCOM Year 1 Business Management 1A LU 7
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BMNG – Business LU 7LU 7 – Planning
7.1 Introduction
Planning gives direction to an organisation. It forces managers to be future-orientated
and enables the organisation to deal with changes in the business environment.
7.2 The benefits and costs of planning
7.2.1 The benefits of planning
The more turbulent the environment, the greater the need for planning.
Managers cannot predict the future, however managers can plan to steer the business in
the best direction possible. Good managers understand that although they are leading
the organisation in a predetermined direction, they should anticipate change in the
environment, and adjust their goals and plans accordingly when necessary.
1. Planning provides direction
2. Planning reduces the impact of change
3. Planning promotes co-ordination
4. Planning ensures cohesion
5. Planning facilitates control
7.3 Managerial goals and plans
Concept of planning has two components:
1. Determining the orgs goals
2. Developing plans to achieve these goals
An “organisational goal/objective” = a desirable state of affairs that an organisation aims
to achieve at some point in the future. An organisational plan can be defined as ‘the
means by which the goals is to be realised’.
7.3.1 The nature of goals
Org goals are the starting point of the planning process. Goals flow directly from the
org’s vision and its mission statement but are more specific. Orgs have multiple goals
and the type of goal that is set is influenced by the organisational level at which it is set.
The focus of goals differs bc goals pertain to different aspects of the org.
Strategic goals are holistic in that they apply to the whole org.
The time period of goals = short term, long term or intermediate.
7.3.2 The importance of goals
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, BMNG – Business LU 7
- Goals provide guidance and agreement on the direction of the org and they
steer all employees and the activities they perform in the same direction
- Goals inspire and motivate
- Goals allow effective planning in terms of resource deployment
- Goals provide a basis for evaluation.
7.3.3 Criteria for effective goals
SMART framework.
Specific - What the goal relates to, period to which the goals refers and the specific
results of the goal
Measurable - Goal is stated in terms that the result can be evaluated objectively and in
quantified terms
Attainable - Realistic yet should still be a challenge.
Relevant - Relates to the orgs mission, vision and goals
Time bound - specific time limit
7.3.4 Integrating individual and organisational goals:
Management by objectives (MBO)
Management by objectives (MBO) us a technique designed to achieve the
integration of individuals and organisational goals in organisations.
MBO is a system which managers and employees define goals for every department,
project and person, and use them to monitor performance.
Assumptions underlying the successful implementation of an MBO programme:
- Should have support of top management and that employees should understand
the process.
- All employees must have a clear understanding of the organisation's purpose,
vision, mission, long-term goals and strategy.
- Individual employees' goals derive from the goals of the business unit, to which
they belong, which in turn derive from the organisation's long-term goals.
Process:
- The manager and the employee have an initial discussion that results in the
formulation of a clear job description and key performance areas for the employee.
- The employee establishes potential key performance targets in the predetermined
areas of responsibility for a forthcoming period. The employee and the manager meet
to develop a set of goals for the employee to which both are committed.
- The employee and manager mutually establish checkpoints to measure the
employee’s progress.
- Evaluation of the degree of goal attainment takes place at the end of the
predetermined period. The evaluation focuses on the analysis of the achieved results
compared with the predetermined goals.
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