Page 341 - Business Principles and Management

Unit 4

13.2 Using Planning Tools

Goals Terms
• Identify the characteristics of • goal • policies
effective goals. • schedule • procedure
• Describe several planning tools • standard
and how they are used.

Establishing Direction

It has been said that you will never know when you have arrived if you don’t
know where you are going. Goals provide that direction for a business. A goal
is a specific statement of a result the business expects to achieve. All types and
sizes of businesses and all parts of a business need to develop goals.
Goals keep the business focused on where it wants to be in the future and
the results it expects to accomplish. Managers and employees may overreact to
short-term problems or the actions of competitors if goals are not clearly stated
and communicated. Managers in large companies may take actions that conflict
with those of other managers if they are not aware of goals. Here are several
characteristics of effective goals:

1. Goals must be specific and meaningful. The goal “to make a profit” is
vague. However, the goal “to increase sales by $25,000 in the next six
months” is much more specific. Goals should relate to the activities and
operations of the business so that employees see how their work relates
to the goals.
Managers must be careful in setting goals and must consider such fac-
tors as (1) the general economic conditions facing the business, (2) past
sales and profits, (3) the demand for products and services, (4) the reac-
tions of current and prospective customers, (5) the resources of the busi-
ness, (6) the actions of competitors, and (7) any other factors that can
influence the achievement of the goals.
2. Goals must be achievable. It is important that goals move the company
forward, but they must also be realistic. It is not useful to set a goal “to
increase unit sales by 5 percent” if the company does not have the capabil-
ity of manufacturing that many more units. If telemarketing salespeople are
already completing many more calls each day than the industry average, it
may not be realistic to set a higher goal for completing calls without in-
creasing the number of salespeople.
3. Goals should be clearly communicated. Company and departmental goals
should be communicated to all employees, because they will be respon-
sible for accomplishing those goals. Communicating the company’s goals
will help employees understand that they are part of a team effort work-
ing together for a common purpose. Usually, they will work harder to
achieve goals they understand.

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