Chapter V.

GOAL-SETTING PROCESS
Learning Objectives:

a. To learn the nature of planning and its importance to succeed in a specific business
undertaking.
b. To acquire a working knowledge of some basic tools and techniques in establishing
objectives, formulating alternatives, deciding on courses of action

THE GOAL-SETTING PROCESS (PLANNING)

“G” which stands for Goal-setting is the first stage of the management cycle. It involves four
steps directed toward the establishment of the goals and objectives for the company or
organization. Goals are derived from a sound and clear understanding of the vision and
mission or purpose of the organization.

To fulfill this function, the manager must engage in the following steps or activities:

1. Gathering and synthesizing information

2. Formulating alternatives
3. Deciding on the course of action
4. Establishing goals

We will discuss these steps in detail in the following sections of the chapter. However, before
we do that, it is important for you to first be clear about the role you will play in the
management process. It would be appropriate if throughout the process, you would be
assuming the lead role—that of the owner and future leader/ manager of a business
organization.

SHARED VISION, MISSION, AND VALUES

To be an effective leader/ manager of a business, he/she should ensure that his/her personal
vision, mission, and values are aligned to those of the organization. If they are not aligned,
there will be inconsistencies in company policies, people will be confused; and the
organization will not move in the same direction.

It is the responsibility of the leader/manager to define the company vision, mission, and
values and to share these to everyone in the organization.

1. What Is Vision?

It is a commonly shared picture of what the organization wants and is committed to become
sometime in the future. It is the guiding and motivating compass of the
organization-capturing the desired spirit of its people can passionately make the organization
to become. A vision can be expressed as the state in the future of what the organization's
services, customers, stakeholders, core competencies, processes, and structure may be.
Examples of Vision:

Disney: “To make people happy”

Tesla : “To create the most compelling car company of the 21st century by driving the
world’s transition to electric vehicles.”

ARC Refreshments Corporation: “To be the lowest cost producer of ready-to-drink,

non-alcoholic beverages and to be able to market products with the best quality and
value.”

A Dental Office: “We are committed to being conscious of our values both
individually and as a team. To be healthy and promote health. To be honest with our
parents and with one another.... And to enjoy our freedom.”

An Appliance Manufacturer: "A refrigerator in every Filipino home"

The vision statement does not provide specific targets. Notice that each of the above
examples could apply to many different organizations. Instead, the vision is a broad
description of the value an organization provides. It is a visual image of what the
organization is trying to produce or become. It should inspire people and motivate them to
want to be part of and contribute to the organization. Vision statements should be clear and
concise, usually not longer than a short paragraph.

2. What Is a Mission Statement?

It is an enduring statement of purpose of an organization's existence that distinguishes itself

from others. It answers the questions: Who are we? Why do we exist?

Examples of Mission Statements:

Disney: “To entertain, inform and inspire people around the globe through the power
of unparalleled storytelling, reflecting the iconic brands, creative minds and
innovative technologies that make ours the world’s premier entertainment company.”

Tesla: “To accelerate the advent of sustainable transport by bringing compelling

mass-market electric cars to market as soon as possible.”

A Management Consulting Outfit: "We are a professional group providing services

and solutions to help our clients achieve their goals and objectives. We have a
deliberate bias in introducing improvements in the context of a well-planned and
managed change."

A School: "We are bound by our commitment to develop and equip learners with the
5 Cs-competence, character, collaboration, creativity, and commitment.. ..and a
strong research orientation within an enriched learning and caring environment"

Notice that each of these examples indicates where the organization will compete (what
industry it is in) and how it will compete (what it will do to be different from other
organizations). The mission statement conveys to stakeholders why the organization exists.
It explains how it creates value for the market or the larger community.

Because it is more specific, the mission statement is more actionable than the vision
statement. The mission statement leads to strategic goals. Strategic goals are the broad
goals the organization will try to achieve. By describing why the organization exists, and
where and how it will compete, the mission statement allows leaders to define a coherent set
of goals that fit together to support the mission.

What Are Values?

Values are fundamental and shared beliefs that will provide the organization's behavior in
meeting its objectives and in dealing with others. Values are the organization's moral
compass. They answer the question, "What is important to us?"

Examples of Corporate Values:

Disney: “To entertain, inform and inspire people around the globe through the power
of unparalleled storytelling, reflecting the iconic brands, creative minds and
innovative technologies that make ours the world’s premier entertainment company.”

Levi's: “Use of child labor is not permissible. Workers can be no less than 15 years
of age and not younger than the compulsory age to be in school. We will not utilize
partners who use child labor in any of their facilities. We support the development of
legitimate workplace apprenticeship programs for the educational benefit of younger
people.”

An Appliance Distributor: "Reliability is our core value. It means being dependable

and trustworthy in the delivery of products and services and also in our relationship
with each other, our customers and other stakeholders... It is supported by six other
values, namely: respect for the individual, candor and openness, communication,
teamwork, creativity, and transparency."

A Change Management Consulting Firm: "To fulfill our mission, we cherish and
nurture the values of: integrity and reliability professional competence and
experience, understanding of people, creative imagination, and hands-on
problem-solving"

Managers cannot just create a values statement and expect it to be followed. For a values
statement to be effective, it must be reinforced at all levels of the organization and must be
used to guide attitudes and actions. Organizations with strong values follow their values
even when it may be easier not to.

Together, the vision, mission, and values statements provide direction for everything that
happens in an organization. They keep everyone focused on where the organization is going
and what it is trying to achieve. And they define the core values of the organization and how
people are expected to behave. They are not intended to be a straitjacket that restricts or
inhibits initiative and innovation, but they are intended to guide decisions and behaviors to
achieve common ends.
Articulating the company's shared vision, mission, and values provide the momentum to
proceed with the goal-setting process. As earlier stated, there are four steps involved
namely: gathering/synthesizing information, formulating alternatives, deciding on the courses
of action, and establishing the goals and objectives.

STRATEGIC MANAGEMENT FRAMEWORK

At this point let us introduce a process that will help you do the four steps in goal setting - the
Strategic Management Framework (SMF). It integrates the SWOT Analysis and the
Balanced Scorecard as shown below.

Strategic Management Framework Diagram

The SMF involves an organization analysis from different perspectives. It analyzes the
company's Strengths, Weaknesses, Opportunities, and Threats (SWOT). It facilitates the
subsequent formulation of the Balance Score Card (BSC) which creates the foundation for
your strategic plan.
THE SWOT

The following discussion is based on an excerpt from Barrow, Colin, et, al. The Business
Growth Handbook, London: Kogan Page Ltd. The SWOT is a powerful planning tool. It
stands for "Strengths, Weaknesses, Opportunities, and Threats."

"Strengths" refer to internal competencies possessed by an organization that will

enable it to achieve its objectives.

"Weaknesses" are areas that limit or inhibit an organization's overall success.

"Opportunities" refer to economic, socio-cultural, political, technological,

demographic, and industrial trends and events that could significantly benefit an
organization in the future. (Major service opportunities, new market
opportunities/target clients' needs, anticipated competitive advantages, and
increased financial capacity/sources)

"Threats" are economic, cultural, political, technological, demographic, and industrial

trends and events that are potentially harmful to an organization's present and future
competitive position.

A SWOT should be prepared for each of your company business/product activities. The
results of SWOT analysis will guide you in making the action plans:

● Capitalize on "Strengths"
● Reduce "Weaknesses"
● Use "Opportunities"
● Neutralize, Convert "Threats" into Opportunities

FOLLOWING THE FOUR STEPS IN GOAL-SETTING

After we have done the SWOT Analysis and the Balanced Scorecard, we are now ready to
undertake the four steps of the planning process.

The management cycle begins with goal-setting, or establishing objectives for a company or
organization. As discussed in the earlier sections of this chapter, objectives and goals are
derived from a sound review and understanding of the vision, mission, and values of the
organization. It also considers the results of SWOT analysis from the viewpoint of four
perspectives: financial, customer expectations, employees competencies, and business
process.
Let us walk you through the four steps.

1. DATA GATHERING & SYNTHESIZING INFORMATION

In this primary stage, you will initially be doing data gathering. If you are thinking of
embarking on a project or business, it would be necessary for you to gather information that
will help you find out if, indeed, it is feasible and beneficial to the company. You should
gather enough data to enable you to do a synthesis and discern whether or not the project or
business is viable. Just keep in mind that data has cost and therefore you must gather only
relevant and useful information.

In the story of Aling Elma, the KPop Merch Online Seller, we noted that even before she got
into the business of online selling, she went through the process of simple data gathering
and synthesis. Her objective is to look for livelihood that would double her savings of P5,000
in two months. So since her daughter is an avid fan of EXO, BTS and Blackpink, and a
collector of kpop merchandise, Aling Elma asked her daughter to where she bought the
items, and from there, she contacted the seller and inquired where the seller gets to buy the
items as wholesale as well as the average of her daily sales. She asks the supplier what is
the suggested maximum retail price of the products. Then she also studies her probable
customers, her daughters friends and even her friends like Aling Maria who loves V and Jin.
Then after calculating her possible earnings in a day, she considered her physical health.
Does she have the stamina to do it everyday? If not how many days can she manage to do
the business? How will this affect her daily sales?

The answer to these questions - however small the business is - will determine if selling
kpop merchandise online is in Aling Elma's best interest. If she thinks the job will be too
much work for her, she might want to think of alternatives.

2. FORMULATING ALTERNATIVES

Through effective data gathering and synthesis, you can arrive at a decision on whether or
not to pursue the business. You can also come up with alternatives, or even a Plan B and a
Plan C, in case Plan A does not work.

Recalling Aling Elma's case, since most of her future customers are still studying and are
dependent on their parents, she needs to think about what else to offer which the
independent people will want to buy. Aside from kpop merchandise, maybe she can add to
her lists are the Korean skin care products which can attract both young and older female
adults.

3. DECIDING ON COURSES OF ACTION

The planning stage is the most difficult stage in the management process. It includes an
assessment of possible choices and chances along the way. You will be confronted with
challenges requiring objective analysis and judgment to deal with varying situations, people
with different interests, and critical incidents that offer opportunity to succeed or fail.
Deciding on the courses of action also involves self-analysis. You have to know who you are,
what you have, and what you are capable of. Then, you have to look into where you are,
what resources outside of yourself you can use, the situation you are faced with, and the
foreseeable developments - favorable and unfavorable.

We saw it in the case of Aling Elma. She had to choose through a set of simple criteria
comprising personal questions as well as questions about the business. Before deciding on
what course of action, you might also ask such questions as: Do like the job? Can I do it
everyday? Will there be too much competition among sellers? Will the business give me my
desired profits?

Putting your answers on a checklist, which compares the advantages and disadvantages of
the alternative ventures, will help you make the final choice.

4. ESTABLISHING GOALS

Defining your goals is the fourth and final step in the planning process. You will not find it
difficult to set your goals if you have a tool or technique to use. Let us discuss two concepts:
SMART and KRA/KPI.

SMART - Good goals should be Specific, Measurable, Attainable, Results-focused, and

Time-bound.

A. Specific: Goals should reflect accomplishments that are desired, not ways to
accomplish them. Goals should generate specific actions and be detailed enough to
be understandable and give direction to others. “To improve operations" is not
specific. "To increase profitability by 10% by the end of the year" is a more specific
statement of the goal.
B. Measurable: Goals should be measurable to determine when they have been
accomplished. A method for measuring must be defined, preferably in quantitative
terms such as: in pesos, kilos, boxes, frequency, etc. There are, however, certain
goals that are difficult to quantify. At most, such goals can be defined only in terms of
easily observable behaviors, i.e., always smile at customers, safe workplace, etc.
C. Attainable: The real art of setting goals is to create a challenging, achievable target.
A goal is a standard of achievement. It should be challenging, but should not demand
the impossible. It should be attainable considering available resources.
D. Results-focused: Goals should specify an end-result or outcome. You may instruct
group "to work together as a team" but if you don't specify what the group is
supposed to accomplish, you are not results-focused. Working as a team might be
the way for the group to accomplish a results-focused goal such as "Ten sets of cell
phones sold a week."
E. Time-bound: Specify a relatively short time for meeting the goal, from a few weeks
to no more than a year. Goals are generally more manageable this way. Ask yourself
the following questions:

● What is a reasonable period of time for accomplishing the goal?

● How critical is immediate action?
● What are the opportunities to act now versus later?
KRAs and KPIs

KRAS or Key Result Areas are highly selective areas (usually four to five only) in which an
organization must achieve a high level of performance. They are critical success factors for
the business. Since these are critical to its success. KPIS, on the other hand, are indicators
of performance established for each KRA.

Illustrative Example of KRA/KPIs

KRAs if properly defined can give focus and clarity to direction and efforts. The "critical few"
organization-wide KRAs can be translated across units through all organization levels. KPIs
may be along any of the following categories: cost, time, quality, etc. Just as KRAS need to
be the critical few needed to acquire a clear focus, so too, should KPIs be a relevant
number, say no more than three for each KRA to give direction and focus.

This chapter covered Goal-setting, the first stage of the GEMS process. The next chapter
will deal with achieving the goals set for the organization.

Review Questions
1. What is the importance of learning about vision, mission, and values?
2. How will you apply the SWOT as a planning tool? 3. What are the four strategic
perspectives of a business organization?
4. What are the four steps involved in goal-setting (planning)?
5. What is the meaning of SMART?
6. What are KRAs? KPIs?