Topic 4 - Overview

Planning

Topic’s Learning Objectives

1. Discuss in depth the need to plan to succeed.

2. Determine how to set objectives.
3. Evaluate how a business is going to achieve the objectives.
4. Critically Analyse the strategies will be applied for achieving the
business objectives in order to identify the needed resources.

Introduction
This topic is about planning the future of a business. It is about planning to
succeed! The Entrepreneur does not have the opportunity an actor has before
the show on the stage. The actor does many rehearsals until is ready for the
show! The Entrepreneur does a business plan which is the map that can help
him / her to step into the market and walk through a complex and difficult
business environment.

The business plan will help the Entrepreneur to understand what really is trying
to achieve and how will achieve it. It will help the Entrepreneur to analyze the
internal and external business environment evaluating the ability of the business
to succeed before the ‘battle’ in a high competitive market.
 Can you determine one of the most important reasons
leading businesses to failure?

Main Analysis

Understand the need to plan in order to succeed

Please, read the following interesting article about why a business needs to plan
first!

“There are many reasons why a business fails and at times having nothing to do
with anything the owner had any control over. These things are going to happen,
that’s just how life goes sometimes. Business people have tough decisions to
make when it comes to running their companies and sometimes those choices
cost them dearly. Hey that’s business and it’s a brutally tough world out there.
Then there are the businesses that crumple due to factors that the owner-
operator had total control over.

Deciding not to create and employ a business plan is setting yourself up for
failure before you even begin the struggle towards success. It’s a shame to see a
business fall apart that might have had a shot at making it. Unfortunately this
happens every day. Someone has an idea for a business and they just move
forward and start up without any planning. So many entrepreneurs jump into their
endeavors not having done all the due diligence of a proper business plan.
This happens all the time, and most of these attempts fail, and is it really a
surprise? People bury their heads in the sand when it comes to this issue. In
reality it’s hard to believe anyone would deny themselves the opportunity to be
successful. When rolling the dice on a new business venture how does one not
utilize the most important aspect of the undertaking?

Opening a business without a business plan is like setting out into the middle of
nowhere with no map or supplies and trying to find a specific location you have
never been to. You have an idea where you want to go, but have no idea how to
get there or what supplies it will take. You’re flying blind, how could you possibly
expect to find your way.

But the fact of the matter is most entrepreneurs do exactly that. They are so out
of touch with reality and what it will take to make their business work. Just
because you have an idea and the courage to go after it is not enough. There are
a ton of million dollar ideas out there that went nowhere. The individual that can
actually make it happen, well that’s the rare breed and a real entrepreneur. The
idea was the easy part, getting the business end of it behind you that is
necessary to sustain and grow your seed is crucial. Without having a solid well
thought out business plan your chances for success are severely hampered.

The importance of having a business plan can’t be stressed enough. I could list
all the benefits and valuable reasons why you need one and how to create one,
but there are hundreds, if not thousands, of websites and books that do a much
better job at that than I ever could. Yes creating one is a daunting task and
probably something you will need help in order to do properly, but by no means is
it impossible. The bottom line is, it’s a must. You simply cannot embark on your
journey without. It’s not necessary to be a business school nerd, there are plenty
of resources both online and offline to get this done. You need many tools to be
successful and a business plan is your most important one of all and the
foundation of any future success you hope to have. It is your guide and an
illustration of your vision. Developing your business plan forces you to focus on
what you are trying to achieve. It tells you exactly where your business is going
and how you are going to get it there. If a time comes that you ever need help, a
strong business plan can serve you well in persuading others to do so. If you
want to be taken seriously in the business community you better have a plan.
Don’t sell yourself or your idea short; success is the plan, so plan to succeed!”
Source: http://under30ceo.com/fail-to-plan-plan-to-fail/
 Determine how to set objectives
At this point, please read the following interesting article in order to learn
the process of setting SMART business objectives.
Overview/ Introduction

According to Jones and George's book "Contemporary Management" (2007), the

goal-setting theory focuses on identifying the types of goals that are most
effective in producing high levels of motivation and performance and explaining
why goals have these effects. Each goal set forth by a person is a resemblance
of what they are trying to accomplish through their actions and behaviors.
Without one's efforts, their goals cannot be set or accomplished. The harder the
specific goal to achieve, the more likely one would be motivated and dedicate
their best performance to achieving the desired goal.
Details of Case

John, a member of the senior management staff at Lowe's, was given a

Professional Development Plan (PDP), in order to maximize his potential as part
of the management team of his store. The goal of the PDP was to ensure that the
store was maintaining excellent customer service and improving company and
store sales. The PDP would allow John to look at each individual section (self-
development, department development, and store performance) to see where he
needed to improve to achieve standards set forth by the Lowe's corporate office.
The plan was built on goal-setting theory and included education on how to
create S.M.A.R.T. goals to ensure focused changes could be implemented to
improve the success of his store. Half-way through the year, John would report
his status to his supervisors. If John was able to meet the goals he had
established, new goals would be created. If the goals were not met by that time,
a more in depth look would be taken to see what changes may be needed to be
able to accomplish those goals.

John realized that if his store was going to be successful, he would first need to
take a look at himself to see if he was reaching his maximum potential.
Therefore, John decided to first focus on self-development. He knew that the
store would not run efficiently if he was not a successful manager. John knew
through his years of being a manager that his crew relied on him for
encouragement, attitudes, dependability, etc. John also knew that his employees'
morale often reflected his own morale while at Lowe's. For each department to
be successful, constant improvements needed to be made. John felt the success
of each department would have a trickledown effect and enhance the success of
the store. Lastly, John had to improve his customer service and store sales to
make the store's overall performance better. Improving in these three areas
would give his Lowe's store a more successful outlook.
Analysis

John began to research goal-setting theory and learned that for goals to be
successful as motivators there are several factors that are necessary (Redmond,
2011). First, there must be acceptance and commitment to the goal. Second, the
goals must be specific in their language and must be directly related to a specific
end result. Third, they must be difficult enough to pose a challenge but not too
difficult that they cannot be achieved. Fourth, there needs to be feedback on
when and how the goal was achieved. The acronym used in goal-setting theory
to make certain that goals affect these four factors is S.M.A.R.T. John now needs
to develop S.M.A.R.T. goals to apply this theory to the self-development,
department development, and the store performance sections of the Professional
Development Plan. John learned that the S.M.A.R.T. acronym meant that his
goals needed to meet the following criteria:

As John continued to read more about each specific section of the S.M.A.R.T.
goals, he decided to relate them to the way he felt about his current position and
ways he can improve himself and his store to make his store better.
Self Development
First, John took a look at the two questions off of the PDP under self -
development "What must I stop doing to be a more successful manager?" and
"What must I continue to do well to be more successful?" Then he went to each
specific category to see how he could relate that to the two questions.

Specific:

With goal specificity, John, as a manager can give his employees some control in
this area. Different departments might have different, specific goals. Specific
goals would include: Increasing the sales of a certain department over last year's
sales. (This information is available through weekly reporting of the company.);
have a month pass with zero on-the-job injuries; higher rates of positive customer
feedback; lower absenteeism/tardiness.

By giving his employees the autonomy to set their own goals, John will "ensure
that the goals are not unreasonable" (Redmond, 2011)

Measurable:

Through the sales monitoring, attendance, number (or lack of) on the job injuries
and customer feedback are all measurable factors that could be measured within
targeted goals. When John applies his questions, he can determine the following:

"What must I stop doing to be a more successful manager?"

Through his measurements, he can see what areas might need to be addressed.
Actions he may need to stop are any scheduling habits that make it difficult for
employees to be punctual or he might need to stop worrying about sales for a
short period of time to address customer feedback. When he addresses
customer feedback, he may improve sales. By stopping certain things that might
impede not only his performance but his employees' performance as well as
sales outcome(s), he can be more successful.

"What must I continue to do well to be more successful?"

John's can use measurements to compare his store's success with other stores
and national benchmarks to identify areas that he is excelling in and he should
evaluate each goal to make certain he will be able to continue to measure those
items and make certain that he doesn't set new goals that would distract from
current success areas.
Attainable:

By giving his employees the freedom to set goals (and in turn would make him a
more successful manager), he must find goals that can be reasonably be
achieved. While the employees may give him feedback on whether or not the
goals are realistic, he must ensure that the goals are difficult but not too difficult
that would cause a drop in commitment. "When commitment to a difficult goal
lapses, performance would be expected to level off or decrease" (Redmond,
2011). He then can analyze their goals in order to set his goals and make them
attainable. He would help his employees set goals, and then set his own goals to
become a better manager and give himself more motivation. John will need to
evaluate his own as well as his employee's competency in each area to make
certain the goals set can be achieved.

Realistic:

As in the attainable part of the goal, letting his employees set realistic goals,
John can in turn set realistic and attainable goals. Although it is important for
John to set himself a certain degree of difficulty in his goals to have a higher
motivation and "higher the performance" (Redmond, 2011), it is also just as
crucial that he is realistic. By evaluating his goals on a month to month basis, he
can visualize more realistic goals and more successful outcomes.

Timely:

John's goals as well as the goals his employee's assist in setting must be related
to a specific time-frame. Setting goals within specific time frames also allows for
periodic evaluation to see where he stands and how much further he needs to
go, and what step is next. If he applies the two questions ("What must I stop
doing to be a more successful manager?" and "What must I continue to do well
to be more successful?") to the timely aspect, he can evaluate and target a
specific time frame that he must stop doing that is interfering with his success as
well as what he should continue to do to be more successful.

With feedback from customers as well as employees, he would be able to weed

out what he might need to stop doing, what he needs to continue to do and
ensure success in his goals.
Store Performance
John was to apply the S.M.A.R.T. theory concept to this part of the PDP and see
what goals can be set to increase the performance of the Lowe's store he is in
charge of managing. The questions listed on the PDP under store performance
included: "How can I improve overall store sales?" "How can I improve average
ticket?" "What can I do to impact customer service?" and "What can I do to
improve employee engagement?" He looked at each category to see how they
could be defined using the S.M.A.R.T. theory.

Specific:

John decided that he needed to give his employees a chance to be involved

within the company to make them feel like part of the team. While research has
not necessarily shown that employee improves motivation John decided that
having the employees involved would give them a sense of belonging. He hoped
that this sense of belonging would improve the morale of the employees and in
turn improve customer service. John set himself a goal to have monthly team
meetings where the staff could give input on ideas they may have to improve
Lowe's. John set a goal to develop a program that would allow each employee to
learn more about their department so that they could better assist customers and
know what the customers want and need when shopping within his particular
store.

Measurable:

John was taught that if a goal is not measurable, it cannot be achieved (Reis,
2010). This is why John was going to review the team meetings after three
months to see if the employees were inputting any ideas they have and how
successful it was at carrying out those ideas. He would also learn as each
meeting went on if the employees felt like they had input, if more and more input
was given as the meetings went on. The team that was in charge of putting
together the program about each department would return to the same
employees within three months to see if their knowledge of their department has
improved as well.

Attainable:

In order for the goals to be attainable, they must be assigned to a specific person
or group capable of achieving that goal. The team meetings were going to be
assigned to John himself since he was in charge of all the employees and he
knew the best ways to improve their morale and receive their inputs. He assigned
the tasks of "department knowledge" to a team of ten people who would ensure
that each department received the knowledge, training, and expertise in their
department.

Realistic:

The two main goals set forth for store performance were realistic because they
could actually happen. They were not goals that would turn people away due to
the lack of interest.

Timely:

John set the time line to review each goal's progress in three months. This would
allow him time to see if the goals were attainable or needed to be changed. John
had a year to complete and work on the PDP. Allowing three months to see the
progress would still give him ample time to change the goals if these specific
goals were not working to improve the store performance.

Source: https://wikispaces.psu.edu/display/PSYCH484/Goal+Setting+Case+Study

Evaluate how a business is going to achieve its objectives

“How…” to
Strategy

Think Theory 1

Can you think the most important types of strategies a business

has available in order to achieve its objectives?
(Take a pen and write down your answer. As soon as you finish
thinking and writing, check at the end of the topic overview for
feedback)
Analyse which strategies will be applied for achieving
the business objectives

In order to put your

plan into action you
need to spend
resources.

The general principle is that

the result (the achievement
of an objective) must be
greater the total resources
spent!

Think Theory 2

Can you identify the 4 different types of resources a business has

to manage in order achieve its objectives?
(Take a pen and write down your answer. As soon as you finish
thinking and writing, check at the end of the topic overview for
feedback)
 1 Business Plan = Action Plan 1 + Action Plan 2 + Action Plan 3 ..…….
To better manage the implementation of a business plan it is necessary to divide
it into action plans.

An action plan integrates all of the strategies you have developed throughout
your business plan into a highly organized and prioritised plan of action designed
to achieve your stated business objectives.

This is achieved by breaking down the strategies you developed into small,
achievable steps and then identifying the actions you need to take for each step.
It can be used as a short term (6-12 months) action plan to achieve short term
business goals.

An action plan identifies the business objective (what you would like to achieve)
and the strategies that can be implemented to reach that objective.

It also explains the specific actions that need to take place in order to achieve
the business strategy. This will include the timeframe, resources, roles and
responsibilities, performance indicators and alternative methods that can be
implemented to reach the business objectives.

Summary

In this topic we understand the need to plan in order to succeed. Moreover

we concluded that the business plan forces you to focus on what you are
trying to achieve. Then we determined how to set smart objectives following
an effective process. We evaluated how a business is going to achieve the
objectives and we referred to the most important types of strategies a
business can apply in order to achieve its objectives. Finally, we analyzed
the strategies will be applied for achieving the business objectives in order to
identify the needed resources.
 Feedback to think theory boxes:

Think theory 1

The most important types of strategies a business has available in order to

achieve its objectives are the following:

 Marketing Strategy
o Target markets strategy
o Marketing mix strategies
 Product
 Price
 Promotion and advertising
 Placement – distribution system
 Sales strategy – Customer Relationship Management strategies
 Leadership and Human Resource strategies
 Financial strategies

Think theory 2

Every business manages the following 4 different types of resources in

order to achieve its objectives:
 Financial

 Human Resources

 Technology and Equipment

 Knowledge and Expertise

Resource Management includes the following 4 major business activities:

 Planning
 Organizing

 Administrating

 Controlling