Goal formulation is the process of developing specific goals for the planning period. (See further discussion below.)
Further discussion on goal formulation:
Goal formulation occurs after a company has performed a SWOT analysis. The goals a company sets are specific to time and size. Most companies set a mix of objectives that include, but are not limited to:
- sales growth
- improving market share
- innovation; creating new products or services
Once the business sets the objectives as part of their goal formulation process, they will then proceed to manage by objectives (MBO). (See MOB criteria below.)
Manage by objectives (MBO) criteria:
Four criteria must be met in order for a MBO system to work. They include:
- Objectives must be arranged from most important to least important (hierarchically arranged): Set key objectives first.
- Whenever possible, objectives must be quantitative: It is better to say that you will increase market share by 12% over the next 12 months over, “We will increase market share.”
- Set goals that are realistic and attainable: Stating goals based on wishful thinking will not help you meet objectives. Your goals should come from your businesses opportunities and strengths.
- Objectives must be consistent: As an example, trying to maximize sales and profits at the same time is not a consistent objective.
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