mg2351- principles of managementmahalakshmiengineeringcollege.com/pdf/ece/visem/mg2351/unit...

K.SUBADHRA, AP/Chemistry, MAHALAKSHMI ENGINEERING COLLEGE, Trichy-621213.

MAHALAKSHMI

ENGINEERING COLLEGE

TIRUCHIRAPALLI – 621213

MG2351- PRINCIPLES OF MANAGEMENT

UNIT II

PLANNING

1) Define planning.

Planning is the process of selecting the objectives and determining the

course of action required to achieve these objectives.

2) What is the main objective of planning? [May 2013]

Planning is a primary function of organization. It helps in achieving

objectives. It done to cope with uncertainty and change. It helps in facilitating

control. It helps in coordination planning increases organization effectiveness.

Planning guides in decision making.

3) Define “Mission”.

Mission may be defined as “a statement which defines the role that an

organization plays in the society”

4) Define “objectives”.

The term “objective” or “goals” are often used interchangeably. Objective are

the end results towards which the activities of attain its objectives.

5) What is mean by strategy?

Strategy of an organization is the programmers of action and

deployment of resources to attain its objectives.

6) What are the factors to be considered while formulating strategies ?

Mission and objectives of an organization. Values, aspiration and prejudices of

top level management Opportunities and threads of the external environment . Strength

and weakness of the firm in various aspects such as funds organization structure,

human talent, technology etc.


7) Define “policies”

Policies are general statement or understanding which provide guidance in

decision making to various managers.

8) What is procedure?

Procedure is a chronological order of action required to implement a policy

and to achieve an objectives.

10) What is programme ?

Programme is a broad term which includes goals, polices, procedure, rules,

task assignment, step to be taken, resources to be employed to carry out a given

course of action.

11) Define budgets.

A budget is a statement of expected result in numerical terms and therefore, it

may be referred as a numerical programmer.

12) What is objective?

Objectives are the aims, purposes or goals that an organization wants to

achieve over varying period of time.

13) What is MBO? [May 2012, 2011]

MBO is a process whereby the superior and the superior and the subordinate

manager of an enterprise jointly identify its common goals, define each individuals

major areas of responsibility in terms of result expected of him, and use these

measures as guides for operating the unit and the contribution of each of its members

is assessed.

14) What is meant by “strategy”? [Nov 2012]

A strategy may also be defined as a special type of plan prepared for

meeting the challenge posted by the activities of competitors and other

environmental forces.

15) What are the major kinds of strategies and policies?

Growth, Finance, organization, personnel, products or service and market.

16) Write down any four factors which lead to fail of strategic planning.

Managers are inadequately prepared for strategic planning. The information for

preparing the plans is insufficient for planning for action. The goals of the organization

are too vague. The business units are not clearly identified.


17) What is planning premises?

The assumptions about future derived from forecasting and used in

planning are known as planning premises.

18) What arethe practices madeinmaking effective premising?

Selection of premises.

Collection of formation.

Development of alternative premises for contingency planning.

Verification of the consistency of premises.

Communication of planning premises.

19) Explain the term decision and decision making?

A decision may be a direction to other to do or not to do. Decision making is

defined as the process of choosing a course of action from among alternatives to

achieve a desired goal. It is one of the functions of management and also a core

process of planning the management executive takes a number of decisions every

day. Thus, decisions may be rational or irrational. The best one is selected out of the

available alternatives.

20) How would you evaluate the importance of a decision? (Or) Mention any 2

features of decision making. [May 2011]

1. Decision making is a selection process. The best alternative is selected out of many available alternatives. 2. Decision–making is a goal–oriented process. Decisions are made to achieve some goal or objective. 3. Decision making is the end process. It is preceded by detailed discussion and selection of alternatives. 21) Mention the three approaches generally adapted by managers in

selections an alternative?

Quantitative and Qualitative analysis.

Marginal analysis.

Cost effectiveness analysis.

22) Name any four quantitative forecasting techniques. [May 2013]

1) Time series methods/ analysis 2) Econometric forecasting. 3) Technological forecasting.


23) List the different types of planning. [May 2012, Nov 2012] Plans: 1. Standing plans: a) Mission or purpose b) Objectives c) Strategies d) Policies e) Procedures f) Rules 2. Single use plans: a) Programmes b) Budgets c) Schedules d) Methods e) Projects.

16 marks questions

1) Describe the various elements in planning? 9 important Elements of Planning A plan has the following elements:-

1. Aim:

Any organization should have definite aim. The aim should be clearly defined so that it can guide and direct the activities of the enterprise. The main aim of a cooperative organization is to do service and to improve the economic conditions of members. Calvert's definition of cooperation clearly exhibits this aim.

2. Objectives:

Webster's Dictionary defines objectives as "that towards which effort is directed or end of action or goal". Hence objectives or goals may be described as the ends towards which the group activities are aimed.

People say "Effective management is management by objectives". A cooperative organisation can have sub-objectives for each department or sections and they can be united to have board based objective.


3. Policies:

A policy is a verbal, written or implied basic guide that provides direction to a manager for action. Policies guide the actions of an organization's performance and its objectives in the various areas of operation.

4. Procedures:

Procedures spell out the actions to be taken out in practice to achieve the organizations objectives as stated in the policies. Procedures may be static or changed often. Organizations have set procedures for procuring raw materials, recruitment of personnel etc.

5. Methods:

Methods are work plans, since they provide the manner and order, keeping the objectives, time and facilities available. Methods involve only one department and one person. They contribute to the efficiency in working and help work planning and control. Methods are used in manufacturing, marketing and office work.

6. Rules:

Rules are different from procedures and policies. A rule requires a specific and definite action be taken or not taken with respect to a situation. Rules do not allow any discretion in their application. Also they do not allow any leniency to come in the way of their application.

7. Budget:

Budget is essentially a plan expressed in quantitative terms. Budgets involve both planning and control element. Like the plan, budget is flexible, realistic and operates within a framework. A budget is differentiated from other plans in the following respects:-

a. It is a tool for planning and control.

b. A budget covers specific period.

c. Budget is expressed in financial terms.

8. Programmes:

Programmes show the way and lay down procedure for activities to take place within a time limit for accomplishing, the stated objectives. The constituents of a programme are objectives, policies, procedures, rules, methods and resources to be made use for obtaining the objectives. Programmes enable the management to anticipate and prepare them ahead to meet future eventualities.


9. Strategies:

Koontz and O'Donnell consider this as an important planning element. "Strategy concerns the direction in which human and physical resources will be deployed and applied in order to maximize the chance of achieving a selected objective in the face of difficulties".

In corporate planning strategy serves as a master plan which the company adopts for the realization of the objectives. It provides skill and judgment to the management to predict and foresee what difficult and complex situations are likely to arise and they can take timely action to avert them or at least to minimize the risk and uncertainty.

2) What are different types of plans? Types(scope) of plans:

I Purposes or missions:

- Meaningful existence–special task

-Elements are primary market, profitability, management, philosophy and

corporate image

Eg.1.Distributionofgoods&services

- ITC “Satisfaction”

- Dupont “better things through chemistry”

- Hallmark “The social expression business”

- GEC/USH “We are in energy business”

II Objectives:

- Ends towards which all activities are directed

-They are the most basic plan and all other plans are based on the objectives

- They are multiple in nature.

- MBO

- Objectives and goals are interchangeable

- They have hierarchy.

- They are verifiable

- They form a network.


- They differ in time span. Some are long term and short term.

- Objectives may be general or specific.

- Classified into External institutional objectives (to develop high degree of corporate

image–TATA); Internal Objectives (profit/maximum rate of return)

II Strategies:

-General program of action and deployment of resources to attain

Comprehensive objectives.

- SWOTanalysis

Eg:

1.Rural marketing

2.ExtensionofDistributionwidth&Length

3. Pester power strategy, social marketing, co-branding, co-marketing.

- Contingentplantomeetthe demandsofadifficultsituation.

- Mainlythe jobof the topmanagement.

IV Policies:

- General s ta tements or understandings which guide or channel thinking and take

actions in decision making.

- Guidelinesfor decisionmaking

- All policies are statements, sometimes it is only practices (implied)

- Allows for some discretion otherwise it becomes rules

- It is a means of encouraging discretion and initiative, but within limits.

-Policies are developed with the active participation of the entire top level

executives.

-Policy is in writing. They take concrete shape when they are put in writing. This

will ensure uniformity in application, continuity and greater conformity.

Advantages:

i. Top management provides guidelines to lower level managers.


ii. Gives managers to act at all levels without the need to consult the superior’s

every time.

iii. Better Administrative control. Provides rational basis for evaluating the results.

iv. By setting up of policies, the management ensures that the decisions made will be in

tune with the objectives and interests of the organization.

v. They save time and effort by pre-deciding problems in.

Limitations:

-Policy is formulated under particular present conditions which do not remain the same

for all problems.

- Requires constant review and revision.

- No formula for all problems

-Serve as guides for thinking and action and do not provide solutions to problems.

- They are not substitute for human judgment. They only point out the limits within which

the judgment is to be taken.

- They may stifle individual initiative and creativity. 3) Give an account of various steps involved in planning? [May 2011, 2013, Nov 2012,] Steps in Planning:

1. Identification of opportunities.

-SWOTanalysis

2. Establishing objectives.

3. Developingpremises

i) Planning premises are forecasts, applicable basic policies, and existing

company plans.

ii) They are assumptions about the environment in which plan is to be carried out.

iii) Forecasting is important for premising.

iv) Premises should be making practical what volume of sales? What price?

4. Determining alternative courses of action

5. Evaluating alternative course of action


- Operation Research

–Decision tree

6. Selectingacourseof action

-Decision making

7. FormulatingDerivativeplans

- Supporting plans for basic plan

8. Numerating plans by budgeting

- Income and expenses

4) Describe the different objectives of planning?

Objectives / Importance / Advantages of Planning:

1. Focuses attention on objectives &results

2. Reduces uncertainity and risk

3. Provides sense of direction

4. Encourages innovation &creativity

5. Helps in coordination

6. Guides decision making

7. Provides a basis for decentralization

8. Provides efficiency in operation

9. Facilitates control

5) Explain briefly the benefits and weakness of MBO? Or Mention any four

advantages and four limitations of planning. [May 2011]

Benefits of MBO:

1. Improvement of managing: MBO forces managers to think of planning for end results rather than merely planning activities or work. MBO produces clear & measurable performance goals. A network of goals is created & appropriate action plans are formulated for goal achievement. 2. Clarification of Organization: Another major benefit of MBO is that it forces managers to clarify organizational roles, the authority & responsibilities.


3. Encouragement of Personal commitment: MBO provides greatest opportunity for personnel satisfaction. This is possible for 2 reasons. a) participation in objective setting, & b) Rational performance appraised. When the individuals are involved in setting goals, they feel satisfaction that they are important for the organization. 4. Development of Effective control: MBO not only provides better planning, but also aids in developing effective control. Control involves measuring results & taking action to correct any deviations from plans. Objectives serve as the standards for appraising performance. Actual performance is compared with the objectives; any deviation is identified & corrected. It ensures that goals are achieved. MBO also allows employees to monitor & control their own performance. 5. Fast decision making: Decision is taken by the manager very quickly. The reason is that each worker knows the purpose of taking the decision & does not oppose the decision.

Weakness of MBO:

1. Failure to teach the philosophy of MBO: MBO fails to explain the philosophy. Most of the executives do not know what is MBO, how MBO works & why is MBO necessary & how participants can benefit by MBO. 2. Failure to give guidelines to goal setters: MBO does not provide any guidelines for setting goals. Therefore, often managers are neither taught how to set the objectives nor familiarized with the various plans & policies of the organization. In such cases, each department ends up going its own way, & the results are counterproductive to the overall organization. 3. Difficulty of setting goals: MBO requires verifiable objectives against which performance can be measured. However, setting of objectives is more difficult in some areas especially where they cannot be presented in quantitative form. Objectives are more in the form of statement rather than in quantitative form. Of course, some objectives can be quantified & can be broken in terms of time period but others lack this characteristic for further course of action. 4. Emphasis on short run goals; MBO emphasis only on short-term objectives & does not consider the long-term objectives. By emphasizing short range objectives, performance appraisal becomes easier, but there is always a danger in emphasizing short-term objectives at the cost of long-term objectives. Sometimes, an organization’s short-term & long term objectives may be incompatible because of certain specific problems. 5. Danger of Inflexibility: MBO is rigid one. Objectives should not be changed under MBO. Thus, it introduces inflexibility in the organization. In present situation, an objective cannot be


valid forever. It needs change with the change in environment. But once goals are set down, the superior may not like to change them due to fear of resistance from the subordinate. Thus, inflexibility created by applying MBO may cause harm than what it may contribute. 6. Time consuming: MBO is a time consuming process. Much time is needed by senior people for framing the MBO. Particularly at the initial stage, several meetings may have to be held to instill confidence in subordinates. The formal periodic reviews & final appraisal sessions also consume a lot of time. 7. Increased paper work: MBO contains many newsletter, instruction booklets, training manuals, performance appraisal reports etc. this increased paper work reduces the effectiveness of MBO in many organizations.

6) Define decision making process. Explain the process followed while taking a

decision in normal situation. [May 2011, 2013]

Decision making Process

1. Defining the problem

2. Analyzing the problem

3. Developing alternative solutions

4. Evaluating the Alternatives

5. Selecting the best alternatives

6. Implementing the decision


7) Explain the principle of planning. [May 2012]

The 5 Principles of Planning for Managers (and Explorers)

1. Set goals

It might seem to some obvious but this step is so often not done well. The first

step in the planning process is to determine with absolute clarity what you want to

achieve. The goal must be specific - you and others will need to recognise if and when it

is achieved.

2. Clarify the tasks

Once you have defined your goal you will need to do the hard work of

establishing what to do to achieve it. The list of tasks might be relatively short for some

undertakings, for others the list of tasks can be exceptionally long and take considerable

time and effort to create.

3. Agree responsibilities

A plan is a tool that enables people to achieve a given aim. Each task needs to

be owned by someone, and importantly they need to know that they own it.

You might find that an odd comment - how can someone own a task and not

know it? In organizations this happens all too often, at all levels in the

organization. Recently we heard a manager in a large bank complaining that a senior

executive did not appreciate they were the designated 'senior executive responsible' - a

specific role in their governance model - for a large and strategically important supplier

relationship. The executive was relatively new to the role and had not been told!


For the plan to work it is key that every task is owned, and that all owners know

what they are responsible for and have agreed to owning the task.

4. Schedule

This means establishing some time scales. By when is the goal to be

achieved? If you work back, when will the tasks need to be completed to ensure the goal

is achieved within the planned timescale? In complex scenarios of course this might

result in the creation of any number of plans that all come together to achieve the main

goal. Linking all this activity together is key, and highlights the importance of a clear plan

effectively communicated to all who contribute, and to those who have an interest in the

plan's achievement.

5. Learn

It was US President Eisenhower who said, "In preparing for battle I have always

found that plans are useless, but planning is indispensable." He was making the point

that effective plans are not static but dynamic. They are frameworks for action, which

help us to make decisions about what needs to be done in an efficient way. We need to

capture our experiences as the plan unfolds and feed them back into the planning

process - a continuous feedback loop, making changes where necessary.

8) Describe the various types of decision. [May 2012]

Managerial decisions may be classified into the following categories:

1. Programmed & non-programmed decisions:

Programmed decisions are otherwise called routine decisions or structured

decisions. The reason is that these types of decisions are taken frequently & they are

repetitive in nature. Such decisions are generally taken by the middle or lower level

managers, & have a short term impact. This decision is taken within the preview of the

policy of the organization. For example making purchase order sanctioning of different

types of leaves, increments in salary, placing purchasing order standard inventory terms,

etc. managers dealing with such issues of routine nature usually follow the established

clear-cut procedure. Managers know in advance what decisions he has to take in a

particular set of conditions. They need not ask anything from their superiors.

Non-programmed structures are otherwise called strategic decisions or basic

decisions or policy decisions or unsaturated decisions. This decision is taken by top

management people whenever the need arises. These decisions deal with unique or

unusual or non-routine problems. Such problems cannot be tackled in a predetermined

manner. There are no established methods or readymade answers for such problems. A

careful analysis is made by the management before taking a decision. For example,


issues related to industrial relations problem, declining market share, increasing

competition, problems with the collaborator, starting new business, acquisition of a

business etc. this decision has a long-term impact on business.

The following table gives the distinguishing between programmed & non-programmed

decisions.

S.No. Programmed decisions Non-Programmed decisions

1. It deals with routine or repetitive type of problem.

It deals with unique or unusual or non-routine problems.

2. Highly certain conditions. Highly uncertain conditions

3. There are established procedures to take decision.

There are no established procedures

4. Middle or low level executives take this type of decision

This type of decision is taken by top level executives.

5. It requires little judgement & deliberation.

It involves much thought & judgement.

2. organizational & personal decisions:

Organizational decisions are decisions taken by an individual in his official

capacity to further the interest of the organization known as organizational decisions.

These decisions are based on rationality, judgment & experience. For example, regarding

decision is introducing a new incentive system, transferring an employee, reallocation or

redeployment of employees etc. such decisions affect the functioning of the organization

directly.

9) With the help of block diagram, explain the process of management by

objectives (MBO). [May 2012, Nov 2012]

The Process of Management by Objectives (MBO)

MBO programs can vary enormously. Some are designed for use in a subunit,

while others are used for the organization as a whole. The particular methods and

approaches that managers use in an MBO program will differ. There also may be wide

differences in emphasis. Therefore the MBO process requires rigorous analysis, clarity

and balance of objectives and participation of managers with accountability for results.

This process has the following steps:

1. Setting of Objectives: The first step of MBO process is to establish verifiable

objectives for the organization and for various positions at various levels. Without having

a clear objective no group or individual can perform effectively or efficiently. One of the

major criteria to set clear objectives is the scope of measuring it. Therefore, objectives

should be set in such a way that they provide a clear direction to the people who have to

contribute and perform for achievement of the same. It is always desirable to have a

participatory approach to set objectives. However, management aspirations and


expectations should be kept in view while adopting a participatory approach to set

objectives.

Setting precise, measurable, and well-defined objectives is indeed a difficult task.

It requires an intelligent input from superiors and practice and team effort on the part of

subordinates. Objectives should:

1) Be verifiable;

2) Indicate the time frame within which they are to be achieved;

3) Indicate associated cost involved;

4) Indicate quantity and quality aspects of the expected achievements;

5) Help in promoting personal and professional growth and development;

6) Get duly communicated to all who are concerned with it;

7) Align short-term objectives to medium and long-term objectives; and

8) Give due importance to the views of individuals expected to contribute in the

achievement of objectives at the time of setting objectives.

2. Key Result Areas: Organisational objectives and planning premises together provide

the basis for the identification of key-result areas. Key-result areas are derived from the

expectations of the various stake holders and indicate priorities for organisational

performance. They indicate top management perspectives for the future and the present

state of health of the organisation. These are the areas in reference to which

organisational health may be measured or appraised for example: (i) profitability, (ii)

market standing, (iii) innovation, (iv) productivity, etc. These areas are not the same for

every organisation.

They differ from organisation to organisation, depending upon various internal

and external environmental factors.

3. Setting of Subordinates Objectives: Organisational objectives are achieved through

individuals. Therefore, every individual must know in advance what he is expected to

achieve. Objectives for each subordinate should be set in consultation between that

subordinate and his or her supervisor. A degree of recycling is required in setting of

objectives. This means that a degree of interaction, consultation, and discussion among

top level managers, departmental heads, superiors and subordinates is necessary. In

such joint consultations, subordinates help managers develop realistic objectives since

they know best what they are capable of achieving. Managers help subordinates "raise

their sights" toward higher objectives by showing willingness to help them overcome

obstacles and confidence in subordinates' abilities.

4. Revision of Organizational Structure: When the goals for each individual are reset

under MBO there is a considerable change in the job description of various positions.

This may call for a revision of the existing organization structure. The organization charts


and manuals should be suitably amended to depict the change brought about by the

introduction of management by objectives. The job description of various jobs must be

defined with their objectives, responsibilities, and authorities. They must clearly lay down

the relationship with other job positions in the organization.

5. Matching Objectives and Resources: It should be noted that without a proper

balance between the objectives and resources, the achievement of goals will be difficult.

Hence, the superiors must ensure combination of goals with available resources. All

managers at various levels require these resources to accomplish their goals. By relating

these resources to the goals themselves, superiors can better see the most effective and

most economical way of allocating them.

6. Conducting Periodic Progress Reviews: Management by objectives ensures

periodic meetings between the superior and the subordinate to review the progress

towards the goal attainment. For this the superior must establish check points or

standards of performance for evaluating the progress of the subordinate. The reviews

should be held monthly or quarterly. These reviews serve as a built-in feedback

mechanism for an MBO system. Since individual or group goals are specifically defined,

usually in quantifiable terms, employees can compare their progress at review time

against the specified goals. This periodic check-up allows managers and employees to

see whether they are on targets or whether some change is necessary. During the

review, managers and employees decide what problems exist and what they can do to

resolve them.

7. Performance Appraisal: While informal performance appraisal of a subordinate is

done by his immediate superior almost every day, formal appraisal at periodic interval,

usually once or twice a year, does ensure that a thorough evaluation of a manager's

performance is done and his achievements are carefully analyzed against the

background of prevailing circumstances and given objectives. The design and format of

the performance review form will depend on the nature of the enterprise.

Performance appraisal can serve three purposes:

1) Feedback to employees concerning their actual performance;

2) Provide the basis for identifying more effective job behaviour;

3) Supply information to managers relevant to future job assignments and to

compensation decisions.

8. Feedback: On the basis of overall evaluation, the feedback is provided to higher level

of hierarchy. Feedback information helps in taking decisions to make necessary changes

in MBO programme and to shape goals for the next year. The MBO cycle repeats itself

on an annual basis.


10) Describe the steps involved in strategic planning process.

Steps in the Traditional Strategic Planning Process

1. Get ready –

Strategic planning takes a lot of time and energy, any way you cut it. The top 2 or more executives must be actively involved, and there are always many demands on their time. Inevitably some costs will be involved - they need to be assessed up front. Decide who needs to be involved and how.

2. Develop a vision and mission –

Vision and mission often get switched around, but we believe the best approach is to consider the vision as "what we want to be like in the future" and the mission as "what we must do to accomplish the vision."

3. Environmental scan –

Analyze the strengths and weaknesses of the internal organization environment, and the opportunities and threats of the external marketplace environment. Gather relevant economic, demographic, political, technological, geographic, legal and trend data. Analyze the data and present it to the group.

4. Gap analysis –

Identify the gaps between the vision-mission statements (what we hope to achieve) and the environmental scan (current realities).

5. Strategic planning –

Develop strategies to close the gaps. This includes specific goals with measurement, timing, and budget; strategies to reach each goal; and who's going to be responsible for each goal and strategy. Sometimes strategies and goals are further subdivided into objectives (specific accomplishments planned for the next 12 months) and tactics (specific plans to accomplish the objectives).

6. Implementation –

The strategic plan is implemented as planned, as closely as possible. Objective forms of measurement track progress and help people stay on course. Progress is periodically reviewed.

7. Updating –

Typically strategic plans are created through a major effort every five years, and updated with a review process every 12 months or so.


11) State & explain the eight recommendations that should considered by

managers for successful implementation of strategies.

1. Communication of strategies

2. Developing & communicating planning premises

3. Developing appropriate operational plans.

4. Periodic review of strategy

5. Developing contingency strategies & programmes

6. Developing appropriate organization structure.

7. Continuing to emphasize planning & implementating strategy.

8. Setting proper organizational climate.

12) Describe the steps in rational decision making.


13) List out the salient features of MBO.

Features of Management by Objectives (MBO)

Based on the definitions of MBO, its features can be identified as below:


1. MBO as a Philosophy:

MBO is a philosophy of management. It is more than a set of techniques. It

emphasis on what is to achieve, not how to achieve. It suggests how the best use of

available resources may be done to achieve the expected objectives. Peter Drucker

writes, "MBO may properly be called a 'philosophy' of management because it rests on a

concept of human action, behaviour, and motivation. Finally, it applies to every manager,

whatever his level or function, and to every organisation, whether large or small."

2. MBO as an Approach:

MBO is an approach to management. Approach refers to various tools or

techniques used in order to achieve the objectives. MBO introduces several new

techniques of management. It also enhances the relevance and utility of existing ones. It

is thus, a joint application of a number of principles and techniques. It works as an

integrating device. Many principles and techniques of planning and control are used in an

organisation in the normal situation, but in MBO the focus is more on these techniques.

3. Organizational and Individual Goals Determination:

MBO is a participating and interactive process whereby superiors and

subordinates jointly determine common objective for the organization and also define

each individual's areas of work and responsibility.

4. MBO Emphasizes Participatively Set Objectives that are Tangible, Verifiable, and

Measurable:

Kreitner writes, "The common denominator that has made MBO approach so

popular in both management theory and practice is the emphasis on 'objectives' that are

both measurable and participatively set.

5. MBO is a Top-down or the Bottom-up Approach in Results Management:

which aims at optimum use of organisational resources. Thus MBO is a

systematic and rational technique that allows management to attain maximum results

from available resources. It allows the subordinate plenty of room to make creative

decisions on his own.

6. MBO has Multiple Uses:

MBO is a way of promoting managerial self-control and it applies to total

management system. It has multiple uses. There are various managerial sub-systems

that can be integrated with MBO process; they include performance appraisal, design of

organisational structures, management development programmes, organisational change

programmes, and budgeting.


7. MBO has Some Relationship with Every Management

Technique and It is a Universal Tool: In fact, MBO provided the stimulus for the

introduction of new techniques of management and enhances the utility of the existing

ones. MBO is the joint application of a number of principles and techniques. It works as

an integrating device. It is a valuable management tool for profit as well as non-profit

organizations. It is a simple, non-technical, operational management approach which can

be applied to every type of organizations.

8. MBO as a Performance Appraisal and Review:

As a performance appraisal and review, MBO is intended to measure and judge

performance, to relate individual performance to organizational goals and to foster the

increasing competence and growth of the subordinates.

9. A Comprehensive System Approach:

MBO has become a comprehensive system. It considers both economic and

human aspects of an organization. It applies to managers and employees in any kind and

size of organization at all levels and in all functional areas. Koontz and Weihrich write,

"MBO, to be effective, has to be viewed as comprehensive system. It must be considered

as a way of managing, and not an addition to the managerial job."

10. Guidelines for Appropriate System:

MBO has a thrust achieved on the objectives. Therefore it provides guidelines for appropriate systems and procedures. Resources allocation, delegation of authority etc. are determined on the basis of objectives. Similarly, reward and punishment system is attached with the achievement of objectives.

Finally we can say that the salient features of MBO are - cascading of organizational goals and objectives; specific objectives for each team/group and member; participative decision making process; explicit time period deadlines; and performance evaluation and feedback.


14) Explain decision making under various conditions:

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