BBA Fundamental of Management MBO in India
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BBA Fundamental of Management MBO in India
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MBO in India Organisation Management
MBO in India Organisation
BBA Fundamental Of Management Notes
In India, there is a very limited experience of MBO. General electric company was the first organization to implement the concept of MBO though in India partially in 1969. In 1969 administrative staff college of India, Hyderabad organized top management seminar on MBO in which heads of many organization participated. Here we will discuss the examples of Glaxo and Mature coats limited, how they have implemented the MBO.
MBO at Glaxo
Glaxo Laboratories (India) Ltd. a pharmaceutical company experiences the problem because of government policy towards multinationals, inflationary pressures and internal organizational problems. In 1973, the decision was taken to practice MBO with the identification of corporate objectives and key result areas. The company adopted the group approach to set objectives and 48 workgroups were identified but later reduced to 37. The objective setting process involved the following steps :
- The corporate group issued guidelines to the divisions for expected results.
- The division indicates its capabilities as also the requirement for additional resources.
- Corporate objectives are established.
- Decisional objectives are finalized.
- Company’s budget was compiled.
- Departmental objectives are established.
- Result guides for a manager are established for three years. Renewal takes place every year.
The corporate and divisional objectives in Glaxo are established for three years. Renewal takes place every year.
The objectives of implementing MBO program, at Glaxo was to strengthen the planning and control systems at different levels and on team building and control systems at different levels and on team building and participative action planning.
As the part of implementing MBO programme, the company’s structure was changed from functional to divisional basis and the three operating divisions were identified as pharmaceuticals, foods and chemicals. The initial process of MBO implementation was slow and encountered several problems. Though there was resistance to change as the time passed, resistance reduced. In 1976, review of company performance after the implementation of MBO program was made and the success was identified in following areas :
- The quality of contribution and division directors and their senior managers to the business discussion from which corporate and divisional plan is evolved.
- The actual setting of objectives with attainable stretch.
- The logic, balance, and quality of expression in these plans.
The business result of the company also improved and there developed a positive attitude toward MBO.
MBO at Madura coats Ltd
BBA Fundamental Of Management Notes :-
Madura coats made MBO a practice in 1971. MBO was implemented throughout the company covering 130 managers ranging from the top level to assistant managers. The company took up SWOT analysis and identified twelve key result areas:
- Financial resources
- Cost reduction
- Product development
- Labour relations
- Management development
- Public image
- Development of organisation
Managerial job descriptions were defined a fresh and the emphasis was to self-control. In the second phase of MBO implementation, the modernization was dropped as a key result area and quality and marketing strategy were two new key result areas identified. The organization structure was restructured sex corporate functional departments were made. They were finance, purchase, personnel, management services, research and technical services. The revised structure caused a change in the sequence of objective setting with the following steps :
- Corporate guidelines to be issued by the managing director.
- Profit center guidelines to be issued by the respective general managers.
- Departmental objectives were set.
- Profit center group objective was set.
- Corporate objectives were set.
- Divisional objectives were set.
In July 1976, a review of MBO program was identified. It was found that systems improved and the opportunities for participation were expended. But the action planning was weak and performance review needed considerable improvement. As a result, great emphasis was given to rigorous action planning.
Process of Decision Making Steps
BBA Fundamental Of Management Notes
Decision making is a mental exercise. It is a process of selection on the best alternative for doing work. The following procedure should be followed in order to take at a correct decision.
Step 1 : Setting Objectives
Step 2 : Perception of the problem
Step 3 : Analysing the problem
Step 4 : Developing an alternative solution
Step 5 : Screening of alternative
Step 6 : Selecting the best alternative
Step 7 : Implementing the decision
Step 8 : Feedback and control
- Setting Objectives: Rational decision making involves a concrete goal of objectives. So, the first step in decision making is to know one objective. An objective is an expected outcome of future action. So, before deciding upon the future course of effort it is necessary to know what objective we are trying to achieve. So, the first step of decision making is to set the objectives.
- Perception of the Problem: Perception involves defining and recognizing the problem in a clear cut manner. A clear understanding of the real problem is the most important task in the process of decision making as the right answer can be found only with the right question.
- Analyzing the problem: After defining the problem, the next step in decision making is analyzing it. The problem should be analyzed to find out adequate background information and data relating to the situation. The problem should be divided into many sub-problems and each element of the problem should be analyzed systematically.
- Developing Alternative Solution: After defining the problem, with the help of relevant information, the decision making should formulate several alternative solutions for the problem. There is hardly any problem in the world wherein alternatives cannot be developed.
- Screening the Alternative Solution : After developing various alternatives, the next step should be to judge and evaluate them through some decision criteria. As a result of these criteria one would like to see the ideal outcome of any action taken.
- Selection the Best Solution : After evaluation of various alternatives the next step is the selection of the best solution. It requires an ability to draw distinction between seen and unseen forces, between tangible and intangible forces, between facts and guesses. In attempting to select from alternative, several basic approaches to decision making are open to the manager.
- Implementing the Decision: After taking the final decision the next problem is to put the decision into effect. These steps involve gaining acceptance of the decision by those directly influenced by it and developing control to see whether the decision is being carried out properly.
- Feedback and Control: This is the last step in the process of the right decision to follow up the decision. In spite of their best effort and analysis, managers cannot make a decision. So the management should receive continuous information and evaluate them regarding the effect of his implemented decision.
Line Organisation Advantage Disadvantage
Line organisation (BBA Fundamental Of Management Notes)
It is the basic framekwork for the whole organisation. It represents a direct vertical relationship in the organisation. This is the simplest and oldest form of internal organisation. This organisation is also known as scalar organisation. The authority flows from the top to the lower level.
The organisation is vertically structured where one person delegates authority to his subordinates and who in turn delegate to his subordinate and so on. Authority flows vertically and from top persons to all persons responsible for execution of work.
Advantages of Line organisation
BBA Fundamental Of Management Notes :-
Advantages of line organisation are as follows :
- It is simple to establish and can be easily understood by the employee.
- Line organisation helps in fixing authority and responsibility of each and every person in the organisation.
- There is effective communication. The chain of command goes from top to bottom.
- Line organisation is easy to operate and less expensive.
- As only one person is incharge of a department or division, the decisions are quick.
- Unity of command principle is followed.
- As the number of subordinates are permitted under line organisation, there is an effective control and supervision.
- It is flexible. Since, the manager has to take all important decision, he can make change if new situation arise.
Disadvantages of line organisation
Disadvantages of line organisation are as follows :
- There is excessive work. Too much is expected from the executives.
- The lack of managerial specialization.
- There is lack of coordination among various departments.
- The ultimate authority for taking all decision lies with line officer. The flow of information is downward.
Difference between Formal Organisation and Informal Organisation
|Basis||Formal Organisation||Informal Organisation|
|1. Purpose||It is created to achieve predetermined objectives.
|It has no predetermined objectives.|
|2. Structure||It is an official hierarchy of relation. It refers to the structure of well defined authority and responsibility relationship.||Its structure is based on human emotion and sentiments. It refers to the personal relationship which develop automatically when people work together.
|3. Formation||Formal relation are well planned and are created deliberately.||Informal are unplanned and they originate automatically.
|4. Focus||Formal organisation focus on authority and task.||It focus on people and relationship.
|5. Flow of authority||Authority flow from top to bottom, i.e., vertically downward.
|Authority flows vertically as well as horizontally.|
|6. Chain of command||Formal organisation follows the official chain of command which can not be changed.
|Informal organisation does not have a fixed chain of command.|
|7. Flexibility||It follows a rigid structure.||It is loosely structured. It is highly flexible.|
Delegation of Authority
BBA Fundamental Of Management Notes :-
Delegation means the assignment of work to other and conferring them the requisite authority to accomplish the work assigned. It enables the mangers to distribute their work load to other and concentrate on important functions which only they can perform better. So delegation is based on the principles of division of work between the superior and subordinate.
In the word of Theo Haimann, “Delegation means the granting of authority to subordinate to operate within the prescribed limits.”
Delegation of authority involves granting of authority to subordinate with a view to make them perform the assigned duties.
Advantages of Delegation Authority
- Reduction of work-load : Delegation lightens the burden of the top executives. it enables them to assign the routine matters to the subordinates. They can concentrate on the vital aspects of management.
- Quick decision making : The subordinate have sufficient authority to take quick decision. They need not go to their superior again and again for taking decision concerning the routine matters.
- Business growth : Delegation of authority prepares executives for the future. This help the organisation to face future challenges effectively. The business can afford to implement growth plans as managerial talent is available.
- Healthy relations : Delegation helps in maintaining healthy relationships in the organisation. The authority and responsibility of the subordinates are clearly defined. As a result conflicts are avoided.
- Technique of training : Delegation of authority allows the subordinates to take decision independently. Thus, it is a technique for developing managers for the future.
Disadvantages or Weakness Delegation Authority
There are many difficulties come in the way of effective delegation. Those difficulties may be grouped into three categories which are as follows :
- On the part of the organisation.
- On the part of the superior.
- On the part of the subordinates.
- On the part of the organisation : The difficulties on the part of the organisation includes :
- Lack of effective control mechanism.
- Defective organisation structure and non clency of authority responsibility relationships.
- Violation of unity of command principle.
- On the part of superior : Failures in delegation arises because of the following reasons :
- Lack of ability of direct.
- Lack of willingness to test subordinates.
- Lack of willingness to give subordinates a chance.
- Lack of setting control standards for subordinates.
- On the part of subordinates : Subordinates may be reluctant to accept delegation of authority due to the following reasons :
- Lack of self confidence.
- Derive to play safe by depending upon the superior for all decisions.
- Subordinates performance to depend on superior rather than to take decisions themselves.
- Lack of information and resources to use the authority and achieve desired results.
Definition Importance Nature of Organisation
Nature of Organisation (BBA Fundamental Of Management Notes)
The nature of organization is discussed as follows :
- Organising is a Basic Function of Management : It is essential for the achievement of organizational objectives. Organizing is done in relation to all other functions of management, namely : planning, staffing, directing and controlling and all the areas of business, namely : purchasing, production, marketing, financing, personnel, etc. The organizing function is performed by all the mangers.
- Organising is always related to Objectives : Whether it is organization of the entire entire enterprise or a part of it, organising is influenced by objectives. The operations are divided into suitable jobs and authority and responsibility, relationships are determined to achieve the pre-decided objectives.
- It is a Process : Organising is not a one step function. Managers and executives are continuously engaged in organising and re-organising. The nature of the process or organization has been described by Theo Haimann as follows :
“Organisation is a process of defining and grouping the activities of the enterprise and establishing authority relationships among them”
- Organisation Show a Structure of Relationship : The structure of relationship created by the management is referred to as ‘formal organisation’. But an organisation also includes the network of social relationship that arise between people working together. Such relationships are known as informal organisation. The study of both formal and informal relationship is necessary to understand the nature of any organisation.
Definitions of Organisation (BBA Fundamental Of Management Notes)
According to D.F. Farland, “an organisation is an identified group of people contributing their efforts towards the attainment of common goals.”
According to Koontz and O’Donnell, “Organisation involves for grouping of activities necessary to accomplish goals and plans, the assignments of these activities to appropriate department and the provision for authority delegation and coordination.
According to Mooney and Railey, “Organisation is the from of every human association for the attainment of a common purpose. They visualize it as the process of relating specific duties or functions in a coordinated whole.”
According to L. Urwick, “Organisation is to determine the activities to accomplish a job and arrange the distribution of activities among the people.”
Importance of Organisation
BBA Fundamental Of Management Notes :-
The importance of a sound organisation for any enterprise can hardly be overemphasised. A good organisation can contribute to the success of an enterprise in many ways. An organisation is definitely the backbone of management though which operation of an enterprise are run. It sets the relationship between people, work and resources to get production results. Organisation helps in achieving the following advantages :
- It Facilitates Efficient Management : Organising is very much necessary for the performance of other function of management like planning, staffing, directing and controlling. Poor organisation may result in duplication of work and effort. Some of the important operations may be left out for lack of efficient organisation.
- It Facilitates Better Coordination and Communication : Organisation is an important means of bringing coordination among the various departments of the enterprise. It creates clear-cut relationship between the department and helps in laying down balanced emphasis on various activities. It also provides the channels of communication for the coordination of the activities of different departments.
- It Provides for Optimum use of Technology : Sound organisation structure is flexible and gives adequate scope for the introduction of improvement in technology. It helps in introducing changes in the enterprise by modifying the authority and responsibility relationship in the wake of new developments.
- If Ensues an Optimum use of Human Resources : Sound organisation matches the job with the individuals and vice versa. It ensures that every individual is placed on the job for which he is best suited. This helps in better use of human resources working in the enterprise.
- It Helps in the Growth of an Enterprise : Without an organisation, an enterprise is just like a man without a body, leaving head and mind only. Good organisation contributes greatly to the continuity and success of the enterprise. It contributes to the growth, expansion and diversification of the enterprise.
- It Helps in Giving Reasonable Emphasis to Various Activities : Organisation divides the entire operations of an enterprise into departments and sections and lay down their goals. This clearly states the role of various departments and section toward achieving the overall goals of the enterprise.
Small organisations makes the proper arrangement of various resources and facilitates their efficient utilisation. It provides direction to the efforts of individuals and groups by concentrating upon objectives.
BBA Fundamental Of Management Notes
BBA Fundamental of Management Question Paper 2018-2020
Advantage Limitations of Budgetary Control
Advantage of Budgetary Control (Introduction Of Management
- Effective planning : Budgeting involves forecasts of future events and preparation of future courses of action. Therefore, budgetary control is a tool of planning. Budgets make plans certain and specific because they are expressed in numerical terms. They clarify the objectives and targets of the organisation and avoid uncertainty.
- Communication : Budgets are prepared with the help of feedback information supplied by lower levels of management. Every department prepares its own budgets with the consulation and participation of the departmental staff. Thus, budgetary control promotes two way communication in the organisation.
- Co-ordination : Budgetary control promotes co-ordination between different departments or divisions of the enterprise. It facilitates centralized regulation of diversified operations. The budget committee itself serves as a means of co-ordination between production, sales and other departments.
- Higher efficiency : Budgetary control is helpful in efficient use of human and physical resources. It minimizes undesirable expenditure and needless activity. It leads to continuous and planned progress of the concern. Budgetary control is an effective means of controlling costs and eliminating wastage. Budgeting promotes economy and efficiency.
- Control : Budget serve as standards for accurate measurement of the actual performance. By identifying the cause of deviations, budgetary control helps to fix responsibility and to device suitable corrective action for the future. Budgets make possible ‘management by exception.’ The top management performance and for spotting weaknesses.
- Motivation : Budgets serve as strong incentives to employees by laying down targets of performance.
- Delegation of authority : Budgeting facilitates delegation of authority because a budget provides a budget provides automatic sanction for execution of work. It lays down the limits with in which delegated authority can be use. Subordinate executive can exercise initiative and judgement with in the budgetary limits.
Limitations of Budgetary Control funda
BBA Fundamental of Management Notes :-
- Inaccuracy : Budgets are estimates of anticipated results and they involve forecasting of future events. The future uncertain and unknown. It is rarely possible to estimate the future with cent percent accuracy. Errors and bias in estimating reduce considerably the value of budgets.
- Expensive : Budgeting control involves considerable expenditure of time, money and effort. A lot of time is required in learning effective budgeting. Budgets can not give results over night and great patience is required on the part of management. Management may lose interest and confidence in budgeting if quick results are expected.
- Human factor : Budgeting require the whole hearted co-operation and active participation of people in the organisation. It is not always possible to secure the voluntary co-operation and support from all in the preparation and administration of budget.
- Danger of rigidity : In practice, budgets often tend to become rigid and it becomes extremely difficult to carry out changes in budgets to take case of changing circumstances. Budgetary limits are considered as final and little scope is left for initiative and judgement on the part of the subordinate staff. Inflexibility makes budgets unrealistic and invalid under new conditions.
- Concealment of inefficiency : There is a danger that budgets may hide and even perpetuate inefficiency. The budget for a particular period tends to become a precedent for the future. Many items which cease to be relevant are continued because of their use in previous budgets.
- Sectional outlook : Budgeting fails when departmental goals are allowed to supersede organisational objectives. Functional budgets may fail to reflect the overall goals of the enterprise. over enthusiasm may prompt department managers to present over estimates in case of departmental budgets. Very often requirements of personnel and investment are over stated.
- Not self sustaining : Budgeting is a tool of management and it can not serve as a substitute for executive judgement. Budgets by themselves neither control nor co-ordinate activities. Efficient management is required to make budgeting successful.
Essentials of Good Budgetary Control : (Requisites for Successful Budgeting) The following precautions must be borne in mind in order to avoid the dangers of budgeting and to make budgetary control effective.
- Goal orientation
- Sound forecasting
- Recording system
- Efficient organization
- Top management support
Importance Nature Elements of Direction
Elements of Direction ( BBA Fundamental of Management Notes)
Direction is a continuous process involving the following elements :
- Communication : the manager issues order and instruction to their subordinates to get work done from them. He ensure that the subordinates understand his instructions. Besides this the manager has also to provide valuable information as to how to perform their jobs.
- Leadership : by performing this function, the manager guides and influences the work of the subordinates in the desired direction.
- Motivation : Motivation means inspiring the subordinates with a zeal to work for the accomplishment of organisational objectives. The manager should motivate the subordinates to work for the achievement of organisational goals. Various kinds of incentives may be used to motivate the workers.
- Supervision : Every manager supervises his subordinates. The manger sees the performance to ensure productivity and quality, avoid wastage of time and effort.
Importance of Direction (BBA Fundamental of Management Notes)
Direction has been called the essence of management. It is an important function of every manger. This is because of the following benefits :
- Organisation Goals are Achieved : Direction is the function of guiding of every subordinates to work towards the accomplishment of organisational objectives. The workers in the organisation have to be directed what, how and when they should do. This will direct their energies towards the goals of the organisation.
- Efficiency is Ensured : The direction function involves training and guiding of the subordinates and also their supervision. This enhances their efficiency.
- Action is Initialed : All the activities of any enterprise are initiated when the direction functionis performed. Planning and organisation are preparatory function. It is the direction function that initiates actions.
- Better Human Relations are Achieved : Directing deals with the human factor, so it is a very delicate function, in order to achieve the cooperation of workers, it is essential to understand their nature and needs. Financial and non-financial incentives may be provided to the workers to satisfy their needs.
BBA Fundamental of Management Notes
Coordination has been viewed by different management experts in different ways. Henry Fayol consider coordination as a function of a manger. The modern authors view coordination as the essence of management.
Sir Henry Fayol emphasized the significance of co-ordination for the smooth working of an enterprise.
He defined as follows :
“Co-ordination harmonises, synchronises and unifies individual efforts for better action and for the achievement of the business objectives.”
Every business enterprise is divided into a number of departments and each department has number of groups and individual, synchronisation of the efforts of all the groups and individual is necessary. Thus, co-ordination is the orderly synchronization of the efforts of the subordinates for the achievement of the goals of the organisation.
Nature of co-ordination
Importance Nature Elements of Direction
BBA Fundamental of Management Notes
Co-ordination has the following features :
- Co-ordination is a managerial activity. Every manger has to take deliberate action to achieve co-ordination. In other words, coordination does not occur automatically.
- It is an orderly arrangement of the effort of all individuals and groups working in the organisation. It leads to integration of all activities in the organisation.
- Its purpose is to secure unity of action toward the common objectives. There is concerted action by all the departments as in the case of a musical orchestra to produce the desired effect.
- It is a continuous process. The need of coordination is always felt so long as the organisation is engaged in productive operation.
- Co-ordination is needed at all levels of management. It is to be achieved by all managers at all levels and not by the top management only.
- Co-ordination is the essence of managing. Each of the function of management is exercised in managing. Thus, the performance of planning, organisation, staffing, directing and controlling leads to co-ordination.
Difference between co-ordination and co-operation
(Study Material of Management)
|1. Definition||Co-ordination is a deliberate effort by a manager.||Co-operation is voluntary attitude of organisation members.
|2. Purpose||It is an orderly arrangement of group efforts to provide unity of action in the pursuit of common objectives.
|It denotes collective efforts of the groups contributed voluntarily to accomplish common objective.|
|3. Essential||It is essential where a group of people work together for a common purpose.||It is voluntary in nature. It arises out of the desire of the people to work together.
|4. Relations||It is achieved through both formal and informal relations.
|Co-operation arises out of informal relations.|
|5. Result||Co-ordination seeks whole hearted support of employees and department.
|Co-operation without co-ordination is fruitless.|
Nature Features of Management Process
BBA Fundamental of Management Notes
Features of Management Process
- Continuous Process : Management is a continuous process, i.e., its functions are repeated time and again. It does not stop anywhere. It is not confined to handing and coordination of human resources at a particular point of time. It is an on going process of planning the activities and execution of plans through organising, staffing, directing and controlling.
- Management is an Integrating Process : The essence of management is integration of human and other resources in a manner that it leads to effective performance. It brings together physical and financial resources and leads the human resources for the efficient use of non-humen resources. All these resources are properly organized and divided into various work-units for the purpose of achieving greater coordination. Management acts as the catalytic agent in getting maximum productivity of all the resources.
- Interactive Process : There is a continuous interaction between various functions of management. They are inter-dependent and inter-related. There is no rigid sequence between them. In actual practice, the management has to perform these functions continuously to achieve the objective of the units.
- Social Process : Management handles the various input that belong to the society for meeting the requirements of the society. It is called a social process because management has to deal with various social groups such as shareholders, suppliers, workers, customers etc.
Management is also called a social process because its major task of motivating and leading the human resources for the effective use of physical and financial resources.
- Direction : It is a very broad function concerned with the inter-personal relation. It includes communication with subordinates, providing them leadership and motivating them.
- Controlling : It refers to the comparing of actual performance with the plans or standard. If the result is not favourable then take the necessary steps.
Nature of Management (BBA Fundamental of Management Notes)
- Management is Purposeful : Management is a goal-oriented activity. For instance management of a business aims to satisfy the customer, to earn profit and to increase the goodwill and the image of the business. There is no need of management, if there are no pre-determined goals or objectives.
The success of management is judged by the extent to which organizational goal are achieved.
- Management is a Process : Management is a process which consists of certain functions like planning, organizing, staffing, directing and controlling. These functions require specialized knowledge and skill for their efficient performance. They are performed continuously by the by the management at all level in the organization.
- Management is a Group Activity : Management is an integral part of any group activity. It involves the use of group efforts in the pursuit of well defined goals or objectives. It can not exist independent of the group or organization it manages.
- Management is a Multi-disciplinary Subject : Though the management is a distinct discipline, it contains principles taken from many social science like anthropology, psychology, sociology, etc. So, it is a multi-disciplinary subject.
- Management is Achieving Result through Others : The management cannot do every thing themselves. They must have the necessary ability and skill to get work accomplished through the effort of others.
- Management is Universal : Management is essential for effective performance of any organized activity. Thus, it is universal in nature. The principle and techniques of management have universal applications. They can be applied to all types of organizations.
- Management is Intangible : The management has been called the unseen force, its presence is evidenced by the result of its efforts orderliness, informed employees, buoyant spirit and adequate work output. Thus feeling of management is result oriented. One may not see with naked eyes the functioning of management. But its results are apparently known. People often comment on the effectiveness of the management on the basis of the end result though they are incapable of observing it during operation.
- Management is both a Science and an Art : Management has an organized body of knowledge consisting of the well-defined concept, principle and techniques which have wide applications. So it is a science.
The applications of these concept, principles and techniques requires specialized knowledge and skill on the part of the manager. Since, the skill acquired by a management are his personal possession, management is viewed as an arts.