BBA Study Material MBO in India Organisation Management

BBA Study Material MBO in India Organisation Management

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BBA Study Material MBO in India Organisation Management
BBA Study Material MBO in India Organisation Management

MBO in India Organisation (BBA Study Material Management)

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 (BBA NOTES Fundamental of Management)

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 :

  1. The quality of contribution and division directors and their senior managers to the business discussion from which corporate and divisional plan is evolved.
  2. The actual setting of objectives with attainable stretch.
  3. 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

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:

  1. Profitability
  2. Financial resources
  3. Cost reduction
  4. Expansion
  5. Modernization
  6. Product development
  7. Labour relations
  8. Planning
  9. Management development
  10. Public image
  11. Ext0ernal
  12. 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 :

  1. Corporate guidelines to be issued by the managing director.
  2. Profit center guidelines to be issued by the respective general managers.
  3. Departmental objectives were set.
  4. Profit center group objective was set.
  5. Corporate objectives were set.
  6. 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 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

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.

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Montey Parjapati



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