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Management By Objectives
Management by objectives (MBO) is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. It aims to increase organizational performance by aligning goals and subordinate objectives throughout the organization. Ideally, employees get strong input to identify their objectives, time lines for completion, etc. MBO includes ongoing tracking and feedback in the process to
Popularized by Peter Drucker in 1954. Management by objectives works if you know the objectives. Ninety percent of the time you dont.-Peter F. Drucker. MBO relies on the defining of objectives for each employee and then to compare and to direct their performance against the objectives which have been set. It aims to increase the performance of the organization by matching goals with the objectives. It focuses attention on individual achievement, motivates individual to accomplishment, and measures
Principles of MBO
Cascading
of goals and objectives Specific objectives for each member Participative decision making Explicit time period Performance evaluation and feedback
includes a reservoir of personnel data and performance information for updating their files An indicator of personnel development needs within the organization A basis for promotion and compensation Better managerial planning and use of employee
standard of evaluation is based in the characteristic of the person and the job He has as input and some control over his future He knows the standards by which he will be judged The employee has knowledge of the managers goals, priorities and deadline He has a greater understanding of where he stands with the manager in
There
is a basis for better evaluation than personality It stimulates higher individual performance and morale
Disadvantages of MBO
Development
of objectives can be time consuming, leaving both the managers and the employees less time in which to do their actual work The elaborate written goals, careful communication of goals, and detailed performance evaluation required in an MBO program increase the volume of paperwork in an organization.
Difficulty
goals Danger of inflexibility Individual over collective effort It underemphasizes the importance of the environment in which the goals are set It did not address the importance of successfully responding to obstacles and constraints as essential to reaching the goal
Strategic planning is the process through which an organization defines its strategy, direction as well as make decisions to allocate its resources. On the other hand, Operational planning is a subset of strategic work plan. It defines the short term methods of achieving the strategic objectives set while strategic planning is done.
Strategic planning is proactive in nature and spans over a long time periods usually 10 years or so. On the other hand, operational planning is also proactive but changes are made to it depending on the current requirements. They are relative short term in nature, spanning a time period of 1-3 years. Strategic decisions are fundamental and directional, and over-arching. Operational decisions, on the other hand, primarily affect the day-to-day implementation of strategic decisions.
Strategic planning is the formal planning for the future course and defines the following: - What do we do? - For whom we do it? - How do we succeed? On the other hand, operational planning defines the following: - Where are we now? - Where do we want to be? - How do we get there? - How do we measure our progress?
Effective Generals had to determine the right liens of supply decade when to fight and when not to fight, and manage the armys relationship with citizens, politicians and diplomats. Effective Generals not only had to plan but had to act as well. As far back as the ancient Greeks, then, the concept of strategy had both a planning component and a decision making or action component. Taken together these two concepts form the basis of the grand strategy plan.
A strategy is all about integrating organizational activities and utilizing and allocating the scarce resources within the organizational environment so as to meet the present objectives. Strategy is a well defined roadmap of an organization. It defines the overall mission, vision and direction of an organization. The objective of a strategy is to maximize an organizations strengths and to minimize the strengths of the competitors.
Levels of Strategy
Enterprise strategy can be formulated and implemented at three different levels: 1. Corporate level Strategy 2. Business unit level Strategy 3. Functional or operational level Strategy
It deals with the allocation of resources among the various businesss or divisions of an enterprise. At the corporate level, the decisions made are concerned principally with the corporate strategic plan and how best to develop the long-term profile of the business.
It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc.
Functional level strategies in R&D, operations, manufacturing, marketing, finance, and human resources involve the development and coordination of resources through which business unit level strategies can be executed effectively and efficiently.