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Questions and Answers
What is the first step in the Management by Objectives (MBO) process?
Which of the following is a potential disadvantage of the MBO approach?
How does the MBO process improve planning within an organization?
What may happen if goals in the MBO process are rigidly adhered to despite changes in the environment?
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In the planning process, what do profit satisficing objectives seek to achieve?
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What is the primary aim of conducting a SWOT analysis in an organization?
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In the context of business-level strategies, what does the Prospector strategy primarily focus on?
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What is meant by corporate strategies within an organization?
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In the tactical planning stage, what is a key characteristic of the plans developed?
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Which area is NOT typically included in the resource profile for internal analysis?
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Study Notes
Management by Objectives (MBO)
- MBO is an approach to setting and achieving objectives, often used with planning.
- Employees set their own goals within a framework provided by management.
- Steps in MBO:
- Set performance standards for employees.
- Employees propose their goals based on exceeding standards.
- Goals become quantified with timeframes agreed upon by both employee and manager.
- Performance reviews happen at set intervals, providing feedback.
- Manager's role is to guide employees towards achieving goals.
- MBO needs full organizational support and consistent monitoring.
- MBO requires skilled managers.
Advantages of MBO
- Clear employee understanding of goals.
- Improved planning through better communication and commitment.
- Easier control due to established standards.
- Increased employee motivation from input in decision-making.
- Simplified employee appraisal.
Disadvantages of MBO
- Employees may feel pressured or coerced.
- Focus on objectives may lead to conflicting goals.
- Emphasis on measurable objectives might neglect crucial ones.
- Agreements can become inflexible if conditions change.
- Resentment and lack of commitment may arise from imposed goals.
The Planning Process
- The planning process has six stages:
- Define corporate objectives (two types: profit maximisers and profit satisficing).
- External and internal analysis (SWOT analysis).
- Revise objectives.
- Develop strategic plans (corporate and business levels).
- Develop tactical plans.
- Implement operational plans, incorporating regular review meetings for feedback.
Strategy
- Business-level Strategies (Miles and Snow):
- Prospector: Explores new markets, embraces change.
- Defender: Protects existing operations, avoids high risk.
- Analyser: Maintains current markets and customers, balances innovation.
- Reactor: Responds to market changes, late to adapt.
- Generic Strategies (Porter):
- Differentiation: Unique products/services.
- Cost Leadership: Lowest cost products/services.
- Focus: Specific market segments.
Corporate-Level Strategies
- Related Diversification: Similar products/services in same market.
- Unrelated Diversification: Diverse products/services across markets.
Boston Consulting Group (BCG) Matrix
- Framework for evaluating diversified businesses.
- Considers market growth rate and market share.
- Categories:
- Stars (high growth, high market share).
- Question Marks (high growth, low market share).
- Cash Cows (low growth, high market share).
- Dogs (low growth, low market share).
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Description
This quiz covers the concept of Management by Objectives (MBO), detailing its steps, advantages, and disadvantages. Understand how MBO helps in setting goals collaboratively between management and employees. Explore its implications on employee motivation and performance evaluation.
