Question

define the following
functional plans
MBO
mission

Answer 1

Answer:-(A)

Functional Planning:
The planning that is made to ensure smooth working of the organisation taking into account the needs of each and every department. The purpose of functional planning is to promote standardised management practices for corporate functions in the department’s decentralised corporate management structure.

The following three basic activities have to be carried out in functional planning:

(1) Functional Guidance:
Managers must be told and guided what they should be doing to properly manage corporate functions within the enterprise.

(2) Goal Setting:
Certain quantifiable goals need to be set that would measure the effectiveness of the functional planning. Goals should be meaningful, achievable and measureable.

(3) Functional Assessments:
Functional assessment wraps up the functional planning process. Here the Comparison is made between the goal setting and the goal achievement.

The functional assessment should have the following characteristics:

(i) Substantiation:
Managers who are responsible for corporate functions must explain how resources and activities devoted to their function provide support to the achievement of the corporate priorities and functional targets.

(ii) Measure of Success.
Managers responsible for corporate functions must quantifiably measure the success in meeting goals identified in their functional guidance.

(iii) Foresight:
Managers should be in a position to identify developing gaps and risks faced in their respective functional areas, along with recommendations to fill up those gaps and risks.

iv. Proactive and Reactive Planning:
Classification of planning into proactive and reactive is based on the organisation’s response to environmental dynamics. Planning is an open system approach and is affected by environmental factors which keep on changing continuously. However, organisations response to these changes differs. Based on these responses, planning may be either proactive or reactive.

(B)

Management by objectives (MBO) is the establishment of a management information system to compare actual performance and achievements to the defined objectives. Practitioners claim that the major benefits of MBO are that it improves employee motivation and commitment and allows for better communication between management and employees. However, a cited weakness of MBO is that it unduly emphasizes the setting of goals to attain objectives, rather than working on a systematic plan to do so.

In his book that coined the term, Peter Drucker set forth several principles. Objectives are laid out with the help of employees and are meant to be challenging but achievable. Employees receive daily feedback, and the focus is on rewards rather than punishment. Personal growth and development are emphasized, rather than negativity for failing to reach objectives.

Drucker believed MBO was not a cure-all but a tool to be utilized. It gives organizations a process, with many practitioners claiming that the success of MBO is dependent on the support from top management, clearly outlined objectives, and trained managers who can implement it.

KEY POINT:-

• Management by objectives (MBO) is a strategic management model that aims to improve the performance of an organization by clearly defining objectives that are agreed to by both management and employees.
• According to the theory, having a say in goal setting and action plans encourages participation and commitment among employees, as well as aligning objectives across the organization.
• The strategy was formulated by Peter Drucker in the 1950s, following five steps that organizations should follow.

Management by Objectives in Practice

• Management by objectives outlines five steps that organizations should use to put the management technique into practice.
• The first step is to either determine or revise organizational objectives for the entire company. This broad overview should be derived from the firm's mission and vision.
• The second step is to translate the organizational objectives to employees. Drucker used the acronym SMART (specific, measurable, acceptable, realistic, time-bound) to express the concept.
• Step three is stimulating the participation of employees in setting individual objectives. After the organization's objectives are shared with employees, from the top to the bottom, employees should be encouraged to help set their own objectives to achieve these larger organizational objectives. This gives employees greater motivation since they have greater empowerment.
• Step four involves monitoring the progress of employees. In step two, a key component of the objectives was that they are measurable in order for employees and managers to determine how well they are met.

(C) MISSION:-

Definition: A sentence describing a company's function, markets and competitive advantages; a short written statement of your business goals and philosophies

• A mission statement defines what an organization is, why it exists, its reason for being. At a minimum, your mission statement should define who your primary customers are, identify the products and services you produce, and describe the geographical location in which you operate
• If your review results in a revision of the statement, be sure everyone in the company is aware of the change. Make a big deal out of it. After all, a change in your mission probably means your company is growing-and that's a big deal.
• Once you have designed a niche for your business, you're ready to create a mission statement. A key tool that can be as important as your business plan, a mission statement captures, in a few succinct sentences, the essence of your business's goals and the philosophies underlying them.
• Equally important, the mission statement signals what your business is all about to your customers, employees, suppliers and the community.
• The mission statement reflects every facet of your business: the range and nature of the products you offer, pricing, quality, service, marketplace position, growth potential, use of technology, and your relationships with your customers, employees, suppliers, competitors and the community.