Presentation on:

Managment By Objective, Decision Making & Problem Solving

By group 1

Main Overview
MBO(

Managment By Objective) Making Solving

Decision Problem

Overview
MBO

What is MBO? Managerial focus Where to use MBO MBO principles

Management By Objective

What is MBO?

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. Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book 'The Practice of Management'. In the 90s, Peter Drucker himself decreased the significance of this organization management method, when he said: "It's just another tool.

Management by Objectives works if you know the objectives, 90% of the time you don't."

Core Concepts of MBO

According to Drucker managers should "avoid the activity trap", getting so involved in their day to day activities that they forget their main purpose or objective. Instead of just a few top-managers, all managers should participate in the strategic planning process, in order to improve the implement ability of the plan, and implement a range of performance systems, designed to help the organization stay on the right track.

Managerial Focus

MBO managers focus on the result, not the activity. Management by Objectives (MBO) is about setting yourself objectives and then breaking these down into more specific goals or key results.

Where to Use MBO

The MBO style is appropriate for knowledgebased enterprises when your staff is competent. It is appropriate in situations where you wish to build employees' management and self-leadership skills and tap their creativity, tacit knowledge and initiative. Management by Objectives (MBO) is also used by chief executives of multinational corporations (MNCs) for their country managers abroad.

Individual Responsibility

Management by Objectives (MBO) creates a link between top management's strategic thinking and the strategy's implementation lower down. It is especially important for knowledge-based organizations where all members have to be able to control their own work by feeding back from their results to their objectives. Management by objectives is achieved through the tool of effectiveness. Today the worker is a self-manager, whose decisions are of decisive importance for results.

MBO Principles
Cascading of organizational goals objectives Specific objectives for each member Participative decision making Explicit time period Performance evaluation and feedback and

MBO Strategy : Three Basic Parts

All individuals within an organization are assigned a special set of objectives that they try to reach during a normal operating period. These objectives are mutually set and agreed upon by individuals and their managers. Performance reviews are conducted periodically to determine how close individuals are to attaining their objectives. Rewards are given to individuals on the basis of how close they come to reaching their goals.

Decision Making

overview
What is decision making? High quality decision making Relationship between planning & decision making OODA loops Case study

Decision Making
Decision Making The process of selecting an alternative course of action that will solve a problem.

Decision-Making Structure

Making High Quality Decisions:

Relationship Between Planning & Decision Making:

Planning & decision making are closely related to each other. Both of them involves: Mental processes- reasoning & judgement. Both are goal oriented. Ongoing or continuous processes. Choice among alternative courses of action. Information about internal & external environment of the organization.

Avoidable steps in the process of Decision making

ANCHORING Many people give disproportionate weight to the first information they receive. STATUS QUO Maintain status quo in decision making only if the objective any decision is achieved, otherwise explore the best available alternatives/options to achieve the target.

CONFIRMING EVIDENCE For best decision, the available evidence validating decision should be considered and examined taking into account all the factors which are likely to affect the decision.

Decision Making Model : OODA Loops

Understanding the OODA Loop model:

The model outlines a four-point decision loop that supports quick, effective and proactive decision-making. The four stages are:

o Observe collect current information from as many sources as practically possible.

o Orient analyze this information, and use it to update your current reality. o Decide determine a course of action.
o Act follow through on your decision.

Case Study On Decision MakingA Hair Care Salon Discovers The Beauty Of Effective Pricing:
With business down & consumer buying habits changing, an owner & franchiser of hair care saloons looked at pricing optimization as a way to improve profitability .

Reduced customer traffic & significant changes in consumer purchasing behaviour was hurting the top line revenue throughout the companys saloon divisions.

 The company took the decision of making changes in its product pricing policies with the motive of improving its profitability. Deloitte practitioners assisted the company in their efforts to analyses the pricing of 3 brands across 9 product categories. Deloitte helped them develop demand elasticity models to identify prices that would enhance gross margins. The group of saloons who were tested with these price changes produced a 1.6 % gross margin improvement = $2 million annual increase from just 3 hair care brands.

Problem Solving

Overview
What is problem solving? Why People Fail To Solve Problems Effectively Step in problem solving Creative problem solving Process of creative problem solving

Problem Solving
Problem

A situation that exists when objectives are not being met.

Problem

solving The process of taking corrective action to meet objectives.

Why People Fail To Solve Problems Effectively

not

being methodical

lack

of commitment to solving the problem problem

misinterpreting the

lack

of. knowledge of the techniques and processes involved in problelI1 solving

inability

to use the techniques effectively

inaccurate information

insufficient or inability

to combine analytical and creative

thinking
failure

to ensure effective implementation.

Remember
A

problem exists when an obstacle prevents you reaching an objective. solving can be divided .into stages, which you. must follow methodically. if you want to be sure of finding an effective solution. problems effectively requires a controlled mixture of analytical and creative thinking skills.

Problem

Solving

Steps in problem solving

Creative problem solving

creative problem solvinglooking at the same thing as everyone else and thinking different

Process of CPS

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