Management by Objectives (MBO) was introduced to Glaxo Laboratories India in 1973 to address issues related to government policy, inflation, and internal problems. Key steps included identifying corporate objectives and work groups, setting divisional and departmental objectives, and compiling budgets. Initial implementation was slow but resistance reduced over time. A review in 1976 found improved quality of planning, attainable objectives, business results, and positive attitude toward MBO, showing its importance in running an organization successfully.

1. Department of Managem
ent & Commerce
MBA 2020-22
PRESENTATION
ON
By:- Tajalli Hera

2. MBO – Introduction
• Peter Drucker in 1954.
• Concept of planning
• Accomplishment of objectives through participation o
pation of all concerned persons
• Participative and democratic style of management
ment

3. Management by Objectives Concept
• The principle behind Management by Objectives (MBO) i
s to make sure that everybody within the organization has
a clear understanding of the aims, or objectives, of that or
ganization, as well as awareness of their own roles and r
esponsibilities in achieving those aims.
• The complete MBO system is to get managers and empo
wered employees acting to implement and achieve their p
lans, which automatically achieve those of the organizatio
n.

4. Management by Objectives Concept
• Management by objectives (MBO), also known as managemen
t by results (MBR), is a process of defining objectives within a
n organization so that management and employees agree to t
he objectives and understand what they need to do in the org
anization in order to achieve them.
• It is a systematic and organized approach that allows manage
ment to focus on achievable goals and to attain the best possi
ble results from available resources.
• The concept of MBO is closely connected with the concept of
planning.

5. Process of MBO
Set
Organizational
Objective
Set and align
employee
objectives
Setting
Subordinates’
Objectives
Monitor
Performance
Evaluate
Performance
Reward
Employee
1.Determining
Organizational
Goals
2. Determining
Employees Obj
ectives
6.The Perform
ance Appraisal
5. Providing Fe
edback
3. Matching Re
sources with O
bjectives
4. Performance
Evaluation

6. Benefits of MBO
• It emphasizes developmental human resources. and utilization of
• It identifies the problems of management, including structure, strategies
and practice.
• It focuses attention and effort on priority areas.
• Planning becomes more precise and useful.
• It makes objectives explicit and directs work activity towards their achie
vement.
• It provides clear standards of control and facilitates self control.

7. Benefits of MBO
• It sharpens accountability.
• It highlights organization. interdependence within the organization.
• MBO provides a vehicle for delegation of authority.
• It stimulates organizational change enabling the top management to initi
ate plan, direct and control the direction and speed of change by providi
ng guidelines for planned change.
• It provides clarity in organization action.

8. Benefits of MBO
• It provides greatest opportunity for personnel satisfaction by adopting p
articipatory approach.
• It establishes good interpersonal relationship between management and
employees.
• It increases efficiency of management and the organization as a whole as
the decisions are taken both by superiors and subordinates.
• It helps in coordinating the activities of different units and departments.

9. Limitations of MBO
• Difficulty in objective setting.
• It is a time consuming process especially in the initial stages.
• Lack of cooperation between superiors and subordinates can be there due
to differences in their opinions during setting objectives.
• It represents the danger of inflexibility in the organization.
• MBO can be in failure, if competent and trained managers are not available
.
• It is one of the greatest managerial illusions because it fails to take adequa
tely into account the deeper emotional components of emotions.

10. MBO in Indian Organizations
• MBO was introduced in India in the early seventies. By no
w more than fifty companies of different sizes and backgr
ounds, and belonging to different industries have experi
mented with MBO not all have been successful, but the n
umber of successes is larger than those of failures.
• Companies which have successfully implemented MBO ar
e Bharat Heavy Electricals Limited, Grindlays Bank, Blue S
tar, Shaw Wallace, and GlaxoLimited.

11. MBO in Indian Organizations
• MBO has been successfully implemented in state gove
rnment organizations such as the Tamil Nadu Dairy De
velopment Corporation, Department of Stationery and
Printing and Directorate of Industries and Commerce a
mongst others. Besides Tamil Nadu, Gujarat is the othe
r state which has enthusiastically adopted MBO.

12. Common Reasons for the Failure of MBO
• Lack of top management support and commitment
• Lack of or inadequate planning and preparation
• Lack of information and education
• Very short time horizon
• Overemphasis on appraisal
• Poor understanding of the role of M BO and
• Lack of clear-cut policy towards MBO
By avoiding the above-mentioned pitfalls, you can ensure that MB
O will be successfully implemented.

13. GlaxoSmithKline
• GlaxoSmithKline plc (GSK) is a British multinational
pharmaceutical company headquartered in London, En
gland. Established in 2000 by a merger of Glaxo Wellco
me and SmithKline Beecham, GSK was the world's sixt
h largest pharmaceutical company according to Forbes
as of 2019

14. GlaxoSmithKline
• The company developed the first malaria vaccine,
RTS,S which it said in 2014 it would make available
for five percent above cost. Legacy products develo
ped at GSK include several listed in the World Heal
th Organization’s List of Essential Medicines, Such
as amoxicillin, mercaptopurine, pyrimethamline and
zidovudine.

15. MBO Implementation in Glaxo
• Glaxo Laboratories (India) Ltd. a pharmaceutical c
ompany experiences the problem because of govern
ment policy towards multinationals, inflationary press
ures and internal organizational problems. In 1973, the
decision was taken to practice MBO with the identifica
tion of corporate objectives and key result areas. The
company adopted the group approach to set objectiv
es and 48 workgroups were identified but later reduce
d to 37.

16. MBO Implementation in Glaxo
The objective setting process involved the following ste
ps
• The corporate group issued guidelines to the divisions for expec
ted 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. Ren
ewal takes place every year.

17. MBO Implementation in Glaxo
• As the part of implementing MBO programme, the comp
any’s structure was changed from functional to division
al basis and the three operating divisions were identifie
d as pharmaceuticals, foods and chemicals. The initial p
rocess of MBO implementation was slow and encounter
ed several problems. Though there was resistance to ch
ange as the time passed, resistance reduced.

18. MBO Implementation in Glaxo
In 1976, review of company performance after the implementat
ion of MBO program was made and the success was identified
in following areas :
• The quality of contribution and division directors and their seni
or managers to the business discussion from which corporate a
nd divisional plan is evolved.
• The actual setting of objectives with attainable stretch.
• The logic, balance, and quality of expression in these plans.
• The business result of the company also improved and there de
veloped a positive attitude toward MBO.

19. IMPACTS ON GLAXO
• The above case study shows the importance of the
MBO in running the business organization successfu
lly and smoothly. The case study shows that the co
mpany’s M.D. had directors personal commitment
was of a very high quality and therefore, the proces
s succeeds