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MANAGEMENT BY OBJECTIVE:
A TOOL FOR ORGANIZATIONAL GROWTH
(A CASE STUDY OF PONTECELLI NIGERIA LTD).
The study examines “Management by Objectives: A tool for organizational growth’ with focus on pontecilli Nigeria Limited, Port Harcourt. The sample were drawn from four (4) departments in the company namely fiancé and administration production, marketing, and purchasing. The experimental design was used as the research design. Hypotheses were put forward and tested with the Spearman’s co-efficient of rank correlation (rs). The findings were that co-operation enables company to achieve profitability because specialization enables the organizational members to work in accordance with their skills, secondly, it was found out that teamwork enhances market share. This is because the MBO process assigns duties collectively to an employee’s area of responsibility serves as a guide for assessing the results expected, and the allocation of responsibility serves as a guide for assessing the contribution of each of the employee’s results. There is a significant relationship between specialization and return on investment, and there is a realization relationship between direction and market share realization. It was also concluded in the study that first, management by objective enables organizations to set goals and assign these goals to organizational members, secondly, management by objectives enables superior manages and subordinates objectives for the achievement of set targets superior managers should get goals for subordinates and evaluate their performance; and lastly, every member of the organization should participate in the strategic planning processing so as to keep the organization on the right tract.
TABLE OF CONTENTS
Title Page i
Table of Contents vi
CHAPTER ONE: INTRODUCTION
1.1 Background to the study 1
1.2 Statement of the problem 2
1.3 Purpose of the study 4
1.4 Research questions 5
1.5 Hypotheses 6
1.6 Significance of the study 6
1.7 Definition of terms 7
1.8 Scope and limitations of the study 8
1.9 organization of the study 10
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction 12
2.1 the concept of management by objectives (MBO) 13
2.2 features of management by objectives 16
2.3 advantages of MBO 17
2.4 Application of MBO Process 18
2.4.1 organization objectives setting 18
2.4.2 manager objectives 19
2.4.3 objectives review 21
2.5 implementation of MBO 22
2.6 employee satisfaction 23
2.6.1 factors that influence employee job satisfaction 24
2.7 overview of ponticelli Nigeria Limited 26
2.8 Summary 27
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction 31
3.1 Research design 31
3.2 Sampling procedure and sample size determination 33
3.3 Data collection methods 35
3.4 Operational measures of variables 35
3.5 Test of validity and reliability 36
3.6 Data analysis techniques 37
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.0 Introduction 40
4.1 Questionnaire distribution and collection 41
4.2 Data presentation and analysis 42
4.3 Testing the hypotheses 48
CHAPTER FIVE: DISCUSSION, CONCLUSION AND RECOMMENDATION
5.0 Introduction 59
5.1 Discussion of findings 59
5.2 Conclusions 62
5.3 Implication for research findings 62
5.4 Recommendations 64
5.5 Suggestions for further studies 64
1.1 BACKGROUND OF THE STUDY
Over the years, several researches have focused on management by objective (MBO). Like many constructs in management theory, the concept of management by objective has been conceptualized and measured is diverse ways. Some of the conceptual analysis indicated that management by objectives is a goal setting technique used in organizations which attempts to align personal with business strategy by increasing communications and shared perceptions between the manager and subordinates, either in individually or as a group, and by reconciling conflict where it exists (Cummings and Worley, 1993:397). To Awujo, (1994:34), management by objective is an organization wide planning system in which top management typically defines the general objectives it wishes to achieve within a given period. Previous studies have also demonstrated that management by objective is a way of improving results of managers, where managers are made to be aware of what they ought to do (Drucker, 1954:37 and Nwachukwu 2006:201).
Most researchers of management by objective treat the concept as goal setting where all through the hierarchy of management employees are assigned with different roles to be performed for the achievement of set goals or objectives (Desseler, 1985:43).
Specifically, all organizations have goals and objectives; all managers have goals and objectives. In many instances, misunderstanding between managers and sub-ordinates exists as to what those objectives are management by objective (MBO) is an approach to resolving these differences in perceptions and goals.
Thus, management by objective is seen as a systematic and periodic manager subordinate meeting designed to accomplish organizational goals by mutual planning of the work, periodic reviewing of accomplishment, and mutual solving of problems that arise in course of getting the job done. Hence, this study is intended to examine “Management by Objective: A tool to Organizational Growth” with focus on Ponticelli Nigeria Limited.
1.2 STATEMENT OF THE PROBLEM
Management by objective (MBO) has been the focus on many studies in the literature of management for the past 25 years. This attention is likely due to manifold reasons: the need to accomplish organizational task efficiently and effectively for the realization of corporation goals or objectives, and the need to improve performance.
Specifically, organizations need to establish objective in eight key areas” “market standing, innovation, productivity; physical and financial resources, profitability, manager performance and development, worker performance and attitude and public responsibility. Thus, in order to adequately improve the key areas of an organization, there must be the cooperation of the superior and subordinate managers to jointly identify the common goals of the organization. Based on this, this study will ascertain why is it necessary for employees to identify the major areas of responsibility for improvement? Does the organization provide measures to monitor the achievement of their objectives? Is the role of goal setting meant for all organizational members? How can organizations evaluate their performances to ascertain if they confirm with established objectives of management programme to be inter-connected among organizational members?
According to Awjo (1994:29), evidence has shown that organization come into being when there are persons who are willing to contribute action to accomplish a common purpose. A manager, in the first place, sets objectives. The manager determines what the objectives should be. The manager, in the first place, sets objectives. The manager also determines what the goals in each area of the objective should be, and decides what has to be done to reach these objectives. Thus, an essential ingredient of an efficient organization is the presence of objectives. These are simple goals that the organization wants to attain. Some of the more common objectives among business firms are growth, survival, and profit.
As a matter of fact, the identification of objectives is to ensure a successful organization (Hodgetts, 1981:29, and Tamunomiebi, 1998:24). However, without objectives an organization will lack direction and be unsure of the activities it should carry out. It should be noted that objectives or goals are plans and that they involve they are also end points of planning. Thus, organizations need to implement the process of management by objectives as a tool to organizational growth so as to gain competitive advantage and achieve set objectives, and enhance corporate performance. Hence, this study will investigate “Management by objective: A tool to organizational growth”.
1.3 PURPOSE OF THE STUDY
According to Tamunomiebi (1998:24), evidences have shown that by the application of management by objective (MOB) principle, an organization is able to have direction and be sure of the activities it should be involved in so to achieve set goals. Thus, the specific objectives of this study are:
i) To identify the benefits to be derived from cooperation in an organization.
ii) To examine how teamwork can enhance corporate performance
iii) To investigate how direction can achieve set targets.
iv) To assess the systematic ways by which responsibility can enhance corporate objective.
v) To explicitly investigate into the measures by which organizations measures performance.
1.4 RESEARCH QUESTIONS
In view of the objectives of the study, this is to investigate management by objective: A tool to organizational growth, the following key questions will be asked. They are:
1. To what extent can o-operation determining organizational profitability?
2. What is the relationship between specialization and return on investment?
3. To what extent can teamwork enhance market share?
4. What is the relationship between direction and sales volume realization?
5. To what extent can the establishment of objectives in hierarchy enhance performance?
Using the literature review and the research questions as the backbone to the study, the following hypotheses were developed.
H01: There is no significant relationship between co-operation and profitability.
H02: There is no significant relationship between specification and return on investment.
H03: There is no significant relationship between direction and sales volume realization.
1.6 SIGNIFICANCE OF THE STUDY
This study is carried out with a view to increasing the wealth of knowledge accumulated so far on the subject matter-Management by Objective. The study will specifically determine how the use of management by objective can enable organizations to specify their aims and objectives based on their vision and mission statements. The complete MBO system is applied to get managers and empower employees acting to implement and achieve their plans which automatically achieve those of the organization.
MBO managers focus on result, and not activity. Thus, the MBO manages delegates’ tasks by negotiating a contract of goals with their subordinates without dictating a detailed roadmap for implementation. Management by objective (MBO) is about setting objectives and meeting up with specific goals for key results. Based on this, MBO aims to increase organizations performance by aligning goals and subordinates objective throughout the organization.
Holistically, the study will be of great importance to managers of every level in an organization. It will also be useful for those who are carrying out research on management theory, human resources management, and organizational behaviour. The study will also provide resources owners, student, lecturers, in the field of management theory the relevant knowledge and information on the application of management by objective techniques for the achievement of set goals.
1.7 DEFINITIONS OF TERMS
To avoid possible confusion in this study, seven key terms as they relate to this research will be operationally defined.
Management: The use of people to achieve set goals.
Objective: A set plan of action.
Management by objective (MBO): A systematic way in which superior and subordinate managers jointly contribute to corporate goals.
Tool: An implement for performing work.
Organization: A group of people working together for a common goal.
Organizational: Connected to an organization with group of people working together for a common goal.
1.8 SCOPE AND LIMITATIONS OF THE STUDY
For the purpose of achieving the required focus of the study, the activities of Pontecelli Nigeria Limited in Port Harcourt from 1985-2010 in terms of the influences of management by objectives on the growth of organization will be investigated.
Specifically, this study will investigate the functional departments of Pontecelli Nigeria Limited in Port Harcourt, which includes production, marketing, finance and administration, and purchasing.
In the process of carrying out this study, the research encountered some limitations and constraints. A limitation would be any constraint beyond the ability of the researcher’s control that may affect the internal validity of the study. The internal validity of an experiment is the extent to which extraneous variables have been controlled by the researcher, so that any observed effect can be attributed solely to the treatment of the variable (Gall, et al 1996:96).
This study is supposed to cover all the functional departments of Ponteceilli Nigeria Limited operating in Port Harcourt so as to collect adequate data on the interactive relationship of management by objective and organization growth. This intended scope could not, however be attained due to cost collecting data and considering the time available for the research.
The case study will cove four key functional areas in Pontecelli Nigeria Limited: production, marketing, finance and administration, and purchasing departments. This is based on the spatial distribution of the functional departments of Pontecelli Nigeria Limited in Port Harcourt will be generalized to be true representation of other companies not covered in this study.
Another limitation was the attitude of some manages of Ponteclli Nigeria Limited towards giving out information in good time. Besides, most of the managers are very reluctant to part with information about their jobs for fear of giving vital information to competitors. All these frustrated the efforts of the researcher to retrieve the entire questionnaire that were distributed. These limitations notwithstanding, the sample technique adopted for this study will provide valuable findings that will make it add some information to the already existing body of knowledge.
1.9 ORGANIZATION OF THE STUDY
This study is organized in five chapters. Chapter one provides the introductory aspect of the study, which is divided into the background of the study, statement of the problem, purpose of the study and research questions. Others are: hypotheses, significance of the study, definition of terms and scope and limitations of the study.
Chapter two deals with the review of related literature on the subject matter.
Chapter three attempts to describe the research methodology, here, emphasis will be made to describe the research design, sampling procedure and sample size determination, data collection methods, operational measures of the variables, and data analysis techniques.
Chapter four deals with the presentation and analysis of data.
Chapter five presents the discussion, conclusions, implication of the research findings and the recommendations as well as the suggestions for further studies.