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MANAGEMENT BY
OBJECTIVE:
A TOOL FOR
ORGANIZATIONAL GROWTH
(A CASE STUDY
OF PONTECELLI NIGERIA LTD).
ABSTRACT
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
Certification ii
Dedication iii
Acknowledgement iv
Abstract v
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
Questionnaire
CHAPTER ONE
INTRODUCTION
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?
1.5 HYPOTHESES
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.
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