Forecasting and MBO
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The document discusses forecasting and management by objectives (MBO). It defines forecasting as predicting future conditions to guide activities and performance. Forecasting involves analyzing past and present data from internal and external sources. The importance of forecasting includes planning, coordination, control, and facing challenges. Limitations include assumptions and costs. MBO is a goal setting approach involving subordinates in consultation to relate individual performance to organizational goals. It aims to measure performance, foster growth, and enhance motivation. Limitations include problems setting goals and potential pressure.
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Forecasting and MBO
- 1. Forecasting: Process of predicting future conditions that will influence and guide the activities, behavior and performance Features: 1. Probability based 2. Analyze past and present 3. Specialized activity 4. Based on data collection (internal & external sources) 5. Quality depend on reliability 6. Long term and short term 7. Several types i.e. economic forecast, weather forecast, sales forecast 1 Prepared by - Rajveer Bhaskar
- 2. Importance of forecasting: 1. Key to planning 2. Means of coordination 3. Basis for control 4. Executive development 5. Facing environmental challenges Limitation of forecasting: 1. Based on assumptions 2. Not absolute truth 3. Time consuming & expensive 2 Prepared by - Rajveer Bhaskar
- 3. Steps in forecasting process: 1. Developing the ground work 2. Estimating future trends 3. Comparing actual with estimated results 4. Refining the forecast Techniques of forecasting: A. Quantitative B. Qualitative 3 Prepared by - Rajveer Bhaskar
- 4. Techniques: 1. Time series analysis – trend, sessional, cyclic and random variations 2. Extrapolation – year and sale 3. Regression analysis – advertising and sales 4. Input output analysis – sector wise (petrol consumption) 5. Econometric models – mathematical models for several parameters 6. Historical analogy – India vs US economy 7. Business barometers – consumer price index, nifty, Sensex, gross national product 8. Panel consensus – opinion polls 9. Delphi technique – blind surveys 10. Morphological analysis – technological changes 4 Prepared by - Rajveer Bhaskar
- 5. MBO: Rational & systemic approach for goal setting in consultation with subordinate and contribution of each individual judged in terms such goals. Objectives of MBO: 1. Measure & judge performance 2. Relate individual performance to organizational goals 3. Job done and expectations 4. Foster increasing competence & growth of subordinates 5. Enhance communication 6. Judgment basis for salary & promotion 7. To stimulate motivation 8. Device for organizational control & integration 5 Prepared by - Rajveer Bhaskar
- 6. Features of MBO: 1. Goal orientated 2. Participation & contribution 3. Blend & balance the goals 4. Dynamic system (company need & personal development) 5. Attain maximum result from available resources 6. Linkage between organizational & individual goals 7. Continuous process of goal setting, periodic appraisal & modification of goals & performance 8. Set evaluation mechanism 6 Prepared by - Rajveer Bhaskar
- 7. 7 Steps in MBO 1. Preliminary goal setting 2. Setting subordinates objectives 3. Recycling objectives 4. Action planning 5. Periodic performance review 6. Final appraisal Prepared by - Rajveer Bhaskar
- 8. 8 Advantages of MBO: 1. Improved planning 2. Team work 3. Effective self control 4. Objective appraisal 5. Motivation & morale Prepared by - Rajveer Bhaskar
- 9. 9 Limitation of MBO: 1. Goal setting problems 2. Time consuming 3. Increased paperwork 4. Pressure oriented 5. Undermining leadership 6. Participation problem 7. inflexibility Prepared by - Rajveer Bhaskar