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Principles

Of 

Management-II Topic – M.B.O., skills & recruitment

Submitted t0: sumi ma’am

CASE STUDY

Magnus Ltd is an established company. It has been into consumer durable

industry since past twenty five years. Magnus Ltd has five manufacturing units

across India. Out of which the one situated in downtown Mumbai is Rs 200 crores

consumer durable manufacturing unit. It had 900 employees. The Indian rural

market is gaining immense importance and attention these days, as this market is

going under an evolutionary phase and is developing and thus is beginning to

become a demand generating centre for consumer durables. In the light of the

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situation, the visionaries of Magnus Ltd have foreseen huge demand for their 

products in rural areas and they also know that they are the most competent

company who would be able to meet the expected increase in the demand. The

management thinks that to meet the demand they will have to establish a new

production unit in the interiors of Palghar.

The entire Magnus team is channelizing its efforts and resources in

meeting this opportunity. To start the new production unit they are in immense

need of new talent and human resource, who would work at the new production

unit. But as the production unit is in the interiors they are apprehensive about the

fact that whether they would be able to get sufficient resources. Also they have

shortlisted Mr. Vijay and Mr. Suri who they think are the right persons to head the

new production unit. Mr. Vijay has been known for his achievements in theorganization. He has completed his mechanical engineering with first class. He

has been with the company since past ten years. But Mr. Vijay is not a great

leader. He is known for achieving his goals individually and is not easily

approachable, whereas Mr. Suri is in the company since past three years. Mr. Suri

is an MBA. Though he is not technically as sound as Mr. Vijay, his team is happy

with the way Mr. Suri is leading them because he motivates them by giving them

incentives, arranging social gatherings etc.

Magnus Ltd has the challenge to meet the expected demands in the rural

areas and to arrange for the required sources to do the same.

FACTS OF THE CASE STUDY :

• Magnus Ltd, an established company, been into consumer durable goods

since twenty-five years.

• Out of five manufacturing units across India, one situated in downtown

Mumbai is Rs. 200 crores consumer durable manufacturing unit having 900

employees

• The Indian rural market is going through an evolutionary phase and thus

beginning to become a demand generating centre for consumer durables.

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• The company has foreseen huge demand for their product in rural areas

and they know that they are the most competent company who would be

able to meet their demand

• The decision to establish a new production unit in the interiors of Palghar 

takes place.

• The team is channelizing their efforts and resources to meet this

opportunity.

• They are in need of new talent and human resources who would work at the

new production unit.

• They are furious about the fact whether they would be able to get sufficient

resources as the unit is in the interior of Palghar.

• Mr. Vijay and Mr. Suri who work in the company are shortlisted to head this

new production unit.

• Mr. Vijay has completed his mechanical engineering with first class. He has

been working with the company past 10 years but is not a great leader. He

is known for achieving his goals individually and he isn’t easily

approachable.

• Mr. Suri is an MBA. He is in the company since three years. He is not as

technically sound as Mr. Vijay but he is a good leader as he motivates his

team by giving them incentives, arranging social gatherings etc.

ANALYSIS:

1) How do you think MBO will help in achieving goals? Prepare a workable MBO

system.

MBO is a result-oriented process of management. Management by

Objectives (MBO) is a way of managing which focuses on the accomplishment of 

well-defined objectives rather than on tasks and activities. The specific expected

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results guide the direction of the operation and are also the standards of 

performance against which the subordinate is appraised.

MBO emphasises on participative management which motivates all

employees. MBO is based on the assumption that people perform better when

they know what is expected of them and can relate their personal goals to

organizational objectives. It tends to make each employee a manager of his or her 

own particular work. It diminishes the authoritarian practice of deciding and

telling the subordinates exactly what to do. The individual plays a greater role in

her or his work decisions and purposes. It improves the superior-subordinate

relationship is improved. The subordinate has greater freedom and plays a very

supportive role. It leads to personality development of both the superior and the

subordinate. This helps the performance to be more effective and satisfyingwhich helps in achieving the overall objectives of the organization.

M.B.O. Plan for new production unit of Magnus Ltd.

a. Establish objectives:

• To meet the increasing demand in the rural areas, Magnus Ltd had the

challenging objective to start a new manufacturing unit.

• For the convenience of distributing the goods, it was decided that the

unit would be located at Palghar.

b. Plan actions to be taken:• The unit has to start producing within a time span of three months.

• Planning recruitment procedures for employees

• Selecting prospective employees

• Arranging for the required machinery

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• Providing on-the-job training

• Arranging for accommodation and/or transportation

• Formation of departments:

➢ Production

➢ Sales

➢ Marketing

➢ Finance

c. Conduct periodic reviews:

• Incentives, bonuses & regular payments

• The units produced should be sufficient enough to meet the demands of 

the consumers.

• The unit must be established within the span of three months.

• The employees should be well-motivated by giving them incentives,

arranging for social gatherings, job enrichment, increasing the payment,

promotion, etc.

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