MBO review

Super Department stores’ MBO Programme

Prakash Gupta was irritated and confused, after the meeting with Dinesh Sharma. Dinesh Sharma was the regional stores Manager (in charge of stores of Noida, Faridabad and Ghaziabad), and Prakash was the chief manager of Delhi city Super Department Stores (SDS). Prakash had  received a letter from Dinesh, 3 weeks Earlier, explaning that top management  had decided on an on an MBO programme to help SDS improve its efficiency and profitability. The letter mentioned about linking stores managers’ salary hikes, promotions etc. to performance. The accompanying instructions required managers to list the objectives they objectives which were appropriate for their store and then to wait the regional manager’s review visit.

Prakash has done just what he was asked to do. In a meeting with his departmental managers, Prakash had chosen objectives that they all agreed were appropriate. All of the objectives represented performance levels that were improvements over the past year and were reasonably attainable, such as:

v Increasing sales by 10 percent.

v Reducing Inventory loss by 2 percent.

v Improving Customers services (i.e.20 percent fewer complaints made to head office).

v Reducing cash register shortages to .05 percent of sales.

Dinesh came late for the MBO review visit and stressed that there was little time. He quickly scanned the written statement of objectives which Prakash gave him, then explained that profit improvements was really what the home office was interested in. Senior management in Chennnai, running the SDS in over 18 major cities in India, decided that a 10 percent increase in profit would be a reasonable objectives for Prakash’s store. This single objectives, Dinesh explained, would facilitate the monitoring of performance by the head office and would also reduce the amount of information the store would have to submit. The visit was cut short because Dinesh had to attend a meeting on the advertising budget back at the Head office.