25 extra multiple-choice questions for Management by Objectives (MBO) and Management by Exception (MBE) (12th Standard Commerce, Samacheer Kalvi), beyond the ones printed in the textbook — each with the correct option highlighted and a clear, worked explanation. Free to read in English and Tamil.
Q1
Who defined MBO as "the establishment of effective standards for managerial positions and the periodic conversion of those into measurable time bound objectives linked vertically and horizontally and with future planning"?
- A. George Odiorne
- B. Prof. ReddinCorrect
- C. Henry Fayol
- D. F.W Taylor
Explanation. Section 3.01 gives this definition to Prof. Reddin. George Odiorne, who popularised MBO in the USA, defined it as superiors and subordinates jointly identifying common goals.
Q2
According to George Odiorne, under MBO the common goals of an organisation are jointly identified by
- A. the shareholders and the board of directors
- B. the superior and the sub-ordinate managersCorrect
- C. the top management and the government
- D. the workers and their trade union
Explanation. Odiorne describes MBO as a system in which the superior and sub-ordinate managers jointly identify common goals and define each individual's major area of responsibility in terms of expected results.
Q3
MBO harmonises the goal of an individual with
- A. the goal of the competitors
- B. the goal of the government
- C. the organisation's goalCorrect
- D. the goal of the customers
Explanation. Section 3.01 states that MBO harmonises the goal of an individual with the organisation's goal, creating self-control and motivating the manager into action.
Q4
Which one of the following is NOT listed in the book as an objective of MBO?
- A. To measure and judge performance
- B. To serve as a basis for judgements about salary and promotion
- C. To increase the span of control by dealing only with exceptionsCorrect
- D. To serve as a device for organisational control and integration
Explanation. Section 3.02 lists measuring performance, salary and promotion judgements and organisational control among MBO's objectives. Dealing only with exceptions and widening span of control are advantages of MBE.
Q5
How many steps does the book list in the process of MBO?
- A. Five
- B. Six
- C. Seven
- D. EightCorrect
Explanation. Section 3.04 explains eight steps, from defining organisational objectives (step 1) to reappraisal of objectives (step 8).
Q6
Which of the following is given in the book as an example of a Key Result Area (KRA)?
- A. Market standingCorrect
- B. Periodical review meeting
- C. Delegation of authority
- D. Job enrichment
Explanation. Under Fixing Key Result Areas, the book names profitability, market standing and innovation as examples of KRA. KRAs are arranged on a priority basis and indicate the strength of an organisation.
Q7
Arrange the following steps of the MBO process in the correct order:
1) Matching resources with objectives
2) Fixing key result areas
3) Periodical review meeting activities
4) Setting subordinate objectives or targets
- A. 2, 4, 1, 3Correct
- B. 4, 2, 1, 3
- C. 2, 1, 4, 3
- D. 1, 2, 4, 3
Explanation. The MBO process runs: fixing key result areas (step 3), setting subordinate objectives (step 4), matching resources with objectives (step 5) and periodical review meeting activities (step 6).
Q8
In the MBO process, organisational objectives are initially framed by
- A. the subordinates, and then move upwards
- B. the top level employees, and then move downwardsCorrect
- C. the supervisors and foremen, and then move upwards
- D. outside consultants, and then move downwards
Explanation. In step 1 of MBO, organisational objectives are framed by top level employees and then move downwards. Long-term objectives are framed first, then short-term ones.
Q9
In which step of MBO do the superior and subordinates meet from time to time to discuss progress, where the fixed standards may be changed but the basic conditions do not change?
- A. Appraisal of activities
- B. Periodical review meeting activitiesCorrect
- C. Reappraisal of objectives
- D. Goals of each section
Explanation. Step 6, periodical review meeting activities, is held during the period set for achieving objectives. Standards may be changed in the light of progress, but basic conditions stay the same.
Q10
If certain resources such as technical personnel or scarce raw material are not adequately available, what does the MBO process require?
- A. The subordinates are replaced
- B. The objectives of the organisation are changed accordinglyCorrect
- C. The periodical review meeting is cancelled
- D. The key result areas are abolished
Explanation. Under step 5, matching resources with objectives, objectives are framed on the basis of available resources. If technical personnel or scarce raw material are short, the objectives are changed accordingly.
Q11
In the appraisal of activities step of MBO, who should take corrective action?
- A. The superiorCorrect
- B. The customers
- C. The shareholders
- D. The trade union
Explanation. At the end of the fixed period, superior and subordinates discuss performance against standards. The superior should take corrective action, find the reasons for failure and tackle the subordinates' problems.
Q12
Why is reappraisal of objectives, the last step of MBO, needed?
- A. Because subordinates always set low standards
- B. Because an organisation is a part of a dynamic world and conditions changeCorrect
- C. Because the law requires objectives to be changed every year
- D. Because key result areas cannot be measured
Explanation. Step 8 says an organisation is part of a dynamic world with many changes in a short period, so top management should review objectives and frame them to suit the changing situation.
Q13
Consider the following statements about the features of MBO:
1) It tries to combine the long run goals of the organisation with short run goals.
2) It tries to relate organisation goals with society goals.
3) It aims at replacing consultations with the exercise of authority.
Which of the statements given above is/are correct?
- A. 1 only
- B. 1 and 2 onlyCorrect
- C. 2 and 3 only
- D. 1, 2 and 3
Explanation. Features 2 and 3 in Section 3.03 match statements 1 and 2. Statement 3 is reversed: MBO aims at replacing the exercise of authority with consultations.
Q14
Assertion (A): Under MBO, decisions are taken by the management very quickly.
Reason (R): Each worker knows the purpose of taking a decision and does not oppose the decision.
- A. Both A and R are true, and R is the correct explanation of ACorrect
- B. Both A and R are true, but R is not the correct explanation of A
- C. A is true, but R is false
- D. A is false, but R is true
Explanation. Advantage 11 of MBO says decisions are taken very quickly, and gives the reason that each worker knows the purpose of the decision and does not oppose it. So R explains A.
Q15
According to the book, MBO emphasises only on __________ objectives.
- A. long-term
- B. short-termCorrect
- C. social
- D. personal
Explanation. Disadvantage 3 of MBO (3.06) says it emphasises only short-term objectives and does not consider long-term objectives.
Q16
Pick the odd one out with respect to the disadvantages of MBO.
- A. It is a time consuming process
- B. It needs heavy paper work
- C. It is a rigid one
- D. It makes systematic evaluation of performanceCorrect
Explanation. Time consumption, heavy paper work and rigidity are listed as disadvantages of MBO. Systematic evaluation of performance is listed among its advantages (3.05).
Q17
MBO motivates the workers by __________ and makes the jobs meaningful.
- A. job enrichmentCorrect
- B. heavy paper work
- C. close supervision
- D. strict control
Explanation. Advantage 9 of MBO says it motivates workers by job enrichment and makes their jobs meaningful.
Q18
Management by exception is based on the belief that
- A. an attempt to control everything results in controlling nothingCorrect
- B. every decision must be taken by the subordinates
- C. objectives should be set only by the workers
- D. short-term goals matter more than long-term goals
Explanation. Section 3.07 says MBE, a principle of managerial control suggested by classical writers, rests on the belief that trying to control everything ends in controlling nothing.
Q19
In the book's example, the quality standard allows five defects per 100 units produced. When is the matter reported to the production manager?
- A. Whenever there is even one defect
- B. When the defects are exactly 5
- C. When there are more than 5 defectsCorrect
- D. Only at the end of the year
Explanation. As long as defects do not exceed 5 per 100 units, supervisors or foremen handle them. More than 5 defects is an exception, so it is reported to the production manager.
Q20
In the process of MBE, what happens when the actual performance deviates significantly from the norm?
- A. No action is required
- B. The issue is passed to the senior managers as an exception has occurredCorrect
- C. The norms are cancelled
- D. The subordinate is promoted
Explanation. Section 3.08 says that with little or no deviation no action is needed, but a significant deviation is passed to senior managers as an exception, to be solved immediately.
Q21
Which of the following is NOT given in the book as a cause of general business exceptions?
- A. Process deviation
- B. Infrastructure or connectivity issues
- C. Malformed data
- D. Job enrichmentCorrect
Explanation. Section 3.07 lists process deviation, infrastructure or connectivity issues, external deviation, poor quality business rules and malformed data as causes. Job enrichment is an MBO advantage.
Q22
Under MBE, top management concentrates on strategic decisions and leaves operational decisions to the lower levels. This leads to an increase in
- A. span of controlCorrect
- B. paper work
- C. the number of exceptions
- D. the cost of production
Explanation. Advantage iii of MBE says it facilitates delegation of authority; leaving operational decisions to lower levels increases the span of control and motivates and develops subordinates.
Q23
What is the main disadvantage of MBE according to the book?
- A. It wastes the time of managers
- B. Only managers have power over really important decisions, which can demotivate lower-level employeesCorrect
- C. It cannot separate important information from unimportant information
- D. It ignores critical problems
Explanation. Section 3.10 names the main disadvantage: only managers hold power over really important decisions, which can be demotivating for employees at a lower level.
Q24
Which of the following is an advantage of MBE rather than of MBO?
- A. The responsibility of a worker is fixed
- B. It saves the time of managers because they deal only with exceptional mattersCorrect
- C. A department does not work at cross purpose with another
- D. Managers recognise the need for planning
Explanation. Saving managers' time by leaving routine problems to subordinates is advantage i of MBE (3.09). The other three are advantages of MBO listed in 3.05.
Q25
Match the following:
a) George Odiorne - 1) Profitability, market standing, innovation
b) Key Result Areas - 2) Handling cases that deviate from the norm
c) MBE - 3) Eighth step of the MBO process
d) Reappraisal of objectives - 4) Popularised MBO in the USA
- A. a-4, b-1, c-2, d-3Correct
- B. a-4, b-2, c-1, d-3
- C. a-1, b-4, c-2, d-3
- D. a-4, b-1, c-3, d-2
Explanation. Odiorne popularised MBO in the USA; profitability, market standing and innovation are KRA examples; MBE handles cases deviating from the norm; reappraisal of objectives is step 8 of MBO.
