MBO is a management system in which each member of the organisation effectively participates and involves himself. This system gives full scope to the individual strength and responsibility. MBO harmonises the goal of an individual with the organisation's goal.

George Odiorne.

Management by Exception.

Initially, organisational objectives are framed by the top level employees of an organisation. Then it moves downwards

(i)  KRA means Key result areas. Key Result area are fixed on the basis of organisational objectives premises.
(ii) Key Result Areas are arranged on a priority basis. KRA indicates the strength of an organisation.
(iii) The examples of KRA are profitability, market standing, innovation etc.

(i) It saves the time of managers because they deal only with exceptional matters. Routine problems are left to subordinates.
(ii) It focuses managerial attention on major problems. As a result, there is better utilisation of managerial talents and energy.

The advantages of MBO are
(i) MBO gives the criteria of performance, It helps to take corrective action
(ii) MBO process helps the managers to understand their role in the total organisation.

(i) Management by exception is an important principle of managerial control suggested by the classical writers on management.
(ii) It is a style of business management that focuses on identifying and handling cases that deviate from the norm.

The objectives of MBO are ;
(i) to measure and judge performance.
(ii) to relate individual performance to organisational goals

Professor Reddin defines 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".