Super engineering company was a multi local light engineering company. It

had manufacturing facilities at Hyderabad, Pondicherry and Indore. The

company adopted budgetary system with main emphasis on production and

expense budgets. The budget target used to be sent on the basis of the analysis

of production facilities and production operations. While two units located at

Hyderabad and Pondicherry was working properly and was able to meet their

budget targets, indore unit was not able to do so. Mr. P. Manohar was

transferred to Indore unit as plant manager. He joined the company about eight

years back as engineer trainee and became the assistant plant manager at

Hyderabad unit, the biggest of three units. Mr. Manohar was very ambitious

and a little bit autocratic. He believed in the exercise of authority and control

to carry out his instructions. He was high achiever and believed in getting

things done. He got quick promotions in the company. Immediately after

joining at Indore unit as plant manager, Mr. Manohar made preliminary study

of the plant and issued instructions to all departments to increase production

by ten percent. He also instructed all supervisors to strictly adhere to budgets.

He introduced several new reports and watched the operations very closely.

He suspended two supervisors in the second month for not meeting the budget

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CO5 10targets. Subsequently two supervisors left the plant. With all his efforts, the

unit was very much on the right track and within six month exceeded the new

budgeted figures by 8%. On setting the plant right, he was called back to

Hyderabad unit as plant manger vacancy arose. However, shortly after he left

for Hyderabad, the productivity at Indore unit fell below the earlier level and

the budget was again in trouble.