Omega Supermarkets
Omega Supermarkets is a chain of thirty successful supermarkets in medium-sized cities in the
Southwest. It has been the company’s policy to have one leading store in cities with a population
of approximately 50,000 to 100,000 people. In each city, large, attractive stores have been
developed that provide complete product lines of food and related products sold at competitive
prices. Recently, the company had to close a few poorly located stores. Over the years it has
relied on the instincts of its president and founder, George Nagel, the most decisions, including
where to locate stores. All in all, the company’s profit record indicates that his judgment has
generally been correct during the company’s twenty-five-year history.
George’s daughter Lesley recently graduated from a university with a degree in business
administration and joined the company as assistant to the president. Her major responsibility
involved developing a “system for planning”.
Lesley’s management courses had stressed the importance of planning. Her summers spend
working at various company stores reinforced her conviction that a more formalized planning
effort was needed because no a day seemed to go by without some “fires having to be put out.”
The more Lesley thought about it, the more she felt that management by objectives (MBO) was a
technique that could be useful not only in determining new store locations, but also in planning
day-to-day store operations.
Lesley discussed her ideas with her father, who responded, “MBO is nothing new here, we have
always had important company objectives that everyone strives to meet. As you know, I expect
$15 million in sales, a profit on sales before taxes of 2 percent, a return on investment of 15
