Modern Theories of Organization
Modern organization theories are classified into quantitative theory, system theory
and contingency theory.
1. Quantitative Theory
The quantitative theory includes operation research and quantification of the
problem. It analyses the problems from quantifiable angles and provides solutions to
complex problems only with the help of statistical and mathematical models such as
linear and non-linear programming, game theory, decision tree, simulation and
probability.
Computers are used to solve management problems whereas
mathematical models were previously used for the purpose. A large number of
problems are solved with the use of simulation equations and computers. The
development of equations requires specialized skills and advance knowledge of
mathematics, statistics, economics and behavioral sciences. Models are tested while
the context of the real world and use of operation research. Operation research is
conducted by diverse specialists and management experts.
2. System Theory
A system is a set of interconnected and inter-related elements of management activity.
It is an arrangement of components of activities performed for achieving certain
objectives. Thus, a system has three components: arrangement, objectives and a plan.
The arrangement is designed and planned in an effective manner to achieve the
objective. Men, materials and money are planned to achieve the objectives of the
organization. Recently, it has been agreed that the organization is a system wherein
operation, marketing, finance, etc. are subsystems.
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