2.2_management_theories
UNDERSTANDING BUSINESS ORGANISATIONS
WITH REFERENCE TO MANAGEMENT THEORIES
Topic 2.2: (HSC topic 1) BUSINESS MANAGEMENT AND CHANGE
Stage 6 Business Studies 2010
AGENDA
Classical-scientific
management as planning, organising and controlling
hierarchical organisational structure based on division of labour
autocratic leadership style
Behavioural
management as leading, motivating, communicating
flat organisational structure, teams
participative/democratic leadership style
AGENDA
Political
uses of power and influence, management as negotiating and bargaining
structure as coalitions
stakeholder view
Strengths and weaknesses of the classical, behavioural and political approaches
Systems/contingency
adapting management and organisational approaches to circumstances
CLASSICAL SCIENTIFIC THEORY
Key Points
Improve efficiency
Decrease costs
Increase profits
AKA “The Principles of
Scientific Management”
Key Person
Frederick Taylor
Do it once
Do it well
Train people properly in this method
Give them the right tools to do the job well
Classical Scientific Cont.
Three key functions of management:
•Setting goals
•Creating a strategy
•Designing a framework
•Who, What,
Where, When,
How
•Measuring what
is happening vs what is planned to happen
ORGANISATION STRUCTURE
Hierarchical organisation structure
Based on division of labour
Autocratic style of management - theory was developed at a time when workers did as they were told.
Pyramid Structure
Division of labour
Rigid chain of command
Small span of control
BEHAVIOURAL THEORY
Direct people Communicate Resolve conflict
Higher productivity if less supervision
Wider span of control
Remove layers of management
Team Structure
Participative
High degree of employee participation
Non voting
POLITICAL THEORY
“MY WAY OR THE HIGHWAY”
Managers having the right to tell employees what to do is wrong
Political Power Cont.- Power & Influence
Political cont. – Negotiating and Bargaining
Negotiation
Negotiation is one of the most common approaches used to make decisions and manage disputes.
It is also the major building block for many other alternative dispute resolution procedures
It involves dealings among persons, which are intended to result in an agreement, and commitment to a course of action: between two parties (bilateral); or among several parties (multilateral).
Bargaining
To negotiate the terms of an agreement, as to sell or exchange.
To arrive at an agreement.
An agreement between parties fixing obligations that each promises to carry out.
An agreement establishing the terms of a sale or exchange of goods or services: finally reached a bargain with the antique dealer over the lamp.
Property acquired or services rendered a a result of such an agreement.
Political cont. – Structure as coalitions
An alliance between different groups of people working together to achieve common goals
Goals may include:
• Increased power
• Rewards
Political cont. – Stakeholder view
Political view held that stakeholders held different views on what they wanted from the business
Employees
Rewards
Managers
Competitive through efficiency and cost cutting
Suppliers
Stability and bills paid on time
Investors
ROI (Return on Investment)
STRENGTHS & WEAKNESSES – CLASSICAL SCIENTIFIC
STRENGTHS
Focus on competitiveness
Focus on productivity – division of labour, training, rewarding of employees
Focus on efficient structure of business – clearly defined chain of command
SYSTEMS THEORY
First theory to stress relationships in business.
Focuses on links that includes the external business environment
A business = A system
Inputs = raw materials, labour etc are transformed into finished products
Process is important
Reducing cost through process
= gaining competitive advantage
Product
= Good Quality
= Increased
Market Share
Key Relationships
Systems Theory – another view
CONTINGENCY THEORY
No universal or best way of running the business
A business organisation must fit with the environment that it is situated within :
• Structure and style should fit with tasks undertaken by the business
• Example – leading troops into war and managing a hospital – the same style cannot apply as different actions are required
A contingency is a future event or circumstance that is possible but cannot be predicted e.g.
Complete power failure to a building
Fire burns down the main factory
Influenza epidemic wipes out 60% of work force in a matter of weeks
Cars will replace horses
Contingency Cont – Adapting Management and
Organisational Approaches
Large businesses who
USE HIERARCHICAL ORGANISATIONAL
STRUCTURES
AND
AUTOCRATIC LEADERSHIP STYLES
Example:
Slow to react to change
Henry Ford and the Model T
