Transcript 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
Higher productivity if
less supervision
Participative
Communicate
Wider span of control
Remove layers of
management
High degree of employee
participation
Resolve conflict
Team Structure
Non voting
POLITICAL THEORY
“MY WAY OR THE HIGHWAY”
Managers having the right to
tell employees what to do is
wrong
Coercive
Reward
Referent
Expert
Legitimate
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:

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.
between two parties (bilateral); or
among several parties (multilateral).
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
 Example:
AND
AUTOCRATIC LEADERSHIP STYLES
Slow to react to change
Henry Ford and
the Model T