TERM PAPER ASSIGNMENT ON THE COURSE MANAGEMENT

THEORIES AND PRACTICES

Topic Four :- The Modern Era or School of Management

Haileleul Worku
MBA || YEAR-1-SEM-1

Management Theories and Practice

Assignment 01
The Modern Era Management Theory

YARDSTICK INTERNATIONAL COLLEGE

2015 E.C / 2023 G.C

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Table of Contents

TERM PAPER ASSIGNMENT ON THE COURSE MANAGEMENT THEORIES AND

PRACTICES..........................................................................................................................................1
Topic Four :- The Modern Era or School of Management.............................................................1
Introduction....................................................................................................................................3
1. Quantitative approach.................................................................................................................3
1.1. Autobiography of influential author of quantitative approach........................................4
1.2. Features of quantitative approach....................................................................................5
1.3. Strength and Weakness of quantitative theory................................................................5
2. System approach.........................................................................................................................5
2.1. Autobiography of contributors and authors.....................................................................6
2.2. Features of System approach...........................................................................................7
System is a..............................................................................................................................7
systems theory........................................................................................................................7
open system............................................................................................................................7
closed system .........................................................................................................................7
synergy...................................................................................................................................7
The System Approach: Open and Closed Systems................................................................7
An open system......................................................................................................................7
A closed system......................................................................................................................7
2.3. Strength and Weakness of Systems theory......................................................................7
3. Contingency approach................................................................................................................8
3.1. Autobiography of contributors and authors.....................................................................9
3.2. Features of contingency theory.....................................................................................10
i. Management is situational in nature. The technique of management depends on
complexity of the situation...................................................................................................10
ii. It is the ‘if and ‘then ‘approach to management, ‘If’ represents the independent variable
and ‘then’ represents the dependent management variable or the technique to be adopted in
that situation.........................................................................................................................10
iii. It helps in understanding the complex organizations as it focuses on multivariate nature
of organization. It helps an organization to operate under different environmental
conditions. Rather than having a specific solution to solve problems, it provides a
framework where every solution depends upon the environmental conditions...................10
iv. It provides insight into organization's adaptability to both internal and external
environment..........................................................................................................................10
3.3. Strength and Weakness of contingency theory.............................................................10
4. Total Quality Management.......................................................................................................11
Employee involvement.........................................................................................................11
Application of modern management theory to real life organization.................................................12
I chose Lefayda Credit and Saving Share Company....................................................................12

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Introduction
The post–World War II period saw the rise of new concepts, along with a continued strong interest in
the human aspect of managing, such as team and group dynamics. In the modern era which begins
from 1960s to present time.

Management scholar Peter Drucker’s 1946 book Concept of the Corporation sparked a dramatic
increase in the academic study of business and management. Picking up on techniques developed for
the military, scholars began cranking out numerous mathematical tools for corporate managers, such
as the application of linear programming for optimizing operations, statistical process control for
quality management, and the capital asset pricing model.

Systems theory is a basic theory in the physical sciences, but had never been applied to organized
human efforts. In 1938, Chester Barnard, a telephone company executive, first wrote in his book,
The Functions of an Executive, that an organization functioned as a cooperative system. In 1960s
management researchers began to look at what was happening in the external environment outside
the boundaries of the organization. Two results of contemporary management perspectives were
system approach & contingency approach.

A quality revolution swept through both the business and public sectors in the 1980s and 1990s. It
was inspired by a small group of quality experts, the most famous being W. Edwards Deming and
Joseph M. Juran. The ideas and techniques they advocated in the 1950s had few supporters in the
United States but were enthusiastically embraced by Japanese organizations. As Japanese
manufacturers began beating U.S. competitors in quality comparisons, however, Western managers
soon took a more serious look at Deming’s and Juran’s ideas . . . ideas that became the basis for
today’s quality management programs.

The following Management approaches and management theories under them are classified under
the modern era of management
1. Quantitative approach
1.1. Operation management
1.2. Information system management
1.3. Management science
2. System approach
3. Contingency approach
4. Theory z
5. Total Quality management (QTM)

1. Quantitative approach
World War II caused many management changes. During World War II, groups of mathematicians,
physicists, and other scientists were formed to solve military problems. Operations research grew
directly out of the World War II military groups (called operational research teams in Great Britain

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 and operations research teams in the United States). The quantitative approach evolved from
mathematical and statistical solutions developed for military problems during World War II. After
the war was over, many of these techniques used for military problems were applied to businesses.
Quantitative approach which is also known as management science involves applying statistics,
optimization models, information models, computer simulations, and other quantitative techniques to
management activities. Linear programming, for instance, is a technique that managers use to
improve resource allocation decisions. Work scheduling can be more efficient as a result of critical-
path scheduling analysis. The economic order quantity model helps managers determine optimum
inventory levels.

This modern management approach often consists of three branches:

 Management science: Management science focuses on the use of mathematical and statistical
methods to form effective business solutions and achieve goals. Examples of these tools include
the Program Evaluation Review Technique (PERT), the critical path method (CPM) and
sampling.
 Operations management: In operations management, managers implement practices that help
make business and production processes more efficient. Depending on the situation, this method
may require managers to restructure or redesign their processes. Some of the tools they use
include forecasting, quality control methods and project planning.
 Management Information System: A management information system (MIS) represents a database
that organizes an organization's data, and managers use this system to support informed
decision-making. This system collects and stores real-time data, allowing managers to run
reports on areas like financial, timelines, personnel and inventory.
1.1. Autobiography of influential author of quantitative approach
1
Peter Ferdinand Drucker ( November 19, 1909 – November
11, 2005) was an Austrian-American management consultant,
educator, and author, whose writings contributed to the
philosophical and practical foundations of the modern
business corporation. He was also a leader in the development
of management education, he invented the concept known
as management by objectives and self-control, and he has been
described as "the founder of modern management". Drucker's
books and articles, both scholarly and popular, explored how
humans are organized across the business, government,

and nonprofit sectors of society. He is one of the best-known and most widely influential thinkers
and writers on the subject of management theory and practice.
His writings have predicted many of the major developments of the late twentieth century, including
privatization and decentralization; the rise of Japan to economic world power; the decisive
importance of marketing; and the emergence of the information society with its necessity of lifelong
1
https://en.wikipedia.org/wiki/Peter_Drucker

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 learning. In 1959, Drucker coined the term "knowledge worker", and later in his life considered
knowledge-worker productivity to be the next frontier of management.

1.2. Features of quantitative approach

i. Boosts productivity: Modern management theory uses mathematical and statistical
methods to assess performance within an organization. Managers can use this data to
understand employee behaviors and develop solutions that maximize the potential of their
workforce.
ii. Aids decision-making: Modern management theories often provide managers insights into
the factors they need to examine, which they can use to evaluate their organization or
department.
iii. Improves employee engagement: As mentioned, the modern management theory examines
employees' motivation for working beyond financial gain. Managers who utilize this theory
can then identify and implement processes or procedures that take employees' varying needs
into account.
iv. Promotes objectivity: The modern management theory emphasizes the use of mathematical
techniques. These techniques allow managers to make decisions based on data and evidence
rather than personal opinions or feelings.
v. Enables adaptability: Modern management theory recognizes that today's organizations
often exist within rapidly changing environments. This theory emphasizes the importance of
recognizing the influence of internal and external factors on business and encourages
managers to use several techniques and approaches to work with them.
1.3. Strength and Weakness of quantitative theory
Advantages
i. Managers use exact computational, mathematical and statistical techniques to make
informed decision.
ii. Managers are aided by various computational techniques and computer simulations.

Limitations
i. This approach does not give any weight to human element.
ii. Real life managers are required to make decisions quickly without waiting for full
information to develop models.
iii. It assumes that all variables to decision-making are measurable and inter-dependent.

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 2. System approach
The systems approach to management views the organization as a unified, purposeful system
composed of interrelated parts. This approach gives managers a way of looking at the organization as
a whole and as a part of the larger, external environment. The systems approach further defines an
organization by dividing it into different components. These components demonstrate how different
parts of the organization work together toward a common goal:
 Inputs: Inputs represent the factors that are needed to create goods and services.
 Outputs: Outputs represent the results produced by an organization. These outputs may include
products, services and financial results, such as profits.
 Feedback: Feedback represents information related to the organization's outcomes or outputs.
Managers will use the feedback to make decisions related to the organization's inputs.
2.1. Autobiography of contributors and authors
2
Karl Ludwig von Bertalanffy (19 September 1901 – 12 June
1972) was an Austrian biologist known as one of the founders
of general systems theory (GST). This is an interdisciplinary
practice that describes systems with interacting components,
applicable to biology, cybernetics and other fields. Bertalanffy
proposed that the classical laws of thermodynamics might be
applied to closed systems, but not necessarily to "open
systems" such as living things. His mathematical model of an
organism's growth over time, published in 1934,[1] is still in
use today.

Bertalanffy is considered to be a founder and one of the principal authors of the interdisciplinary
school of thought known as general systems theory.
3
Chester Irving Barnard (November 7, 1886 – June 7, 1961)
was an American business executive, public administrator, and
the author of pioneering work in management theory
and organizational studies. His landmark 1938 book, The
Functions of the Executive, sets out a theory of
organization and of the functions of executives in
organizations. The book has been widely assigned in university
courses in management theory and organizational
sociology. Barnard viewed organizations as systems of
cooperation of human activity, and noted that they are typically
short-lived.
According to Barnard, organizations are generally not long-lived because they do not meet the two
criteria necessary for survival: effectiveness and efficiency.

2
https://en.wikipedia.org/wiki/Ludwig_von_Bertalanffy
3
https://en.wikipedia.org/wiki/Chester_Barnard

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2.2. Features of System approach
Key concepts
System is a set of interrelated parts that function as a whole to achieve a common purpose.
systems theory is an extension of the humanistic perspective that describes organizations
as open systems characterized by entropy, synergy, and subsystem interdependence.
open system is a system that interacts with the external environment.
closed system is a system that does not interact with the external environment.
synergy is the concept that the whole is greater than the sum of its parts.
System boundary : Each system has a boundary that separates it from its environment. In a closed
system, the system boundary is rigid; in an open system, the boundary is more flexible.
Flow: A system has flows of information, materials, and energy (including human energy).

The System Approach: Open and Closed Systems

An open system is characterized by interaction with the external environment.
All organizations are open to the extent of the system’s permeable boundaries to interact with the
external environment for energy, information and material need.
A closed system has firm, fixed boundaries; its operation is relatively independent of the
environment outside the system.

Figure 1, The system view of Organization

2.3. Strength and Weakness of Systems theory

Advantage

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 i. System approach provides a holistic view of the organizations and emphasizes on their
adaptive nature. Organization is studied as a whole therefore it gives full picture rather than
its constituent parts.
ii. Sub-systems of the organization are studied with respect to inter-relatedness towards a
unified view. Starting from individual goal and moves towards achieving organizational
goals.
iii. It frees management from many daily details of operations management.
iv. System approach provides a framework for effective interaction of parts of the organization
in a specific arrangement for attainment of its goals. It does not focus on one part of the
organization.
v. It refers to consideration of both the distinct elements of a situation and the complex and
changing interaction among those elements.

Limitations of system approach

i. It fails to put the exact relationship between internal and external environment of the
organization.
ii. The small organizations are less adaptive to environmental variables than large
organizations. The theory assumes that most of the organizations are big, complex and open
systems.
iii. This approach is vague. It doesn’t provide specific procedures or techniques to managers.

3. Contingency approach
The contingency approach (sometimes called the situational approach) was developed by
managers, consultants, and researchers who tried to apply the concepts of the major schools to real‐
life situations.
According to the contingency approach the manager's task is to Identify which technique will, in a
particular situation, under particular circumstances, and at particular time, best contribute to the
attainment of management goals. The contingency management approach states that there is not just
one management approach that fits every organization. It believes that the optimal management style
depends on the situation. Leaders who utilize this theory do not adopt a single management style and
instead must identify and use different styles for different situations. As a result, these leaders also
develop additional traits and skills that ensure they can employ various management approaches
effectively. The use of diverse styles can help make these leaders more flexible and adaptable in the
workplace.

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3.1. Autobiography of contributors and authors
5
Joan Woodward (27 September 1916 – 1971) was a British
professor in industrial sociology and organizational studies.
Background
Woodward was educated at Oxford University, where she
gained a first in Philosophy, Politics and Economics in 1936,
followed by an MA in medieval philosophy from Durham
University in 1938, and a Diploma in Social and Public
Administration from Oxford in 1939. She undertook her early
research at South East Essex College of Technology, before
4 joining Imperial College in 1957 as a part-time lecturer in
Industrial Sociology and was appointed to a Senior Lectureship
in the Production Engineering Section in 1962. In 1970, She published a book "Industrial
Organization: Behaviour and Control".

Contribution
Woodward was a leading academic and commentator in the field of Organization Theory,
particularly Contingency Theory. Woodward was a pioneer for empirical research in organizational
structures and author of analytical frameworks that establish the link between technology and
production systems and their role in shaping effective organizational structures. She classified the
technology into Unit based or (Small scale), Mass based or (large scale) and Continuous
process organizations. All successful organizations in these categories, according to her, had a
particular organizational structure.

6
Fred Edward Fiedler (July 13, 1922 - June 8, 2017) was one
of the leading researchers of industrial and organizational
psychology in the 20th century.
Background
He was born in Vienna, Austria to Victor and Helga
Schallinger Fiedler. His parents owned a textile and tailoring
supply store prior to 1938. Fiedler immigrated to the United
States shortly after the Anschluss in 1938 and became a US
citizen in 1943. He served in the US Army from 1942 to 1945.

He studied psychology at the University of Chicago where he obtained his undergraduate degree and
later a Ph.D. in clinical psychology in 1949. In 1951, he joined the University of Illinois and became
a member of the psychology faculty. He became the director of the Group Effectiveness Laboratory
at the University of Illinois from 1959 to 1969.
Contribution
The most common situational theory was developed by Fred Fiedler. Fiedler’s Contingency Model
4

5
https://en.wikipedia.org/wiki/Joan_Woodward
6
https://en.wikipedia.org/wiki/Fiedler_contingency_model

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 states that there’s no one best style of leadership. Instead, a leader’s effectiveness is determined by
whether the leader’s style and the environment in which the leader is performing complement each
other. Fred Fiedler's Contingency Model was the third notable situational model of leadership to
emerge. This model appeared first in Fiedler's 1967 book, A Theory of Leadership Effectiveness.

In addition to Joan Woodward and Fred Edward Fiedler the following two author’s names are
mentioned with contingency approach.
 Paul Roger Lawrence (April 26, 1922 – November 1, 2011) was an American sociologist,
Professor of Organizational Behavior at the Harvard Business School, and consultant, known
from his work with Jay W. Lorsch on "Differentiation and integration in complex
organizations”.
 Jay William Lorsch (born 1932) is an American organizational theorist and the Louis
Kirstein Professor of Human Relations at the Harvard Business School, known for his
contribution of contingency theory to the field of organizational behavior.

3.2. Features of contingency theory

i. Management is situational in nature. The technique of management depends on complexity
of the situation.
ii. It is the ‘if and ‘then ‘approach to management, ‘If’ represents the independent variable and
‘then’ represents the dependent management variable or the technique to be adopted in that
situation.
iii. It helps in understanding the complex organizations as it focuses on multivariate nature of
organization. It helps an organization to operate under different environmental conditions.
Rather than having a specific solution to solve problems, it provides a framework where
every solution depends upon the environmental conditions.
iv. It provides insight into organization's adaptability to both internal and external environment.
3.3. Strength and Weakness of contingency theory
Advantages
 It utilized classical, behavioral and systems approach techniques depending on the demand of
the situation.
 It gives great emphasis on the need to study the situation before arriving at solution.
 The manager must find the best suitable technique with least drawbacks to the situation at hand.
 It is adaptive to the circumstances in order to fulfill organizational objective.
Limitations
 Most of the time it is impossible to determine all factors in a situation due to time, money and
skill requirement to chose the best technique.
 It doesn’t follow the concept of ‘Universality of principles’.
 Reactive rather than proactive. It suggests what managers could do in a specific situation.

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4. Total Quality Management
The theme of quality is another concept that permeates current management thinking. The quality
movement is strongly associated with Japanese companies, but these ideas emerged partly as a result
of American influence after World War II. The ideas of W. Edwards Deming, known as the “father
of the quality movement,” were initially scoffed at in the United States, but the Japanese embraced
his theories and modified them to help rebuild their industries into world powers.49 Japanese
companies achieved a significant departure from the American model by gradually shifting from an
inspection-oriented approach to quality control toward an approach emphasizing employee
involvement in the prevention of quality problems.50 During the 1980s and into the 1990s, total
quality management (TQM), which focuses on managing the total organization to deliver quality to
customers, moved to the forefront in helping U.S. managers deal with global competition. The
approach infuses quality values throughout every activity within a company, with frontline workers
intimately involved in the process.

Four significant elements of quality management are employee involvement, focus on the customer,
bench-marking, and continuous improvement.
Employee involvement means that achieving quality requires company-wide participation in quality
control.

7
William Edwards Deming (October 14, 1900 – December 20,
1993) was an American engineer, statistician, professor, author,
lecturer, and management consultant. Educated initially as
an electrical engineer and later specializing in mathematical
physics, he helped develop the sampling techniques still used
by the U.S. Department of the Census and the Bureau of Labor
Statistics. He is also known as the father of the quality
movement and was hugely influential in post-WWII Japan. He
is most well-known for his theories of management.
8
Joseph Moses Juran (December 24, 1904 – February 28, 2008)
was a Romanian-born American engineer and management
consultant. He was an evangelist for quality and quality
management, having written several books on those subjects.
Juran was one of the first to write about the cost of poor
quality. This was illustrated by his "Juran trilogy," an approach
to cross-functional management, which is composed of three
managerial processes: quality planning, quality control, and
quality improvement. Without change, there will be a constant
waste; during change there will be increased costs, but after the
improvement, margins will be higher and the increased costs
7
https://en.wikipedia.org/wiki/W._Edwards_Deming
8
https://en.wikipedia.org/wiki/Joseph_M._Juran

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 are recouped.

Application of modern management theory to real life organization

I chose Lefayda Credit and Saving Share Company (“Lefayda”)

( www.lefayda.com)

System approach is in use by Lefayda.

Lefayda is composed of head office and branch offices. More over it has well defined organizational
structure. Branches and head office function as separate sub-systems while interact and communicate
through well defined policies and procedure manual.

Information management system is also in place to manage daily operations.

Huge transnational data is also stored in a data base therefore there are opportunities for quantitative
approach to be utilized to increase effectiveness and efficiency of the organization.

I recommend
 The use of Quantitative analysis to improve the effectiveness and efficiency of Lefayda.
 Effiecient utilization of system approach also can contribute to the acheivement of the
organiztion goal.

References

 Management, Ninth Edition Richard L. Daft, with the assistance of Patricia G. Lane © 2010,
2008 South-Western, Cengage Learning
 https://www.yourarticlelibrary.com/management/modern-management-theory
 https://en.wikipedia.org/wiki/Peter_Drucker

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