SYSTEM APPROACH

OPERATIONAL APPROACH
QUANTITATIVE APPROACH
CONTINGENCY THEORY
THEORY Z
TOTAL QUALITY MANAGEMENT
 Organization is a system consisting of four subsystems-
task,structure,people and environment
 Subsystems are interconnected and interdependent
 Management regulates and modifies the system to optimize
performance

OPERRATIONAL APPROACH
 Production – oriented field of management
dedicated to improving efficiency and cutting
waste
QUANTITATIVE APPROACH
 A problem is expressed in the form of quantitative
or mathematical model
 Different variables in management can be
quantified and expressed in the form of an
equation
 Management =decision making,
organization=decision making unit

CONTINGENCY THEORY
 There is no universal or one best way to manage
 Wide range of external and internal factors must be
considered and the focus should be on the action that
best fits for the situation.
THEORY Z
 Theory Z has been called a sociological description of the
humanistic organizations
 “Theory Z is an approach to management based
upon a combination of American and Japanese
management philosophies”. Proponents of Theory Z
suggest that it leads to improvements in
organizational performance.

TOTAL QUALITY MANAGEMENT APPROACH

 Wide effort to improve quality of products and services
 People and organizations mainly focus on quality given by
Quality = results of work efforts
total costs
SYSTEM APPROACH
LUDWIG VON BERTALANFFY IS RECOGNIZED
AS THE FOUNDER OF GENERAL SYSTEM THEORY.

SYSTEM: A system is a set of INTERRELATED but

separate parts working towards a common
purpose.

TYPES OF SYSTEMS:
1)Open system.
2)Closed system.
 KEY TERMS
• SUBSYSTEM : parts of system that
depends on each other.
• Internal subsystem.
• External subsystem.

• SYNERGY : cooperation between

subsystems.

• SYSTEM BOUNDARY:separation
b/n internal and external
subsystems.
COMPONENTS OF A SYSTEM
• Inputs
• Transformation process
• Outputs
• Feedbacks
• environment
• Subsystems have proper order and
communication b/n them.

• Decisions are based on impacts on various

subsystems.
LEVELS OF SYSTEMS
THREE FUNCTION SYSTEMS MODEL
• Benchmarking
• Leadership
• Employee involvement
• Process involvement
• Customer focus
FEATURES OF SYSTEM APPROACH
• Dynamic
• Adaptive
• Multilevel and multidimensional
• Managers will have a good view
• Gives importance to interdependence of
different parts
• Forecasts consequences and plans actions
ADVANTAGES
Closeness to reality.

The approach may be utilised by any of the

other approaches.

DISADVANTAGES
Complex when used in large
organisations.

Increased difficuilty for managers.

 What is operational approach?

 Systematic management of all

processes to achieve world class
performance by:

 Efficient utilisation of tools

 Optimisation of resources

 Elimination of process
wastes/inefficiencies
 By following the above three
conditions, there is a continuous
improvement and standardization in a
process.
 CHARACTERISTICS:

 Draws together concepts, principles,

techniques and knowledge from other
fields and managerial approaches.

 The conceptual framework of

management can be constructed on
the basis of the analysis of
management process and
identification of management
principles.
 ADVANTAGES:

 Increase in Productivity.

 Improvement in Quality.

 Potential savings.

 Simplification of Tasks.
 Operational Approach emphasises
static conditions whereas the
organizations have to function in
dynamic conditions.
 It claims universality or management
principles while management differs
from organization to organization and
from level to level.
 Quantitative techniques are those
statistical and programming techniques,
which help decision makers solve many
problems, especially those concerning
business and industry
 Quantitative techniques are those
techniques that provide the decision
makers with systematic and powerful
means of analysis, based on quantitative
data, for achieving predetermined goals
 1) Statistical Techniques
 2) Programming Techniques
 It is a mathematical technique for optimum
allocation of scarce or limited resources to several
competing activities on the basis of given criterion
of optimality, which can be either performance,
ROI, cost, utility, time, distance etc.
 Formulate the problem
 Convert all inequalities to equations
 Plot the graph of all inequalities
 Find out the feasilble region
 Find out the corner points
 Substitute the objective function
 Arrive at the solution
 A special kind of optimization problem in which
goods are transported from a set of sources to a
set of destinations subject to the supply and
demand constraints. The main objective is to
minimize the total cost of transportation.
 A flow of customers from finite/infinite
population towards the service facility
forms a queue due to lack of capacity
to serve them all at a time.
The decision making environment
 Under certainity

 Under uncertainity

 Under risk
 Laplace Criterion
 Maxmin Criterion
 Minmax Criterion
 Maximax Criterion
 Minmin Criterion
 Hurwicz Criterion
 Inventory is vital to the successful functioning of
manufacturing and retailing organizations. They
may be raw materials, work-in-progress, spare
parts/consumables and finished goods.
 It involves developing a model of some real
phenomenon and then performing experiments on
the model evolved. It is descriptive in nature and
not an optimizing model.
 Definition of the problem
 Construction of an appropriate model
 Experimentation with the model
 Evaluation of the results of simulation
A project is a series of activities directed to the
accomplishment of a desired objective.

 PERT
 CPM
CONTINGENCY APPRAOACH
OF
MANAGEMENT
Contingency approach states that there is “no
one best way” to manage an organisation.
It is also known as situational approach.

“THE BEST WAY TO ORGANIZE DEPENDS ON

THE NATURE OF THE ENVIRONMENT TO
WHICH THE ORGANIZATION RELATES.” -
William Richard Scott
In 1970s, it is recognized as a key to effective
management.
CONTRIBUTORS:
 L.W. Lorsch
 Joan Woodward
 Burns
 George Stalker
 Paul R.Lawrence
Joan Woodward (1916-1971)
– “Management and Technology”, 1958,
”Industrial
Organization”, 1965
– Studied a large number of firms (100) in the
South Essex area
of England in the 1950s
– Found that organizational form varied, and
correlated with
production technology
– Concluded that there was not ”one best way”
to organize – the
nature of the production process would
determine which form
that would be most suitable.
Tom Burns (1913-2001) and G. M. Stalker
– “The Management of Innovation” (1961)
– Studied the introduction of electronics in Scottish
industry
– Described two ideal types of organization on each
side of a
continuum – the mechanistic and the organismic
(organic)
organization
– The organization as a result of the simultaneous
working of (at
least) three different social systems:
• Formal authority: aims, technology, relations with
the environment
• Cooperative systems of people with different
aspirations
•The political system – the competition and
cooperation for power
Paul R. Lawrence (1922-2011) and Jay W. Lorsch (1932 )
– “Organization and Environment: Managing Differentiation and Integration” (1967)
– Question: Why do people seek to build organizations?
Answer: In order to find better solutions to the environmental problems faced by
them.
– Therefore:
• It is people who have purposes, not organizations
• People come together to coordinate their different activities into an organization
structure
• The organization’s effectiveness is judged from the extent to which the members’
needs are satisfied
through the planned transactions with the environment
– In order to cope with the environment, organizations develop units and formal
structures
suited to the particular environment(s) they operate in.
What you do “depends” on the
“situation”.
-internal contingency factors
-external contingency factors
Internal Contingency Factors

Technology

People Size

Purpose Structure
External Contingency Factors

Socio-cultural Technological
Factors Factors

Legal Economic
/Political Factors
Factors
General Environment of Coca Cola
Sociocultural Technological
•New recycle friendly canning tech.
•Concerns about health
•New promotional opportunities
•Easier access to refrigeration
via the internet
•Baby boomers drinking less
•Threat of substitute drinks
•Immigrants drink less
•Concerns about recycling
•Increased acceptance in China
and India
Coca Cola

Government
•Increased health standards Economic
for bottling
•Stricter liability legislation •Slow economic growth
•Prospect of economic recovery
Instead of propagating universally applicable
organisation-management principles, this theory tries
to demonstrate that different circumstances require
different organisational structures
What works for one organisation may not work for
the other.
Managers need to understand the key contingencies
that effect the management practice for a given
situation.
EXAMPLE OF A SHOE MANUFACTURING COMPANY:

A shoe manufacturing company is faced with the problem of decreasing

profits;
Solution can be:
May establish a committee of sales and production personnel to
coordinate the production and distribution of goods under the assumption
that large inventories are responsible for the decline in profits
- (Systems theory)
By application of a contingency perspective:
Would enable to examine the situation and to determine the cause of
decreased profits before a new procedure or program is implemented.
Example of a super market manager:
Problem:
Customers Are complaining that queing lines and time for
billing are high.
Solution:
Manager identifies that,
1)The waiting times and queue lengths are always changing.
2)So a flexible approach is required.
Then he observes the customers and assings duty to the
workers according to the changing situation.
Studies show that companies that operate in less structured
environments are more successful with a flexible approach to
management, while companies in a more stable environment
do better with a more rigid and structured management style
of operations.

When the uncertainity of environment is high, an organic

structure(more flexible one) is suitable and when
uncertainity is low a mechanistic structure is suited.
Contingency theory is designed to provide the manager with the
capabilities to examine numerous possible solutions to a
problem.
Adapting to changing circumstances- No two situations are
absolutely identical, therefore each situation requires its own
unique solution.
To adopt this approach managers must sample all the past and
present ideas, some refer this to the ‘smorgasbord approach’.
 The way you manage should change depending on the
circumstances.
 Sometimes a bureaucratic organization is most effective,
sometimes a more loosely structured one; sometimes a
more classical approach is best, sometimes a more modern
one.
 The most effective management style will vary depending
on the type of organization, its size, its environment, and
the particular situation/problem it faces at the time.
Limitations of Contingency Approach:
 Difficulty in determining all relevant contingency
factors and showing relationship between them may be
complex.
 It is totally practical approach without support of
theoretical and conceptual frame work.
 Sometimes manager finds difficulties in analyzing the
situation and discovering appropriate management
technique in absence of proper research and lack of
proper understanding of the situation.
 Theory Z has been called a sociological description
of the humanistic organizations
 “Theory Z is an approach to management
based upon a combination of American and
Japanese management philosophies”.
Proponents of Theory Z suggest that it
leads to improvements in organizational
performance.
 Short-term employment
 Individual decision
making
 Individual responsibility
Rapid evaluation &

promotion
 Explicit control
mechanisms
 Specialized career paths
American Organisations
 Lifetime employment
 Collective decision
making
 Collective
responsibility
 Slow evaluation &
promotion
 Implicit control
mechanisms
 Non-specialized career
paths Organisations
Japanese
 LONG-TERM EMPLOYMENT
 CONSENSUAL DECISION MAKING
 INDIVIDUAL RESPONSIBILITY
 SLOW EVALUATION AND PROMOTION
 INFORMAL CONTROL WITH FORMALIZED
MEASURES
 MODERATELY SPECIALIZED CAREER PATH
 HOLISTIC CONCERN
 Type Z organizations generally make life-
long commitments to their employees and
expect loyalty in return, but Type Z
organizations set the conditions to encourage
this. This promotes stability in the
organization and job security among
employees.
 The type-z organisation emphasizes
communication,collaboration,consensus in
Decision making
 Type z organizations retain the emphasis on
individual contributions that are characteristic
of most american firms by recognizing
individual achievements,albeit within the
context of the wider group
 The type z organisation,conversely adopts the
model of slow evolution and promotion
 The type z organization relies on informal
methods of cotrol,but does measure
performances through formal mechanisms.
This is an attempt to combine elements of
both the Type A and Type J organisations.
 The type z organization is characterized by
concern of employees that goes beyond the
workplace.This philosophy is more consistent
with the japanese model than the U.S model
 IBM
 Procter and Gamble
 Hewlett and packard
 Eastman kodak
 TOTAL QUALITY MANAGEMENT(TQM) is the
integration of all functions and processes
within an organization to achieve
continuous improvement of the quality of
goods and services.
 The goal is customer satisfaction.
 Quality is defined as conformance to
requirements, not goodness.
 The system for achieving quality is prevention,
not appraisal.
 The performance standard is zero defects, not
“That’s close enough”.
 The measurement of quality is price of non
conformance, not indexes.
Different people interpret quality differently. Few can
define quality in measurable items that can be proved
operationalized. When asked what differentiates their
products of service
The banker will answer “Service”.
The health care worker will answer “Quality health
care”.
The hotel employee will answer “Customer
satisfaction”.
 According to Phil Crosby, Quality is…..

 An attitude:
- zero defects
- continuous improvement.

A measurement:
- price of Conformance, plus
- price of Non Conformance (defects)
A belief in employees ability to solve
problems.
 A belief that people doing the work are
best able to improve it.
 A belief that everyone is responsible for
quality.
- 22,000 checks will be deducted from the
wrong bank accounts in the next 60
minutes.
- 20,000 incorrect drug prescriptions will
be written in the next 12 months.
- 12 babies will be given to the wrong
parents each day.
 Visible, committed and knowledgeable.
 A Missionary zeal.
 Aggressive Targets.
 Strong Drivers.
 Communication of values.
 Customers Contact.
• Systems viewpoint
• Dynamic process of interaction
• Multilevelled and multidimensional
• Multimotivated
• Probabilistic
• Multidisciplinary
• Descriptive
• Multivariable
• Adaptive
• Management is influenced by Internal and external
environment.
• Appropriate techniques are determined by situation and
Environmental factors of an organization.
• Thus the conclusion is that there cannot be any fixed
universal principles of management and organizations.
• The ancient approaches to management namely the
scientific approach and the human relations thought can be
described as the sources of the modern day management
thought.
 While the scientific management theory focus on the efficiency of the
production process and the motivation of the worker, the human
relations thought emphasizes on the importance of behavioral
elements in employee satisfaction and consequently the levels of
satisfaction.
 The combination of these two traditional models therefore covers the
most important aspects of management albeit in a retracted form.
 The modern approaches to management tend to build onto these
provisions by providing meaningful insights that enable management
practices to be relevant and more effective in the modern day.
 The conveyor belt production which is still common can also be
traced to the scientific model.
 It therefore must be concluded that modern approaches to
management reinforce rather than repudiate the traditional
approaches to management.
THANK YOU