Some modern approaches also played a significant role in the evolution of management theories. These approaches can be classified as Quantitative School of Thought, the Systems Theory and the Contingency Theory.
1. Quantitative School of Thought:
Quantitative school of thought emerged during the World War II. During the war, managers, government officials and the scientists were brought together to help the army to effectively utilize resources. Using earlier mathematical approaches to the concepts advocated by F.W. Taylor and Gantt, the experts of quantitative school of thought, solved many logistic problems in the war.
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After the war, such techniques were applied by many organizations to solve their business problems. This school of thought extensively utilized statistics, optimization models, information models and computer simulations for decision making and economic effectiveness to solve business problems. Different branches of quantitative approach are:
i. Management science
ii. Operations management
iii. Management information system
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Management Science Approach visualizes management as a logical entity, expressing management in terms of mathematical symbols, relationships and measurement data. This approach is also known as operations research approach. In areas like capital budgeting and cash flow management, production scheduling, development of product strategies, human resource planning, inventory management, etc., such approach is used.
Various mathematical tools like queuing theory, linear programming, Programme Evaluation and Review Technique (PERT), Critical Path Method (CPM), decision theory, simulation, replacement, probability theory and sampling, time series analysis, index numbers, etc., are used to minimize the error in management decisions. Due to its importance, all these mathematical tools are taught in modern management education programmes to develop managerial skills.
Operations Management is another approach under this school of thought. This approach is primarily concerned with the production management and its related areas. In fact, it is difficult to draw a line between management science and operations management.
In operations management, most of the mathematical tools that are mentioned in the discussion of management science are used. Moreover, such approach also helps in decision making in other functional areas like finance, marketing, human resource management, etc.
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Management Information Systems (MIS) approach focuses on design and implementation of computer-based information systems for the management’s use. It converts raw data into information inputs, which are subsequently used by management for any decision making.
Now-a-days, MIS helps in enterprise- wide decision making, integrating all functions of management. Enterprise-wide decision support systems like Human Resource Information Systems (HRIS) is an important example, which is used for any critical or strategically important decisions, as it provides valuable information inputs.
2. Systems Theory Approach:
An extension of quantitative school of thought is Systems Theory Approach. This approach considers organization as a whole because of the interdependent nature of activities, requiring organization to interact with the external environmental factors. In this competitive scenario, organizations cannot function in isolation.
It has to operate in an open system, interacting with the environment around it. Whether it is a new product development or employee selection, organization has to decide considering it as an open system, as its decisions are interrelated and interdependent on the environmental situation.
Synergy is the phenomenon of open systems of management by which the total system is more than a simple sum of its parts. It means, if a manager effectively coordinates the efforts of related sub-systems, the result would be greater than the sum total of such independent efforts, i.e., 2 + 2 would be greater than 4. Systems Approach to management is also important because it helps in avoiding entropy. Entropy is a syndrome, where systems and processes eventually decay. By relating organization to environment, following the Systems Approach, such situation can be averted
3. Contingency Theory Approach:
Contingency Theory Approach is another extension of modern approach. It also contributed significantly to the evolution of management thoughts. This approach discards the concept of universality in management principles and determines managerial decisions considering situational factors.
The task of a manager, as per this theory, is to identify which technique will, in a particular situation, under particular circumstances and at a particular point of time, best contribute to achievement of organizational goals.
The theory contends that organizational phenomena exist in a logical pattern, which managers can understand by gradually interpreting various situations. They can thereby frame their managerial styles, which vary from situation to situation.
Contingency Theory and Systems Theory together are classified as Integrative School of Management Thought, because these two theories integrate the classical, behavioural and quantitative theories into a framework that uses only the best of each approach in a given situation.
