DAYSTAR UNIVERSITY- MASTERS IN BUSINESS ADMINSTRATION

MGT 612X: STRATEGIC MANAGEMENT & POLICY

GROUP ASSIGNMENT: THREE KEY STRATEGIC MANAGEMENT THEORIES

SUBMITTED TO:

DR. SAMUEL MURIITHI

BY:

CATHERINE WANJIRU 20-1568

DREDA WANGIO 20-0107

ESSAJEE ZAHRA SHAMOON 14-2425

GAKENIA KAGIRI 20-0984

DUE DATE: 29th JUNE 2021

Research on three key strategic management theories relevant to the 21st century business.
From the theories discussed, how relevant are the theories to the African business
environment? What theory would you propose to SME businesses struggling to survive
during the period of COVID-19 and why? (10 Marks).

a) Research on three key strategic management theories relevant to the 21st century
business.

Thompson, Strickland & Gamble (2007), assert that an important aspect about strategy
is that management needs to proactively craft how the organization’s business will be
conducted. This brings about the need for management to continuously keep their strategy
evolving and treat it as a living process especially in the 21 st century. The following
theories can enable businesses to stay relevant:

Scientific Management Theory

Fredrick Taylor’s theory of scientific management emphasized money as key
incentive for working. This informed the “fair day’s wages for a fair day’s work” concept.
In this century this concept is seen to inform the policy making in many countries with
Western countries really adopting this concept.
Millennial employees are current champions of the fact that forcing people to work
hard wasn’t the best way to optimize results. Instead, Taylor recommended simplifying
tasks so as to increase productivity. This has resulting into more adoption of technology
for work, concepts like teleworking and more collaborative projects being introduced into
the workplace.
Innovation Management is the way to change the organization, as a response to
external or internal changes or as a proactive attempt to change this environment (Hult et
al., 2004). Initially, top executives had minimal contact with his employees but in the 21st
century we see organizations adopting a flat structure with employees and management
seemingly working as equals.

Contingency Management Theory

In the contingency management theory managers are at the forefront of the success or
failure of a company’s fitness to effectively adjust to change. Managers who implement
this theory use their training, experience and gut instinct to decide on the proper course of
action based on the variable or situation they face (Plunkett, Allen & Attner, 2013). They

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 trio believe that the old philosophy of “one size fits all” does not apply in business like
other management theories suggest.
Fred Fiedler’s contingency theory proposed that the traits of a leader were directly
related to how effectively he led. According to Fiedler, there are leadership traits that are
suited for every kind of situation. This is like what we see in modern day organizations,
leaders are flexible to adapt to the changing environment and no one management
approach suits every organization. The contingency theory states that the size of an
organization, technology and leadership style is the variables likely to influence an
organization’s structure.
Adaptability is crucial in today’s business environment, especially for organizations
trying to remain significant in global industries. All management theories offer ways to
effectively run a company, but the contingency management theory is one of the most
relevant in running a successful organization in the 21st century.

Theory X and Theory Y

Douglas McGregor’s theory refers to two management styles: the authoritarian

(Theory X) and participative (Theory Y). During this era of emergence of service
industries and global e-business organizations we see these theories come into play.
Theory X holds a pessimistic view of employees in the sense that they cannot work in the
absence of incentives. Theory Y, on the other hand, holds an optimistic opinion of
employees.
In the past, leaders employed the authoritarian style of management. However, this
style does not work in the modern day as current strategic management practices call for a
collaborative and trust-based relationship. Leaders are likely to use participative
management as we are currently working in a global environment with employees
working remotely as a result of the COVID-19 pandemic. Managers must trust their
employees and give them autonomy over their work to achieve the best performance from
them.
Aithal & Kumar (2016), cite that today’s employee is no more passive or lazy (theory
X) or contended with rewards and support (theory Y). Instead, is a self-centred
professional who is trying to catch up with the fast pace of life yet fulfil the desires of
living. Therefore, planning for realization of organizational and individual objectives
should follow strategy adoption that rely on role models of best performers as well as
exploration of one’s own self. Performance as well as responsibility towards targets is

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 realized through fulfilling accountability. This informs the need of the Theory of
Accountability.
b) From the theories discussed, how relevant are the theories to the African business
environment?
The following theories are relevant in the following ways:
Scientific Management Theory- This theory is relevant to African business
environment as many African employees heavily rely and depend on incentives such as
salary bonuses, wages, medical insurance, retirement benefits, commission amongst
others to perform their tasks and responsibilities to the best of their abilities. The best
employee is rewarded based on their performance and achievements. This in turn is
beneficial to the company as great levels of output is required from a staff for them to be
rewarded.
A research conducted by Damilola & Olusoji (2014), in Nigeria concluded that many
insurance companies in Nigeria rely on the ideology of Scientific Management and
Taylorism to get the best out of their workers, through the design of incentive systems
which are based on output. Most insurance workers earn an extra reward, via
commissions and bonuses, if targets are met. Such targets add value and volume to the
turnover of the organisation, as well as productivity. The marketing departments of most
banks also rely on this approach.
Contingency Theory- This theory is relevant to the African business environment as
businesses are dynamic and each situation requires its own unique way of management in
order to survive in the industry. The environment comprises of both internal and external
environment that affect the running of a company. In Africa, a case study done by
Marwah (2012), on the Influence of Envronmental Factors on the Operations of UBA
Bank Ltd in Kenya highlighted the external factors that affect operations include: legal
such as taxes, economic such as infrastructure, political such as government intervention
and, socio-cultural such as coruption. Internal factors affecting businesses as brought out
by Shiamwama, Ombayo, & Mukolwe (2014), on Internal Factors Affecting the
Performance of Businesses of Retirees in Kakamega Municipality include: Nature of
business, capital, human relations, marketing strategy and financial stability amongst
others.
Based on these factors that are all unique and distinct to each business, management
has to formulate its stategies to adopt to the changing times as is stated by the
Contingency Theory. For example as cited by Damilola & Olusoji (2014), most Nigerian

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organisations that deal in fast moving consumer goods (FMCGs) rely on the
contingency approach, which depends on the circumstances. Majority of these
organisations take so many factors of the present situation into account (contingencies),
before making a decision. Until Cowbell milk entered the Nigerian market with sachet
packaging, milks were in tins. Most milk companies had torespond to such
competitive contingencies, if they were to survive.
The primary relevance the contingency approach adds to management is that it affirms
that there are no universal or simplistic principles for managers to adhere to and
that management is entirely situational. A major benefit of this theory is that it
makes managers much more dynamic and flexible in their approach to problem-
solving and managing organisations, since alternatives for managerial acts are
contingent upon internal and external factors (Damilola & Olusoji, 2014).
Theory X and Y- The relevance of this theory is that, the kind of human resource
employed by a organization dictate the kind of authority that will be deployed by the
organization. In Africa, there are different kinds of employees and what drives them to
work. Some work because they love their job and doing their job to their best of abilities
bring them satisfaction and others only do it for the money. Those who love their job
need no supervision while those who have no motivation for the job need supervision.
Elaborating on McGregor’s theory, Thompson and McHugh (2009) as cited in
Natukunda (2016), explain that managers who hold Theory X views hold assumptions
about workers that lead them to use coercive behaviour, causing employees to actually
take on Theory X characteristics. Likewise, Theory Y assumptions on the part of the
manager will produce Y-type behaviour in both managers and workers. A research
conducted in Uganda on Employee Performance Management and Control in Africa,
shows that besides managers’ assumptions about employees, the workers’ behavioural
responses resulted from the value they put on their informal relationships with each other,
and not merely what managers assumed about them (Natukunda, 2016).
Today, the management needs to deploy both ways of management. For staff that need
motivation, especially in large companies, management can apply Theory X whereas,
employees are self-driven, they can use Theory Y. This theory has come to major play
during Covid-19 times in Africa where some organizations resorted to working from
home. Staff who can work without motivation have easily cooperated and responded to
the changing times to serve the firm in the best way possible. While, staff who always

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 needed a push have proved to be burdensome to managers as they are harldy available
and cannot be supervised from their respective homes.

c) What theory would you propose to SME businesses struggling to survive during the
period of COVID-19 and why?
Small and Medium Enterprises (MSMEs) play a crucial role for economic
development of African countries. They are a vital engine in African economy, since they
drive growth, create employment - especially among youth - and spearhead innovation.
They provide a customer base to larger companies across the supply chain and supply
vital goods and services to companies and households, helping to keep the wheels of the
economy in motion. Many of Africa’s SMEs have the potential to become tomorrow’s
large corporations that the continent needs to continue on its path to growth and
prosperity. There are several ways the Coronavirus pandemic affects the economy,
especially the Small and Medium Enterprises, on both the supply and demand according
to AFD (2020), which include:
i. SME’s experienced a reduction in the supply of labour, as workers were unwell
or needed to look after children or other dependents while schools remained
closed and movements of people were restricted
ii. The supply chains were interrupted leading to shortages of intermediate goods.
There was a sudden loss of demand and revenue for (SMEs) which severely
affected their ability to function, and/or caused severe liquidity shortages.
iii. Consumers experienced loss of income, fear of contagion and heightened
uncertainty, which in turn reduced spending and consumption of goods.
iv. Some sectors, such as tourism and transportation, were particularly affected,
also contributing to reduced business and consumer confidence.
The contingency approach to management suggests that there is no particular best way
to manage. The management activities such as planning, controlling, leadership, or
organization are completely dependent on the circumstances and the environment. 
According to the contingency approach, the managers generally pay attention to the
current situations and then make strategies based on their knowledge and experience. This
approach is quite advantageous for the SME’s as it allows them to learn from specific
circumstances and change their policies accordingly in the future if the same situation
arises.

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 The contingency approach to leadership means that the leaders themselves have to
adjust their working styles and management strategies based on the needs of their co-
workers and the organization.

The contingency approach focuses on the variable nature of businesses and

organizations. The managers choose a framework for finding solutions to a problem
rather than sticking to a particular strategy for solving the problems. This allows the SME
to work under differentiable environmental conditions and circumstances.
All managers have to take into consideration the composition of their internal and
external environment before making major decisions which can significantly impact the
operations of the business (Crawford, 2010). The manager has to consider the structures
instituted, organizational needs, resources in control, organizational capability and human
resources of the institution which they manage (Zeithaml, Varadarajan, & Zeithaml,
2012).
Vastag (2009), argued that when applied correctly, the contingency theory allows
businesses to maximize their performance capability by empowering them and guiding
the management in the best course of action depending on the structural choices and
infrastructural factors. The application of the theory thus helps SME’s enterprises in
adopting various strategies that support the maximization of their performance (Helkiö,
2008).
Given that each strategy is not equally effective under all conditions, certain
organizations' actions are more appropriate than those of other organizations (Crawford,
2010). The management makes decisions and institutes policies and procedures aimed at
enabling the business to sustain itself even with the existence of complex uncertainties of
their situations, so as to improve their performance (Zeithaml, Varadarajan, & Zeithaml,
2012). These uncertainties are a product of the technological and environmental
composition which leads to organizations having different strategies, structures, and
decision-making procedures. In addition, Zeithaml, Varadarajan and Zeithaml (2012),
argued that the operationalization of these dimensions has become a norm in the
contingency theory development, providing organizations a level of control although its
performance is still dependent on its internal composition and capabilities.
The theory holds that a single form of management cannot be applied in all
organizations and lead to effective execution of organizational processes since all firms
face different situations. Hence, managers are expected to examine the various situations

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 and deploy the right marketing, operational and innovative practices to ensure the SME’s
performance.

References
AFD (2020). Supporting African Small and Medium Businesses During the COVID Crisis: A
Development Priority. https://www.afd.fr/en/actualites/supporting-african-small-and-
medium-business-duringcovid-crisis-development-priority, 19, June 2020

Aithal, S., & Kumar, P. (2016). Organizational Behaviour in 21st Century – 'Theory A' for
Managing People for Performance. Organizations & Markets: Policies & Processes
eJournal.

Allen, G. P., & Attner, R. F. (2013). Management: an approach to customer expectations.

South-Western: Cengage Learning.

Crawford, G. A. (2010). Information as a Strategic Contingency: Applying the Strategic

Contingencies Theory of Intraorganizational Power to Academic Libraries. Hendel
Library at Penn State Harrisburg. College and Research Libraries-, 1-11.

Damilola, A., & Olusoji, J. (2014). Management Theories and its Application in
Organisations: The Nigerian Experience. The British Academy of Management.

Helkiö, P. (2008). International Investigation of Manufacturing Flexibility: Strategies,

Contingencies and Antecedents. Industrial Engineering and Management, 40 - 67.

Ibrahim A Zeidy (2020). Report on Economic Impact of Covid-19 on Micro, Small and
Medium Enterprises (Msmes) in Africa and Policy Options or Mitigation.

Marwah, T. (2012). The Influence of Envronmental Factors on the Operations of UBA Bank
Ltd in Kenya.

Natukunda, L. (2016). Employee performance management and control in Africa: The case
of a development organisation in Uganda.

Shiamwama, S., Ombayo, J., & Mukolwe, M. (2014). Internal Factors Affecting the
Performance of Businesses of Retirees in Kakamega Municipality. International
Journal of Business, Humanities and Technology.

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Thompson Jr., A. S. (2007). Crafting & Executing Strategy. New York: McGraw-Hill Irwin.

Vastag, G. (2009). The theory of performance frontiers. Journal of Operations Management,

18, 353–360.

Zeithaml, V. A., Varadarajan, P. R., & Zeithaml, C. P. (2012). The Contingency Approach:
Its Foundations and Relevance Approach to Theory Building and Research in
Marketing. European Journal of Marketing, 22(7), 37 - 64.