Benefits of the modern theory of management

Here are the benefits of incorporating modern management theories:

 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. For example,
they may implement processes that make employees' tasks more efficient or offer training
programs to improve their skills.

 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.
When managers know what to look for, it can help them identify problems and begin coming up
with potential solutions. The use of mathematical techniques also enables them to use data to
support those solutions and final decisions.

 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. If employees feel satisfied at work, it can boost their morale and engagement and
make them want to continue working for the organization.

 Promotes objectivity: 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. They also enable testing of different options to assess
which best supports the organization. As a result, managers can implement more effective
solutions.

 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. For example, managers can use
new technology to streamline processes or perform statistical modeling when developing
solutions.

Internal Fators:

1. Employees

Employees refer to the general workforce of the organization or business. These are the people
(Men and Women) who engage in production.

2. Competitors

Competitors refer to those who are in the same line of business. A typical example of competitors is
Nike and Adidas.

3. Customers
 The taste and desires of customers are constantly changing. It is the responsibility and goal of the
business to keep up with the demands and changing tastes of customers.

4. Suppliers

Suppliers provide the resources for the production activities of a business. Suppliers affect business
because as a source of raw material for production when they fail to supply the business with the
needed resources for the production it affects the business’ production and service to its customers.

External Factors:

1. Technology

Technology is very important to a business because it determines how well a business does with its
production and also marketing efforts.

2. Government and its Policies

The activities of government affect business. The priority of the government in a certain area of the
economy affects business.

3. Economic Forces and Elements

The prevailing economic conditions at any point in time affect business. The economic forces and
elements which could affect a business are demand and supply and the availability of and cost of
capital. During times of economic recession, businesses don’t do well because of the low consumer
spending experienced at times of recession.

4. Socio-Cultural Factors

The socio-cultural factors which affect businesses are demand, taste and the preference for certain
goods and services at particular times by the consumers.

5. International Factors

The world today is a global community. This means that an event in one country can have a serious
effect in another country due to the availability of modern transportation and communication
methods. The cost of imports and exports also affects business.

Quantitative Theory
This theory based on efficiency and mathematical equations came out of the necessity for managerial
excellence in World War II. This is a simple number-based theory that relies on calculating the risks,
benefits, and drawbacks of any action before it is taken. This approach applies statistics, computer
simulations, information models, and other quantitative techniques to the management of a company.
This theory is usually not used to manage a business on its own. Instead, the Quantitative Theory must
be used with more humanistic theories, in order to run a company. 
The quantitative approach to management uses statistics and mathematical techniques to solve
complex problems. Depending on the business area, managers may use techniques like computer
simulations or information models to assess performance. This analysis enables them to understand
what is working and what is not within the business, then develop solutions to solve or improve the
issues they find. Managers can also use these techniques and data to determine the benefits or risks of
different ideas. This approach can help managers make objective decisions based on data and facts,
rather than personal opinions or feelings, that support the business.

Systems Theory
This theory treats companies like living organisms, with all parts necessary for the company to survive.
Developed by Ludwig von Bertalanffy, this theory states that all parts of a company, from the CEO to the
entry-level employee, must work in harmony for the company to survive. Companies using this theory
think that departments and employees must work as a collective group and not an isolated unit. Synergy
and interconnectedness between departments are key to this theory. 

While striving for harmony between departments is important in a company, most companies don’t
need to rely on synergy so much for their day-to-day functions. For example, the accounting department
of a small company doesn’t need to be totally in sync with the HR department. This management theory
is more of a way you can view the company, not an exact management style.

The systems approach of management states that organizations represent a complex collection of
various components that work together to reach a common goal. An organization is made up of
numerous subsystems, such as different departments. Managers using this theory examine how these
subsystems interact with and affect one another, rather than analyzing them separately. They must also
consider their surrounding environment and external factors that influence or affect these systems. 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.

Contingency Theory
The Contingency Management Theory holds that every situation requires a different leadership style,
and therefore no one theory can work for an entire office. Created by Fred Fiedler in the 1960s, this
theory states that it is up to the leaders of a company to assess a situation and use the best leadership
strategy. Fiedler believed there are three main variables for determining what leadership strategy to
employ — organization size, technology being used, and the overall style of leadership in the company. 

This theory puts a lot of responsibility on the leaders of a company. Fiedler believed that a leader’s traits
directly affected how they managed people. This theory is also a more useable theory for modern
workplaces, as it understands that as technology and companies change, so must the leadership styles.

Contingency approach

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.

This theory outlines three variables that it believes influence an organization's structure: the
organization's size, the technology it uses, and the leadership styles. An effective manager understands
these factors and how they may impact performance. For example, a small organization may represent
more flexibility and less separation between departments, whereas a large organization may be more
complex and divided. Managers in smaller organizations can have more control over processes due to
their flexibility and potentially make changes to them more easily.