ORGANIZATION AND

MANAGEMENT
QUARTER 4:

LAS 1: ORGANIZATION
THEORIES
Running a business requires a lot of hard
work, unbridled enthusiasm and
dedication, and unprecedented ideas, the
key features that can make the business
profitable and successful. Furthermore,
business organizations employ
organizational theories which address all
questions on how business firms work.
After going through this module, you
are expected to:

•Apply organization theories for

effective business management.
ABM_AOM11-Ih-j17
 Direction: Read the questions below and choose the letter of your answer from the given choices. Write
your answer on a separate sheet of paper.
1. What theory implies that an organization is a system that changes with the change in its
environment whether internal or external?
A. Contingency theory
B. Administrative theory
C. Neoclassical theory
D. Modern Theory
2. Tasks are being coordinated within a complex division of labor by the most rational organization. What
organization theory is most likely taking place?
A. Decision-making theory
B. Systems theory
C. Administrative theory
D. Bureaucracy
3. Every situation requires different managerial action.
A. Motivation theory
B. Contingency theory
C. Scientific Management theory
D. Decision-making theory
 
 
4. What theory describes the organization as a social system that can be affected by human
actions?

A.Systems theory
B.Motivation theory
C.Neoclassical theory
D.Contingency theory
5. According to this theory, the organization is considered as a machine and the employees as
different components of that machine.

E.Decision-making theory
F. Administrative theory
G.Scientific Management theory
H.Neoclassical theory
 •Organization theories speak about the set of
interconnected concepts, definitions that explain
the behavior of individuals or groups, who interact
with each other to perform the activities intended
towards the accomplishment of a common goal.
The activities are not only limited to the
identification of solutions when problems arise but
it implies how to maximize efficiency and
productivity.
ORGANIZATION THEORIES AND APPLICATION
2The Classical Theory

The classical or traditional theory focuses on the

formal structure of organization and leaves the
human aspect of organization to personnel
specialists. They have been concerned with the best
way of dividing up the tasks to be done, with how to
group these tasks together into departments, and
how to deal with the problems of coordination
1The Decision-making Theory

Herbert A. Simon (who was awarded in the

year 1978, the Nobel Prize mainly on the
basis of this theory) favors organization as
a structure of decision makers. In an
organization, decisions are made at all
levels, and important decisions tend to be
made at higher levels.
4The Systems Theory

The systems approach looks at the organization as a

total system comprising a number of interacting
variables. This approach highlights that we should not
deal with problems in isolation but consider their
interactions. In fact, the word system means a regularly
interacting or interdependent group of items forming a
“unified whole”.
3Weber’s Ideal of Bureaucracy. Max Weber, a German scientist,
defines bureaucracy as a highly structured, formalized, and also an
impersonal organization. He also instituted the belief that an
organization must have a defined hierarchical structure and
clear rules, regulations, and lines of authority which govern it.
• Max Weber bureaucracy ideally has the following
characteristics:
 Specialization of labor
 A formal set of rules and regulations
 Well-defined hierarchy within the organization
 Impersonality in the application of rules
10Modern Theory.

The modern theory considers the organization as

an open system. This means an organization
consistently interacts with its environment, so
as to sustain and grow in the market. Since the
organization adopts the open system several
elements such as input, transformation, process,
output, feedback and environment exists. Thus,
this theory differs from the classical theory where
the organization is considered as a closed system.
6Neo-classical Perspective.

This theory is developed to fill up the gaps

and deficiencies in the classical theory. It is
concerned with human relations
movement. In this way, the study of
organization is based on human behavior
such as – how people behave and why
they do so in a particular situation
this theory emphasized that the workers
should be encouraged and motivated to
display active participation in the
production process. The feelings and
sentiments of the workers should be taken
into account and respected before any
change is introduced in the organization
5Contingency Theory.

It is an important theory of management

developed in the recent past to evolve practical
solutions to situations. This is an approach
based on situation. Critics of scientific and
administrative management could not give a
proper guideline, how to evolve a proper
management theory.
It makes management responsible to make
appropriate decision to the need of the situation
7Motivation Theory.

It is concerned with the study or work

motivation of employees of the organization.
The works are performed effectively if proper
motivation is given to the employees. The
motivation may be in monetary and non-
monetary terms. The inner talents of any
person can be identified after giving adequate
motivation to employees.
9Administrative Theory.

Henry Fayol is one of the famous names to

be attributed to this theory. This theory
made its contribution on the managerial
aspect of an organization. The theory is very
much associated with the proper
understanding of the task of management. It
provides directions or principles how to
activate management effectively
8Scientific Management Theory.

A theory which is well known for its

application of engineering science at the
production floor or the operating levels.
The major contributor of this theory is
Fredrick Winslow Taylor, and that’s why
the scientific management is often called as
“Taylorism”.
The scientific management theory focused on
improving the efficiency of each individual in
the organization. The major emphasis is on
increasing the production through the use of
intensive technology, and the human beings are
just considered as adjuncts to machines in the
performance of routine tasks.
• Directions: Read each item carefully. Use a separate sheet for your answers. Write the letter of the best
answer for each test item.

1. What theory is concerned with the interaction between the different aspect of the organization, people,
technology, formal structure, the physical setting, and environment?
A.Decision-making theory
B.Scientific Management theory
C.Classical theory
D.Systems theory
2. Who is the main proponent of scientific management theory?
A.Henry Fayol
B.Herbert Simon
C.Fredrick Taylor
D.Max Weber
3. What theory of organization is based on human behavior?
A.Behaviorism theory
B.Classical theory
C.Motivation theory
D.Neo-classical theory
4. Which is defined as a highly structured, formalized, and also an impersonal organization?
A.Government
B.Business firm
C.Bureaucracy
D.All of the above
5. Which theory is concerned with the best way of dividing up the tasks to be done, with how to
group these tasks together into departments, and how to deal with the problems of coordination?
E.Modern theory
F. Classical theory
G.Motivation theory
H.Taylorism
6. Art Life Company provides compensation benefits and bonuses to employees for them to be
more productive. Which theory is being applied in this situation?
I. Classical theory
J. Contingency theory
K.Motivation theory
D. Modern theory
7. What theory highly suggests division of labor among employees?
A. Bureaucracy
B. Administrative theory
C. Systems theory
D. Scientific management theory
8. Bureaucracy has the following characteristics EXCEPT:
E. Specialization of labor
F. A formal set of rules and regulations
G. Well-defined hierarchy within the organization
H. Personality in the application of rules
9. It is the integration of the concepts of the classical models with the social and
behavioral sciences.
I. Behaviorism theory
J. Classical theory
K. Motivation theory
L. Neo-classical theory
10.What theory assumes that organizations adapt to their environments in the absence of
formal structures?
M. Classical theory
N. Contingency theory
O. Motivation theory
P. Modern theory
• JEREZ
• ALMACIN