Management Accounting

Managers rely on management theories to motivate employees, allocate resources, negotiate deals, or make decisions. Management theories are defined as management concepts and strategies which include tools, guidelines, and frameworks which are used to run modern organizations. Managers rely on several theories to make decisions that best suit company culture and workforce. Although older theories are still relevant, new theories have been developed in line with the current practices in the business world. Managers use management theories to enhance productivity and improve service quality. Some of the popularly applied management theories are contingency theory, system theory, chaos theory, and theory X and theory Y.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name
Institution

MANAGEMENT ACCOUNTING 2
Apply management accounting practices and theories to analyse and solve business and
management problems
Managers rely on management theories to motivate employees, allocate resources,
negotiate deals, or make decisions. Management theories are defined as management
concepts and strategies which include tools, guidelines, and frameworks which are used to
run modern organizations. Managers rely on several theories to make decisions that best suit
company culture and workforce. Although older theories are still relevant, new theories have
been developed in line with the current practices in the business world (Rahim, 2017).
Managers use management theories to enhance productivity and improve service
quality. Some of the popularly applied management theories are contingency theory, system
theory, chaos theory, and theory X and theory Y.
a) Contingency theory states that managers rely on the present circumstances facing a
business to make decisions instead of using the established systems. Managers should
learn the characteristics of a given current situation before making a decision. For
example, institutional managers apply a leadership approach to enhance employees'
participation in decision making (Kessler, 2013).
b) Systems theory stipulates that managers should learn how an employee influence
organizational systems as well as how the systems affect an employee. An
organization system comprises of different functionality parts which work together to
realise a common objective. The systems theory encourage managers to have a broad
observation of their workforce. Understanding the systems would help managers to
develop and match different programs to match a common organizational goal or
mission. Failure to understand and match organizational systems leads to the isolated
performance of departments (Rahim, 2017).

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c) Chaos theory appreciates the changing business environment. The theory states that
change cannot be avoided and controlled. As companies grow, the necessity for
changes increases as well, which leads to complexity in managing entities. Therefore,
managers should increase their energy to run sophisticated companies. Managers
should direct their energy to developing more structures to maintain organizational
stability (Kessler, 2013).
d) Theory X and theory Y assumes that managers hold subjective views about their
employees. Managers use theory x to motivate employees who are considered to be
less ambitious to increase their productivity. Likewise, managers use theory Y when
the employees are naturally ambitious and are responsible. Theory X pronounce that
managers should adopt a controlling leadership style to succeed. Likewise, Theory Y
states that managers should adopt inspiration leadership styles which encourage
employees to participate in decision making (Rahim, 2017).
No single theory is considered to be the best over the others. Each one of them offers
valuable guidance based on the manager's requirements. Management success is realised by
combining several theories because dynamic factors influence the workplace. Management
theories are integral to business decision making. However, managers should consider
different factors before deciding on the most appropriate theory to apply given the current
situation. For example, small business managers should consider the sustainability aspect of
implementing a theory based on business resources (Kessler, 2013).

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References
Kessler, E. H. (2013). Encyclopedia of Management Theory. London, UK: SAGE
Publications.
Rahim, A. (2017). Management: Theory, Research, and Practice. San Diego, CA: Cognella
Academic Publishing.