Management Accounting

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).