Organisation Theory
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ORGANISATION THEORY
(ESSAY-CRISTIAN OPREA)
(ESSAY-CRISTIAN OPREA)
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Classical approaches....................................................................................................................3
Neo-classical approaches.............................................................................................................4
Forces that will shape organisations and their structures in the future........................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Classical approaches....................................................................................................................3
Neo-classical approaches.............................................................................................................4
Forces that will shape organisations and their structures in the future........................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
INTRODUCTION
Organisational theories play an effective role to different companies and organisation in
market place, in which top-level management of each company have to follow the concept of
theories of organisation (Sears, 2017). Currently those organisations and groups are gaining huge
profit in market place where existing management has already implemented various theories of
organisation. Basically, organisational theories provide a specific framework to different
companies and ventures to achieve very positive outcomes in market place. This report discusses
the classical and neo classical approaches to an organisation. Factors which shape an
organisation and its structure also has been mentioned in this report.
MAIN BODY
Classical approaches
Classical approach is the oldest approach to organisation, and it known by many other
names as well, like; functional, empirical and management process approach etc. This theory is
helpful to different organisations in representing traditional thought about business and growth.
This classical approach is fully focused on the overall development of an organisation. Three
major classical approaches to organisation has been discussed below;
Scientific Management Approach
This approach is given by Frederick Winslow Taylor, and he is currently known as
“father of scientific management”. He has provided some specific ways of management through
this theory, and that’s why currently lots of ventures highly considers scientific management
theory in their daily operations. According to Taylor’s view point, top-level management of a
business should always start its work with conducting the practice of scientific selection and
training of workers or employees. After conducting this practice, that business will simply
achieve an effective workforce in its workplace. This approach said that, a venture should always
be focused on working for maximum result or output, because this is the only way to perfectly
survive in market place.
Administrative Management Approach
Organisational theories play an effective role to different companies and organisation in
market place, in which top-level management of each company have to follow the concept of
theories of organisation (Sears, 2017). Currently those organisations and groups are gaining huge
profit in market place where existing management has already implemented various theories of
organisation. Basically, organisational theories provide a specific framework to different
companies and ventures to achieve very positive outcomes in market place. This report discusses
the classical and neo classical approaches to an organisation. Factors which shape an
organisation and its structure also has been mentioned in this report.
MAIN BODY
Classical approaches
Classical approach is the oldest approach to organisation, and it known by many other
names as well, like; functional, empirical and management process approach etc. This theory is
helpful to different organisations in representing traditional thought about business and growth.
This classical approach is fully focused on the overall development of an organisation. Three
major classical approaches to organisation has been discussed below;
Scientific Management Approach
This approach is given by Frederick Winslow Taylor, and he is currently known as
“father of scientific management”. He has provided some specific ways of management through
this theory, and that’s why currently lots of ventures highly considers scientific management
theory in their daily operations. According to Taylor’s view point, top-level management of a
business should always start its work with conducting the practice of scientific selection and
training of workers or employees. After conducting this practice, that business will simply
achieve an effective workforce in its workplace. This approach said that, a venture should always
be focused on working for maximum result or output, because this is the only way to perfectly
survive in market place.
Administrative Management Approach
Administrative management theory or approach was given by Henry Fayol. Basically,
this approach is completely based on the functions and principles of management. The
management principles of Mr. Fayol are currently considered by many ventures and
organisations in market place for managing their various activities and operations in a very
systematic manner (Brugger and Gehrke, 2017). According to administrative management
approach, each business has to divide its whole organisational work into small functional
departments for running different functions in proper channel. The business needs to give
different responsibilities to its various people or employees as well for maintaining effectiveness
in their performance. Administrative management approach contributes in properly conducting
five major functions of management as well, like; Planning, organising, directing, coordinating
and controlling Mr. Fayol said that, Discipline is another key principle of management, in which
top-level management of each venture have to follow the concept of discipline in its workplace.
After considering these factors of administrative approach, any organisation can simply gain
huge profit margins in market place.
Bureaucratic Approach
Bureaucratic theory has been given by Max Weber. He was a German sociologist.
Currently this theory also has used by many of companies in market place. This approach also
discusses some fundamental ways or methods of management which can save lots of precious
time and resources of an organisation. According to Bureaucratic approach, division of work is
very necessary for analysing responsibilities of different people in workplace. Rigidity in rules
and regulation is another major attribute existing approach which has influenced to organisation
for developing some productive rules and regulations in organisation for motivating all people to
work in a proper manner. This approach is focused on the development of various competences,
skills and abilities of employees as well. That’s why Bureaucratic is also a very useful classical
theory to organisation
Neo-classical approaches
Neo-classical approach is basically an attempt to more improve or develop classical
theory. This is also known as behavioural science and human relations approach which gave
effective emphasis for man behind a machine. Currently this theory is mainly used by
organisation for reducing stress levels of employees, and providing them the great satisfaction.
this approach is completely based on the functions and principles of management. The
management principles of Mr. Fayol are currently considered by many ventures and
organisations in market place for managing their various activities and operations in a very
systematic manner (Brugger and Gehrke, 2017). According to administrative management
approach, each business has to divide its whole organisational work into small functional
departments for running different functions in proper channel. The business needs to give
different responsibilities to its various people or employees as well for maintaining effectiveness
in their performance. Administrative management approach contributes in properly conducting
five major functions of management as well, like; Planning, organising, directing, coordinating
and controlling Mr. Fayol said that, Discipline is another key principle of management, in which
top-level management of each venture have to follow the concept of discipline in its workplace.
After considering these factors of administrative approach, any organisation can simply gain
huge profit margins in market place.
Bureaucratic Approach
Bureaucratic theory has been given by Max Weber. He was a German sociologist.
Currently this theory also has used by many of companies in market place. This approach also
discusses some fundamental ways or methods of management which can save lots of precious
time and resources of an organisation. According to Bureaucratic approach, division of work is
very necessary for analysing responsibilities of different people in workplace. Rigidity in rules
and regulation is another major attribute existing approach which has influenced to organisation
for developing some productive rules and regulations in organisation for motivating all people to
work in a proper manner. This approach is focused on the development of various competences,
skills and abilities of employees as well. That’s why Bureaucratic is also a very useful classical
theory to organisation
Neo-classical approaches
Neo-classical approach is basically an attempt to more improve or develop classical
theory. This is also known as behavioural science and human relations approach which gave
effective emphasis for man behind a machine. Currently this theory is mainly used by
organisation for reducing stress levels of employees, and providing them the great satisfaction.
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After employing neo-classical theory in workplace, any venture can simply retain its various
talented and skilled employees in market place (Boianovsky, 2018). There are three major neo-
classical approaches has been discussed below;
Human Relations Approach
This is the first and most important neo-classical approach which was given by Elton
Mayo. Human relations approach is basically based on the development of human or people
relations in workplace of organisation. Currently most business and venture has implemented
this approach in their workplace for improving employee relations, because this approach is very
helpful in order to maintain an effective relationship between employer and employees. In this
dynamic and modern world, employees get highly motivated in workplace when its upper
management or employer maintains effective relations with them. This is the main reason that,
currently many businesses have been succeeded in improving their employee relations by using
this neo-classical human relations approach.
Hawthorne Experiment
Hawthorne experiment is another major neo-classical approach which focuses on
changing or improving behaviour of people in workplace. Basically, the approach was developed
in 1927 by Fritz J. Roethlisberger, Dickson and Elton Mayo at Electric’s Hawthorne plant in
Chicago. According to this theory, top-level management in each company or venture have to be
focuses on day to day developing behaviour of its employees, because many times, employees’
behaviour changed by negative way because of many negative factors of business environment
(O’Donnell, 2017). This is the main reason that, upper management of each business need to use
this approach for positively affecting the behaviour of its employees. This approach promotes
self-discipline and positives discipline as well which helps improving productivity of employees.
Behavioural Science Approach
Behavioural science approach is very helpful approach to different organisations, because
it focuses on the sociological and psychological processes which affects to performance of
different employees. Currently most organisations have implemented this neo-classical approach
for positively changing different behavioural aspects of employees or workers, like; attitude,
talented and skilled employees in market place (Boianovsky, 2018). There are three major neo-
classical approaches has been discussed below;
Human Relations Approach
This is the first and most important neo-classical approach which was given by Elton
Mayo. Human relations approach is basically based on the development of human or people
relations in workplace of organisation. Currently most business and venture has implemented
this approach in their workplace for improving employee relations, because this approach is very
helpful in order to maintain an effective relationship between employer and employees. In this
dynamic and modern world, employees get highly motivated in workplace when its upper
management or employer maintains effective relations with them. This is the main reason that,
currently many businesses have been succeeded in improving their employee relations by using
this neo-classical human relations approach.
Hawthorne Experiment
Hawthorne experiment is another major neo-classical approach which focuses on
changing or improving behaviour of people in workplace. Basically, the approach was developed
in 1927 by Fritz J. Roethlisberger, Dickson and Elton Mayo at Electric’s Hawthorne plant in
Chicago. According to this theory, top-level management in each company or venture have to be
focuses on day to day developing behaviour of its employees, because many times, employees’
behaviour changed by negative way because of many negative factors of business environment
(O’Donnell, 2017). This is the main reason that, upper management of each business need to use
this approach for positively affecting the behaviour of its employees. This approach promotes
self-discipline and positives discipline as well which helps improving productivity of employees.
Behavioural Science Approach
Behavioural science approach is very helpful approach to different organisations, because
it focuses on the sociological and psychological processes which affects to performance of
different employees. Currently most organisations have implemented this neo-classical approach
for positively changing different behavioural aspects of employees or workers, like; attitude,
motivation and interest etc. This approach has enabled to a company for removing all those
factors from its workplace which can negatively affect to performance of employees. It helps in
turning negative motivation of people into positive motivation. That’s why behavioural science
approach is also very productive neo-classical approach to an organisation.
Maslow’s theory of motivation
This theory basically aware about five major needs of humans which can motivate to employees
well in the workplace.
Psychological needs: These needs include need of food, need to clothes, need of
accommodations.
Safety needs: These needs motivate to an employee for working in a safe and secure workplace.
Social needs: Social needs motivates to an employee to make new friends, fun squad, love and
belonginess etc.
Esteem needs: These needs encourage to work hard to get appreciated and rewarded in
workplace.
Self-actualisation: Employees get motivated to do some different or productive to improve its
levels of dignity.
X and Y Theories
X and Y Theories are generally theories of employees work management and motivation
which was first introduced by McGregor in own book, named; “The Human Side of Enterprise”.
The X theory has explained the importance of external rewards heightened supervision and
penalties. On the other side, Y theory has highlighted the motivating or encouraging role of the
job satisfaction and motivates employees for approach actions without the direct supervision.
Forces that will shape organisations and their structures in the future
There are various factors exists in the market place that will defiantly shape an
organisation and its structure in the future. Top-level management has highly required to
consider these all factors for systematically dealing with the impact of these all factors. In this
factors from its workplace which can negatively affect to performance of employees. It helps in
turning negative motivation of people into positive motivation. That’s why behavioural science
approach is also very productive neo-classical approach to an organisation.
Maslow’s theory of motivation
This theory basically aware about five major needs of humans which can motivate to employees
well in the workplace.
Psychological needs: These needs include need of food, need to clothes, need of
accommodations.
Safety needs: These needs motivate to an employee for working in a safe and secure workplace.
Social needs: Social needs motivates to an employee to make new friends, fun squad, love and
belonginess etc.
Esteem needs: These needs encourage to work hard to get appreciated and rewarded in
workplace.
Self-actualisation: Employees get motivated to do some different or productive to improve its
levels of dignity.
X and Y Theories
X and Y Theories are generally theories of employees work management and motivation
which was first introduced by McGregor in own book, named; “The Human Side of Enterprise”.
The X theory has explained the importance of external rewards heightened supervision and
penalties. On the other side, Y theory has highlighted the motivating or encouraging role of the
job satisfaction and motivates employees for approach actions without the direct supervision.
Forces that will shape organisations and their structures in the future
There are various factors exists in the market place that will defiantly shape an
organisation and its structure in the future. Top-level management has highly required to
consider these all factors for systematically dealing with the impact of these all factors. In this
situation, some major factors have been discussed below which will shape a company or a
business and its structure in the future.
Change in the demand of talent
In this dynamic world, there is huge competition in each industry or sector, in which most
companies and businesses in market place has started to demand very highly talented and skilled
employees in their workplace. Many new entrants come in market place day to day, so currently
top-level management of each venture is taking lots of actions for hiring some talent employees
in their workplace for gaining effective outcomes. Demand of talent factor will influence to a
business in the future for conducting the practice of talent management in business environment
for gaining workforce many talented employees. HR departments within different organisations
will get influenced to demand for talented employees in future, because after taking this step,
they can simply deal with the existing high market competition. In this situation, factor relating
to demand of talent will shape a company and its structure in the future.
Technology and digital productivity
A business and its organisational structure will be shaped by technology and digital
productivity factors as well (Letaifa and Goglio-Primard, 2016). In this situation, upper
management of each organisational have to make a specific plan for properly dealing with
impact of these factors of its business environment as well. In this dynamic and modern world,
each venture is trying to implement various modern and digital technologies within its workplace
for improving its productivity and performance in market place. These factors will shape an
organisation and its structure in the future as well, because day to day many new digital
technologies comes in market place which affects to business environment of each company and
venture in across the world. However, technology and digital productivity always positively
impact any business in market place, so that upper management of a business not to worry about
it that, these factors will negatively shape its organisational structure, because these factors will
defiantly shape positively to a venture and its organisational structure.
Consumer trends
business and its structure in the future.
Change in the demand of talent
In this dynamic world, there is huge competition in each industry or sector, in which most
companies and businesses in market place has started to demand very highly talented and skilled
employees in their workplace. Many new entrants come in market place day to day, so currently
top-level management of each venture is taking lots of actions for hiring some talent employees
in their workplace for gaining effective outcomes. Demand of talent factor will influence to a
business in the future for conducting the practice of talent management in business environment
for gaining workforce many talented employees. HR departments within different organisations
will get influenced to demand for talented employees in future, because after taking this step,
they can simply deal with the existing high market competition. In this situation, factor relating
to demand of talent will shape a company and its structure in the future.
Technology and digital productivity
A business and its organisational structure will be shaped by technology and digital
productivity factors as well (Letaifa and Goglio-Primard, 2016). In this situation, upper
management of each organisational have to make a specific plan for properly dealing with
impact of these factors of its business environment as well. In this dynamic and modern world,
each venture is trying to implement various modern and digital technologies within its workplace
for improving its productivity and performance in market place. These factors will shape an
organisation and its structure in the future as well, because day to day many new digital
technologies comes in market place which affects to business environment of each company and
venture in across the world. However, technology and digital productivity always positively
impact any business in market place, so that upper management of a business not to worry about
it that, these factors will negatively shape its organisational structure, because these factors will
defiantly shape positively to a venture and its organisational structure.
Consumer trends
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Factor of consumer trend will also shape a business and its organisational structure in the
future. In this situation, upper management of each venture have to consider consumer trends as
well. Basically, analysis of consumer trends always helps to a business for knowing about the
actual demand and want of people or customers in market place. However, currently most
businesses know about the impact of consumer trends factor on organisational structure, and
that’s why they always conduct the operations of market research for analysing present consumer
trends. After knowing consumer trends, any venture can simply develop its products and services
accordingly (Hacklin, Björkdahl and Wallin, 2018). Day to day market competition is increasing
in each sector and industry, and market competition will badly affect those venture in the future
who doesn’t have proper knowledge of consumer trends. For example; due to corona virus
(Covid 19) pandemic, many customers or people will like to buy products and services from
those ventures which has maintained all precautions of corona virus in their workplace. In this
situation, this consumer trends will shape an organisation and its structure for always
maintaining all precautions of corona virus in own workplace for attracting maximum people
towards own brand.
Economic fluctuations
This is another major factor that can shape to an organisation as well as its structure in
market place. For example; Samsung is a South Korean company which currently serves in many
countries in across the workplace. In this situation, when any country’s economy will fluctuate,
then this factor can directly influence to organisational structure of Samsung. There are well
developed economic conditions of a country always impact a company in very positive way. On
the other side, when economic conditions of a country are poor, then this factor will negatively
affect to a company’s business environment and structure.
Top-level management of a company have to expand its business operations in mostly
such countries which has well-developed and stable economic situations (Marzec, 2017). Upper
management should avoid serve in such countries where economic conditions are completely
unstable and highly fluctuates. Due to existing corona virus pandemic, economic conditions of
most countries are highly fluctuating, in which this factor will defiantly shape a company and its
organisational structure in the future.
future. In this situation, upper management of each venture have to consider consumer trends as
well. Basically, analysis of consumer trends always helps to a business for knowing about the
actual demand and want of people or customers in market place. However, currently most
businesses know about the impact of consumer trends factor on organisational structure, and
that’s why they always conduct the operations of market research for analysing present consumer
trends. After knowing consumer trends, any venture can simply develop its products and services
accordingly (Hacklin, Björkdahl and Wallin, 2018). Day to day market competition is increasing
in each sector and industry, and market competition will badly affect those venture in the future
who doesn’t have proper knowledge of consumer trends. For example; due to corona virus
(Covid 19) pandemic, many customers or people will like to buy products and services from
those ventures which has maintained all precautions of corona virus in their workplace. In this
situation, this consumer trends will shape an organisation and its structure for always
maintaining all precautions of corona virus in own workplace for attracting maximum people
towards own brand.
Economic fluctuations
This is another major factor that can shape to an organisation as well as its structure in
market place. For example; Samsung is a South Korean company which currently serves in many
countries in across the workplace. In this situation, when any country’s economy will fluctuate,
then this factor can directly influence to organisational structure of Samsung. There are well
developed economic conditions of a country always impact a company in very positive way. On
the other side, when economic conditions of a country are poor, then this factor will negatively
affect to a company’s business environment and structure.
Top-level management of a company have to expand its business operations in mostly
such countries which has well-developed and stable economic situations (Marzec, 2017). Upper
management should avoid serve in such countries where economic conditions are completely
unstable and highly fluctuates. Due to existing corona virus pandemic, economic conditions of
most countries are highly fluctuating, in which this factor will defiantly shape a company and its
organisational structure in the future.
High market competition
As everyone knows, market competition in each industry and sector is raising day by day,
in which this factor will affect to a company or a business in negative way in the future, because
high market competition factor always decreases sales ratio of a company in market place. Due
to having great growth opportunities, currently most people are taking steps towards opening
new businesses by entering into the market. This type of market practices promotes high market
competition in marker place, and that’s why this market competition will negatively shape to a
business and company in the future. In this situation, each company have to make it’s all
operations, practices and strategies very effective to gain huge competition advantage in market
place (Foss and Saebi, 2017). For example; adoption of competitive-based marketing strategy
helps to a company for systematically manage the impact of high market competition in market
place, because this strategy enables to make own product prices something favourable than other
competitors.
The culture-excellence approach: The management has highly required to consider this
approach to make an effective culture in the workplace. This approach enables to all employees
who comes from different culture to work together.
The Japanese approach: Japanese Management approach has popularized while Asian
economic boom or boost of 1980s. The Theory Z has focused for increasing loyalty of
employees within the business by providing employment for life with the effective focus on
well-being of various employees.
Organizational learning: This factor basically exists in the workplace of business for improving
learning capabilities of employees. Learning is very necessary to all employees to develop own
skills and abilities.
Other recent developments: Modernist postmodernist, complexity and realist are three major
developments in market place, in which these also can affect or shape an organization, in which
upper management have to consider these all factors has well.
CONCLUSION
On the basis of above findings, it can be concluded that currently there are various
classical and neo-classical approaches has been mentioned above in this report which each
As everyone knows, market competition in each industry and sector is raising day by day,
in which this factor will affect to a company or a business in negative way in the future, because
high market competition factor always decreases sales ratio of a company in market place. Due
to having great growth opportunities, currently most people are taking steps towards opening
new businesses by entering into the market. This type of market practices promotes high market
competition in marker place, and that’s why this market competition will negatively shape to a
business and company in the future. In this situation, each company have to make it’s all
operations, practices and strategies very effective to gain huge competition advantage in market
place (Foss and Saebi, 2017). For example; adoption of competitive-based marketing strategy
helps to a company for systematically manage the impact of high market competition in market
place, because this strategy enables to make own product prices something favourable than other
competitors.
The culture-excellence approach: The management has highly required to consider this
approach to make an effective culture in the workplace. This approach enables to all employees
who comes from different culture to work together.
The Japanese approach: Japanese Management approach has popularized while Asian
economic boom or boost of 1980s. The Theory Z has focused for increasing loyalty of
employees within the business by providing employment for life with the effective focus on
well-being of various employees.
Organizational learning: This factor basically exists in the workplace of business for improving
learning capabilities of employees. Learning is very necessary to all employees to develop own
skills and abilities.
Other recent developments: Modernist postmodernist, complexity and realist are three major
developments in market place, in which these also can affect or shape an organization, in which
upper management have to consider these all factors has well.
CONCLUSION
On the basis of above findings, it can be concluded that currently there are various
classical and neo-classical approaches has been mentioned above in this report which each
business has to use its business environment according to its comfortability. On the other side,
there are lots of factors exists in business environment of a company which will defiantly shape
its organisational structure in the future. In this situation, the management of a company have to
consider these all factors in its daily operations for managing their impacts on business.
Principles of management are very beneficial to a business in market place, because these makes
a specific path to growth to a business in market place. That’s why the management at an
organisation should always consider theories, principles and competences of management
there are lots of factors exists in business environment of a company which will defiantly shape
its organisational structure in the future. In this situation, the management of a company have to
consider these all factors in its daily operations for managing their impacts on business.
Principles of management are very beneficial to a business in market place, because these makes
a specific path to growth to a business in market place. That’s why the management at an
organisation should always consider theories, principles and competences of management
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REFERENCES
Books & Journals
Boianovsky, M., 2018. When the history of ideas meets theory: Arthur Lewis and the classical
economists on development. History of Political Economy. 50(S1). pp.172-190.
Brugger, F. and Gehrke, C., 2017. The neoclassical approach to induced technical change: From
Hicks to Acemoglu. Metroeconomica. 68(4). pp.730-776.
Foss, N. J. and Saebi, T., 2017. Fifteen years of research on business model innovation: How far
have we come, and where should we go?. Journal of Management. 43(1). pp.200-227.
Hacklin, F., Björkdahl, J. and Wallin, M. W., 2018. Strategies for business model innovation:
How firms reel in migrating value. Long range planning. 51(1). pp.82-110.
Letaifa, S. B. and Goglio-Primard, K., 2016. How does institutional context shape
entrepreneurship conceptualizations?. Journal of Business Research. 69(11). pp.5128-
5134.
Marzec, M., 2017. Determinants which shape confidence in third sector
organisations. International Journal of Contemporary Management. 16(2). pp.177-200.
O’Donnell, R., 2017. Structural Flaws in the Axiomatic Approach to Post-Keynesianism.
Mimeo.
Sears, N. A., 2017. The neoclassical realist research program: Between progressive promise and
degenerative dangers. International Politics Reviews. 5(1). pp.21-31.
Books & Journals
Boianovsky, M., 2018. When the history of ideas meets theory: Arthur Lewis and the classical
economists on development. History of Political Economy. 50(S1). pp.172-190.
Brugger, F. and Gehrke, C., 2017. The neoclassical approach to induced technical change: From
Hicks to Acemoglu. Metroeconomica. 68(4). pp.730-776.
Foss, N. J. and Saebi, T., 2017. Fifteen years of research on business model innovation: How far
have we come, and where should we go?. Journal of Management. 43(1). pp.200-227.
Hacklin, F., Björkdahl, J. and Wallin, M. W., 2018. Strategies for business model innovation:
How firms reel in migrating value. Long range planning. 51(1). pp.82-110.
Letaifa, S. B. and Goglio-Primard, K., 2016. How does institutional context shape
entrepreneurship conceptualizations?. Journal of Business Research. 69(11). pp.5128-
5134.
Marzec, M., 2017. Determinants which shape confidence in third sector
organisations. International Journal of Contemporary Management. 16(2). pp.177-200.
O’Donnell, R., 2017. Structural Flaws in the Axiomatic Approach to Post-Keynesianism.
Mimeo.
Sears, N. A., 2017. The neoclassical realist research program: Between progressive promise and
degenerative dangers. International Politics Reviews. 5(1). pp.21-31.
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