Organizational Theory

This paper discusses two organizational theories, contingency theory and organizational culture theory, in the context of Lakeland Wonders. It identifies management issues and differences in perspectives, and outlines the required capabilities of managers to overcome them.

Running head: ORGANIZATIONAL THEORY
Organizational Theory
Name of the Student
Name of the University
Author Note

1ORGANIZATIONAL THEORY
Introduction:
The modern organizations are observed to follow various organizational theories in
order to manage the operations of their organizations. These theories vary depending on the
type of leadership or management of the organization. Along with that it can also be said that
the organizational theories generally contain the variation of the approaches in order to
analyse the organization. The organizations are following different theories like the
bureaucracy, contingency, power politics, scientific management, institutional, paradox, and
practice theories depending on market parameters (Jones and Jones 2013). With the
application of this theories, the organization operates their business but each and every theory
relates to some sort of issues along with the advantages. The paper describes two of the
organizational theories in context of an organization named Lakeland Wonders. The paper
specifies the focus of those theories in the organizational context and the limitations of those
theories as well. Apart from that, the paper will also specify the knowledge and the
capabilities, required by the managers of the organization to overcome the differences of
perspectives generated from the organizational theories.
Overview of the organization:
Lakeland Wonders was a small scale business organization from Minnesota, United
States. The organization was primarily a classy manufacturer of the wooden toys. The
organization operated in the manufacturing industry. The organization was a renowned name
in the small scale business industry. But in the recent times it was significantly falling behind
market competitors as the design section of the organization was not doing anything
innovative and was significantly lacking the will to meet the customer trends. The
organization was having three major plants for their business operations in Minnesota and it
was experiencing the excellence of almost 5000 employees (hbr.org 2018). The organization
was having a hierarchical structure where the employees were divided into several layers and
Mark Dawson was the senior Vice President for the organization with Cheryl Hailstrom as
the Chief Executive Officer. The organization was feeling the vulnerability around them and
to get rid of that situation, they introduced Cheryl as the CEO of the organization. The
organization was having a board of directors on top of the senior level management and in
that board, Sean Curtiss’ company was having two seats along with the Swensen children
who were having the same number of seats as well. Walley Swensen and Karen Winks from
the Northern Minnesota Trust had one seat each in the Board of Directors as well (hbr.org

2ORGANIZATIONAL THEORY
2018). The organization was conducting business in the concerned industry for more than 94
years. The organization was observed to follow the contingency theory in its approach to
introduce and plan for the implementation of an idea of business expansion which included a
precise focus on the offshore manufacturing and midmarket capturing. Along with this, the
case also specified the organizational culture theory which had significant impact in the
restructuring of the workforce with the objective of a rapid increment in the growth of the
organization.
Organizational Theories:
Two of the chosen organizational theories are the organizational culture and the
contingency theory. These two theories are chosen because the mentioned case is
significantly influenced by them. The contingency theory is considered to be an
organizational framework which claims that there is no perfect method to arrange or organize
a company or there is no perfect way to create decisions (Otley 2016). Rather the method has
significant focus on the external and the internal equations because a contingent leader will
concentrate on the organizational situation in order to make decisions. In the contingency
theory, the leader has the right to apply his or her own way of leading as the theory suggests
that a leader must act according to his or her assessment of the situation. The contingency
theory is significantly influential in the business categories like the Technology, Suppliers
and Distributors, Unions, Customer and Competitors, Consumers interest groups and
Government (Mikes and Kaplan 2013). On the other hand the organizational culture theory
significantly focuses in connecting the values and the behaviours which has high influence on
the social and psychological environment of any organization (Shafritz, Ott and Jang 2015).
In a nut shell, the theory of organizational culture portrays the collective beliefs, values of the
organizational members. Many of the researchers of the organizational culture stated that the
benefits of the theory will be in the form of the competitive advantages generated from the
innovation and the customer service along with the stable and effective performances from
the employees (Young and Ghoshal 2016). Apart from that, the theory is significantly
influential in increasing the team bonding, creation of a high employee morale and it also
helps the company to get aligned to the achievement of the goals in a strong manner. The
theory of the organizational culture has great significance in leading the organizational
change that may be a merger or an acquisition (Alvesson, 2016.).

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Seminal Papers on the theories:
For the explanation of the contingency theory two of the researches will be
significantly suitable which are Fred Fielder’s contingency model and the contingency theory
by L. Donaldson. In the contingency model of Fred fielder, the focus is on the leadership. The
paper expresses the relationship between the leadership style and the appropriateness of the
situation. The paper describes the situational favourableness in terms of three dimensions
which are leader-member relationship, degree of task structure and the leader’s position
power. Fielder in the research is able to specify that if the leader is acknowledged, accepted
and respected by all the members, if the task is well structured and if the leader’s position has
significant amount of authority and power then the situation is stated to be favourable for the
leader. On the other hand in the Donaldson’s contingency theory, the main concept of the
contingency theory is stated as the organization are open systems which is in need of
attentive management in order to meet and balance the internal needs of the organization and
apart from that theory is considered to be influential in the adaption of the environmental
circumstances. The research also specifies that according to the theory the management must
concentrate in getting well aligned with the goals of the organization. Along with that, it also
specifies that the different parts of the organization are needed for the adjustment of the
different types of the environments. Apart from that the paper is able to clarify that the theory
allows the leader to consider the appropriate form of the management depending on the task
environment.
In case of the organizational culture theory, the chosen researches are The value of
corporate culture by Luigi Guiso, Paola Sapienza and Luigi Zingales and Understanding
organizations by Charles Handy. From the paper named as The value of Corporate Culture,
the classification of the corporate culture in the form apathetic, caring, exacting and
integrative is achieved. The paper states that an apathetic culture portrays least amount
concern to both people and the performance and on the other hand an integrative culture is
stated to pose high concern for both people and the performances (Guiso, Sapienza and
Zingales 2015). The paper also states that caring culture portrays significant concern for the
people but shows least concern to the issues of the performances. On the other hand an
exacting culture is stated to pose high concern for the performances but least concern for the
people. Handy’s Understanding Organizations classifies the organizational culture into four
different types which are the Power culture, Role culture, Task and Person Culture. The paper
discusses that the power culture concentrates more on the power given to a small group or a

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central figure and that centre of power will control all the operations like a web. Along with
that, it needs less number of rules as well. The concept of role culture ensures that the
organization concentrates on the rules than any other thing and apart from that the role
culture has significant influence in making sure that the individuals know what their roles and
responsibilities are. The task culture is specified in the paper as a concept which creates the
team depending on the nature or the merit of the task. As the task is the most important thing
in the culture, the power inside the team may vary depending on the combination of the team
members and the status of the task. In the person culture, the individuals in the organization
consider themselves to be unique and superior o the organization. An organization having the
Person culture is considered to be a mere collection of the individuals who are working in
that organizations.
Identification of the management issues:
The organizational culture theory focuses on the general problems that an
organization with the employees and the management faces. The concept of the
organizational culture is able to acknowledge the gaps in the workplace environment, issue in
effective team work in a particular organization. Along with these issue, the concept also
covers the cultural differences among the employees of any organization. The mentioned
issue is significantly visible with the operations of the multinational organizations where
employees of different nations, cultures and languages are present. It is observed that the
cultural differences among the employees have genuine impact on the effective team work.
Apart from this, the communication among the employees are also a point of concern,
depicted in a significant manner by the concept of the organizational culture. In context of the
mentioned case or organization, the organizational culture was significantly creating
headaches for the senior level management and the CEO where it was observed that the
employees were not concentrating on their work and rather they were reducing the quality of
the work culture by leaving the office almost even before the scheduled time finishes. Apart
from that, the manufacturing section was concentrated in creating intentional barriers in case
of increasing the growth and the design section was significantly following the unethical
approach in order to favour the local and not so creative and mediocre design firms. Apart
from that, Cheryl was observed to point out the concern related to the apathy of the
manufacturing section to concentrate on offshore manufacturing which was producing a
significant detrimental effect on the plan of achieving the desired growth.

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The contingency theory allows the organizations to identify the threats and the issues
on their own. It enables the organizations to find out the general and emergency issues that it
faces. In context of the case mentioned above, the contingency theory can be used to evaluate
the issues what Cheryl Hailstrom faced in the organization while introducing the offshore
manufacturing and the plan to capture the midmarket along with the Bull’s Eye deal. The
theory enabled the organization to evaluate the concerns like job cuts and the relocation of
the workforce to some other midmarket just few months before the contract expiry with the
employee unions. Apart from that the contingency theory also focused on the concern of the
Senior Vice President Mark Dawson when he informed Cheryl that it is close to impossible to
go to some other country and construct a plant in such a limited amount of time in order to
catch the Bull’s eye deal. Apart from these issues, one more was highlighted by the
contingency theory and that was related to the planning of going to the midmarket in order to
reduce the price of the products and the concern of the management in this case was
evaluated by the mentioned theory. The concern was that if the organization go to some other
country for the offshore manufacturing, then the belief of American people regarding
company’s origin may get influenced in a negative manner.
Difference in perspectives:
In the explanation of the difference in the perspectives, it can be said that some other
stakeholders of the mentioned organization could also thought about delaying the plan of
offshore manufacturing and the implementation of the concept of outsourcing. The
preliminary reason behind the thought can be the fact that the organization was approaching a
contract expiry with the union and any plan of the offshore manufacturing or the outsourcing
can be assumed as a part of the job cut plan. This has the potential to create an employee
unrest. Following the organizational culture theory, different stakeholder can reconsider the
plan of Cheryl to recruit more effective employees like Pat Sampsen or Cecil Fleming and
they could have spoken to the Barry Quince or the manufacturing head regarding their
inefficiency.
Manager’s required capabilities:
Under the current situation the managers need to effectively plan or gather important
insights on the operation of the two theories. In case of the differences in the organizational
culture theory, the manager need to have the capability to decide whether the organization
needs effective employees like Pat or Cecil or the organization is okay with the existing

6ORGANIZATIONAL THEORY
Barry Quince and just needs to effectively communicate the issues which the organization
feels to be taken care by the concerned authorities. In case of the contingency theory, the
manager must have the capability to decide whether the sense of urgency must be created
among the employees like what Cheryl tried to do or the stabilized form of the business is
needed where the existing union and their contract extension is much more important than the
Bull’s Eye deal.
Conclusion:
On a concluding note it can be said that the organizational theories like the two
mentioned are significantly important in the analysis of the particular case and from the
assessment of the case, it is evident that the setting of the priority by the managers is much
needed for the effective business. In the mentioned case Cheryl was significantly meeting
each and every concern of the senior level management by following the contingency theory
where she was able to answer the concerns depending on their own merits. Cheryl answered
the concern of Mark by assuring him that offshore manufacturing or the midmarket planning
will be a business expansion and in that case no job cuts will take place rather it will be job
openings. Again when Mark had doubts on the plan of building the required infrastructure
within such limited time, Cheryl was the one who introduced the concept of outsourcing.
Among the many innovative ideas by Cheryl, these two were significantly productive and
contained considerable vision as well.

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References:
Alvesson, M. ed., 2016. Organizational culture. Sage.
Guiso, L., Sapienza, P. and Zingales, L., 2015. The value of corporate culture. Journal of
Financial Economics, 117(1), pp.60-76.
Harvard Business Review. (2018). Welcome Aboard (But Don’t Change a Thing). [online]
Available at: https://hbr.org/2002/10/welcome-aboard-but-dont-change-a-thing
Jones, G.R. and Jones, G.R., 2013. Organizational theory, design, and change. Upper Saddle
River, NJ: Pearson.
Mikes, A. and Kaplan, R.S., 2013. Towards a contingency theory of enterprise risk
management.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–2014.
Management accounting research, 31, pp.45-62.
Shafritz, J.M., Ott, J.S. and Jang, Y.S., 2015. Classics of organization theory. Cengage
Learning.
Young, C. and Ghoshal, S., 2016. Organization theory and the multinational corporation.
Springer.
Bibliography:
Donaldson, L., 2001. The contingency theory of organizations. Sage.
Fiedler, F.E., 2006. The Contingency model: H Theory of Leadership Effectiveness. Small
Groups: Key Readings, p.369.
Handy, C., 2007. Understanding organizations. Penguin Uk.