Modern Approaches To Management

Besides the classical, behavioral and quantitative approaches to management, there are certain modern approaches to management. Two of these approaches are the systems theory and the contingency theory, which have significantly shaped modern management thought.

Systems Theory

Those who advocate a systems view contend that an organization cannot exist in isolation and that management cannot function effectively without considering external environmental factors. The systems approach gives managers a new way of looking at an organization as a whole and as a part of the larger, external environment.

According to this theory, an organizational system has four major components: inputs, transformation processes, output and feedback. Inputs – money, materials, men, machines and informational sources – are required to produce goods and services. Transformation processes or throughputs – managerial and technical abilities – are used to convert inputs into outputs. Outputs are the products, services, profits and other results produced by the organization. Feedback refers to information about the outcomes and the position of the organization relative to the environment it operates in.

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