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Description of Organizational Theories
Organizational theory entails the set of mutual concepts and definitions which are used to give a description about the behavior of individuals or parties who interacts and work together to perform the intended activities towards achieving the set goals. Therefore, the organizational theories study the social relationships between the individuals of an organization and their collective actions and also the effects of both internal and the external environment of the business, for example, political, cultural and legal effects on an organization (Hatch, 2018).
Both the deterministic theories and strategic choice theories contribute to the organizational success. Each of the given theories has their positive impacts and negative impacts, therefore, an organization should prefer the most compelling theory. The main aim of an organization is basically to generate profits, hence an organization should implement a theory which is more flexible to match both the organizational changes and the dynamic business environment (Whittington, Nolan, Lewis, & Torres, 2015).
The organizational theories benefits an organization in various ways which include the following: The theories enables an organization to plan before taking a particular action. Basically, a plan is a pillar to each organization where prior planning determines how far an organization will soar and achieve goals and objectives in a given time bound (Bryson, 2018). The theories also helps in organizing which enables the organizations to come up with various policies which regulates the behavior of employees. Organized policies greatly contributes to how a given organization will conduct its activities effectively and efficiently (Schoeneborn, Kuhn, Kärreman, 2018).
The theories also helps in human resource management which is a broader aspect in an organization. Human resource enables an organization in diverse activities which include recruiting and selecting the appropriate personnel in an organization. Also helps in the management of employee welfare in an organization, for example, ensuring they work in conducive environments and incorporating them in various decision making (Bratton & Gold, 2017). Human resource therefore is a core component in an organization which contributes to the set targets of an organization. An organization, therefore, should make critical analysis about the theories they intend to embrace before implementation.
From the given theories, I have structured an essay which will commence with the description of each theory to an organization and the effects of the given theories to an organization. The impacts of the theories towards the managerial aspect of an organization and the most compelling theory perspective among the discussed theories. After the critical analysis of the theories, a conclusion with recommendations about the most compelling theory among the four theories will be discussed. This is to lay emphasis on the best theory an organization should take before taking actions which will determine its productivity. The body of the essay will also demonstrate to an understanding why organizations take various actions.
Benefits of Organizational Theories
The resource based theory describes the transactions an organization engages in with other organizations in a given environment in order to acquire resources. The resource dependence theory also describes how a particular given organizational behavior is affected by the external resources which the organization utilizes, for example, the raw materials. The resources are scarce in nature and therefore an organization should strengthen their relationship with each other so as to build a chain of acquiring the scarce resources (Berger, Eyre, & Zelditch, 2018)
The Description and Impact of the Theory to an Organization
The resource dependency theory portrays that a particular organization’s resource allocation has the ability and potential to influence, for example, create conflict between the organization and the various stakeholders who control the resources it needs. Due to the competition with competitors to acquire resources, the organization strengthens their relationship with their resource providers to acquire resources when they need, for example, capital. The organizations therefore, relates well with financial institutions for example timely payments. Another example is through good employee relations which creates a reputable image and anyone would be willing to work with the organizations when there is need for labor. Organizations incorporates some strategies which include diversifying the product lines which lessens an organization’s dependence on other businesses which in turn helps to improve power and leverage (Kozlenkova, Samaha, & Palmatier, 2014).
Organizations, therefore, need to consider the resources they need and their sources before embracing the resource dependence theory since the resources act as a building block to an organization which ensures continuation of a business as well as its success.
The institutional theory entails the broader and deep aspects of the social structure through considering the processes by which the structures, for example, the rules, routines and norms are established as authoritative guidelines involved in social behavior. The theory deeps down on how the above elements are created, adopted and adapted in a given time period and various ways why they fail and decline (Boxenbaum & Jonsson, 2017).
The Description and Impact of the Theory to an Organization
The theory expounds on the organizational roles, structures and procedures on its operation. Organizations therefore, have innovation structures which improves for example, the technical efficiency which are legitimized to the environment. The institutional theorists claim that the institutional environment may have a strong influence on the development of formal structures in a given organization which are deeper than the market pressures (Bolman & Deal, 2017). Organizations, therefore, comes up with certain appropriate structures which will make decision making processes quick and efficient so as to solve the arising problems that needs critical attention. An example is through incorporating the decision making tools by the managers for example the decision support system which helps manager to make sound and informed decisions (Arnott & Pervan, 2016)
Resource-based Theory: Description and Impact
The organizations should therefore consider its organizational structure before adhering to the theory which will help in guiding how an organization should be structured. Structure of an organization is an important aspect which provides a roadmap which an organization should follow.
Population Ecology Theory
The population ecology theory holds ground that organizations exist within a given field or population of other similar organizations and the organizations that maintain survival are the ones that appropriately responds to the environment of their operation. The environment can be either external outside the field of their operation or in the internal environment for example of other organizations which are within the field (Thompson, 2017).
The Description and Impact of the Theory to an Organization
The theory holds that the upcoming organizations in the environment initially holds on copying the other organizations which are dominating the field and having successful operations. The upcoming organizations will not only copy the organizations only because they are successful in their strategies but also because they will mutually benefit from those organizations, for example, gaining the resources they need. (Felin, Foss, & Ployhart, 2015).
The organizations should therefore, choose on embracing for example, appropriate technology, policy and procedures from other organizations without considering mutual benefit only but also on what they want to achieve on its overall operations.
The Strategic Choice Theory
The strategic choice holds that an organization has an effect and control over its place in a given market and towards the consumer behavior. There are various ways how an organization can have control on the market, for example, through aggressive market and advertisement of its products, embracing some strategies for example cost leadership and willingly relating with other companies. Through focusing on the laid goals and objectives, an organization can hence manipulate the market in order to achieve its objectives (Whittington, 2014).
Impact of Strategic Choice to an Organization
Strategic choice holds on the strategic management of an organization which entails setting of goals and objectives and embracing some activities, for example, planning, controlling and organizing in order to achieve the set goals and objectives. Some of the strategies that the strategic choice embraces are for example the generic strategies which position an organization in a competitive way in its market of operation without being influenced by the external pressures unlike the case of the other theories which include the following:
Cost leadership: this is an important strategy which entails charging fare prices on the products of an organization without compromising the quality of the products. Most organizations embrace this strategy and strive to be cost leaders while producing quality products in order to achieve the customers’ needs and locking them from switching to other competitors or substitutes (Littler, 2015). Differentiation is another strategy that organizations adopts, for example, producing similar products with other competitors but adding more value in order to appear more appealing to the customers. An example is the Dell Company where it has a unique strategy of customizing its laptops according to the needs and specifications of the customers. They have a platform where customers can give specifications, for example, the features to be incorporated for the laptops and the company goes ahead and manufactures the products towards the specifications (Cattani, Dunbar, & Shapira, 2017). Focus is the other strategy which entails targeting a particular segment of people in a broader market segment and thereby meeting their needs. An example of the above is the coca cola Company with its sugar-free coke drink which is produced especially for diabetic people. The strategy ensures that everyone is incorporated and best suit.
Institutional Theory: Description and Impact
The Most Compelling Perspective
After an analysis of the contribution that strategic choice and determinists theories make towards an understanding of organizational action, I hereby find the strategic choice to be most compelling due to the following reasons: Adapting to change- the deterministic organizational theories holds that businesses are forced to be flexible on the changing environmental conditions while the strategic choice holds that businesses should embrace the changes without being influenced and willingly changes to meet the consumer demands which is believed to position a business in a certain market position.
The deterministic organizational theories also hold that organizations fix and plan their strategies according to how the external markets operate. This is, for example, to achieve the mutual benefits after complying on how the external market dictates. On the other hand, the strategic choice does not lay more emphasis on structuring strategies in accordance with the external pressure but rather according to the factors that will position organizations uniquely in the market.
After the critical analysis of both the determinist theories and strategic choice, organizations should therefore carefully make a choice on the most appropriate action to take. An organization should therefore table down the resources it requires for its effective operation. This will lead in embracing the resource dependency theory effectively and identifying on how to obtain the resources as discussed above on the theory.
An organization should also lay out its organizational structure and adopt the institutional theory effectively to match its developed structure to run the organization. The population ecology theory should help an organization in identifying the relevant technology and other principles to borrow from other organizations which will match the expected operations of an organization.
The strategic choice on the other hand, should therefore, provide a solution on how to counter the mutual interdependence of the organizations on each other and also the environmental pressures. An example is through embracing backward integration which helps to lock in the suppliers hence providing a reliant source of raw materials. This would greatly help in minimizing the level of manipulation in order to comply with some unnecessary strategies which do not yield to competition in the market.
The strategic choice will, therefore, lead organizations to compete where innovation will be a routine. This will, therefore, change the turn in which organizations are taking and due to aggressive competition from various unique strategies, more advanced technology will be upheld in production which in turn lead to quality products which will suit customers effectively.
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