Management Theory For Respect To Stakeholders: Case Study Analysis

Contingency theory

Discuss about the Management Theory for Respect to Stakeholders.

In this assignment, critical evaluation of the chosen management theory is conducted. In the given case study, Australian National Security Company is facing a crisis as their supplier’s delays to deliver the order. Thus, they used the contingency theory to solve the problem. The study analyses the theory and evaluates the usefulness with respect to stakeholders.
Fred Fiedler developed the contingency theory in the 1960s. It is an organisational theory focus on the personality of a leader. The leadership styles observed in this theory are relation-motivated that is related to the interpersonal relations and task-motivated refers to the completion of tasks. Hanisch & Wald (2012) stated that the factors that encompass the theory are a structure of the task, the position of power and the relation between the leader and members. Several external and internal factors affect the structural framework of the organisation. The factors are the leadership style adopted by the organisation, a size of the organisation, the ability of the organisation to adopt changes and the technology used.  The least preferred coworker scale is used to measure the approach adopted by the managers, relationship-oriented or task-oriented.

In this case study, Australian National Security Co deal with a client that wants the system within next Monday (Jones et al., 2016). However, the supplier of the company is unable to deliver the order on time due delay in shipment. The manager of the company decides to adopt the principle of contingency theory that is based on the relation-motivated approach. They provide the client with a free service for a period of one month and 10% discount for a year. This satisfies the client. However, to compensate for this loss, the suppliers offer them to give 30% discount on the order. Fiedler (2015) opined that this type of discount is considered to act as a catalyst for an organisation. Similarly, the client could not refuse lucrative offer provided by Australian National Security Co. Both the suppliers and distributors adopt contingency theory that is based on customer satisfaction.

Oreg & Berson (2015) commented that customer satisfaction is an indication of customer loyalty and shows the repurchase ability of customers, reduces customers churn, is a point of differentiation, and increases the value of customers and help in retaining the existing customers. According to the case study, a reward system was used to retain the client and satisfy the need of the customer of both the supplier and distributor. Thus, customer satisfaction by using reward system help in maintaining a healthy relationship with its customer and it increases the value of its customers. Hill (2014) stated that the theory is a marketing strategy that encourages the customers to be loyal and repurchase from the company. According to the perspective of contingency theory, the change in environment is uncertain and unpredictable. It emphasises centralization. It permits changing the policies, rules and procedures of the company based on predictability and uncertainty. Bagozzi et al. (2014) suggested that different organisation units operate according to the varying environment for developing the internal characteristics of the company. The size of the company is an important variable in the contingency theory. In the case study, it was observesd that there are few people in the company because of which the manager controls the entire department. Thus, divisional structure is not applicable in this case. 

Practical application of contingency theory in relation to the case study

The only stakeholders in this case study are the customer for Australian National Security Co. and for the supplier the stakeholder is the company. The theory applied in this case, helped in retaining their respective customers. The lucrative reward offered by the supplier and the company is a strategy-adopted increase the value of the customer. Van de et al. (2013) opined that a stakeholder is an entity that is associated with the organisation that can affect or be affected by the action of the organisation. The perspective of stakeholder is a determining factor for the success of a business. The client of Australian National Security Co. is in need of service; however, the company fails to provide timely service to the client (Jones et al., 2016). The company cannot provide the service in the stipulated time thus, it can be seen that the client can switch to another company if the other company provides them better service. The contingency theory has certain disadvantage in its approach. Although the theory appears to be simple where the manager acts according to the situation, however, in practice it is a complex approach (Sueldo, 2016). The analysis of a particular situation involves appropriate evaluation of a large number of variables that have multifarious dimension. Due to a shortage of time, the manager might ignore analysis of certain variables. In this case study, the manager resort for a reward system to the client for compensating the delay in delivery time that did not satisfy the key need of the client. According to McCleskey (2014), it could be a reason for disloyalty of the customer. The theory presents a problem in testing the perspective of the theory. For an appropriate testing, a methodology is required. There is a methodology present for evaluation of the theory; however, due to the presence of several variables it becomes difficult to test the effectiveness of the theory. It can be noted in the case study that the manager is unable to evaluate and analysis the situation properly due to a shortage of time. According to (ColariÄÂ-Jakše, 2015) there are a different environment in different departments in an organisation. In the contingency theory, regardless of the size of the company the behaviour of employees is responsible for meeting the goals and needs of the client. As stated by (Eskerod, Huemann and Ringhofer, 2015), the freedom of decision-making ability of the employees can have a direct effect on meeting the objectives of the company by following the contingency theory. In this theory, there is no possibility or strategies for mitigating risks beforehand. Thus, it lacks skilled personnel led required for handling a project in a crisis. The manager is responsible for taking decision-related to the entire department in the company. Since the manager is responsible for taking all the decision in the company, it increases the pressure and workload of the manager.

Evaluation of solution based on needs of stakeholders

The Australian National Security Co. has faced an issue client while delivering the products and services towards the client. This company do not deliver products and services on time and as per the mentioned criteria of the clients. As a manager, I have to take some important decisions to satisfy the customers and to increase the customer base of this company. Therefore, Australian National Security Co. has implemented the Contingency theory for providing better services to the customers of this company. As per this theory, an organisation should always satisfy their customers, which can increase the profitability rate of the organisation . As the customers are not satisfied by the services of this company, I have to apply some strategic procedures and policies to attract the customers towards this company. If the customers are not satisfied with the services and products of the company, it affects the brand image of the organisation. It creates a negative effect towards the customers. This negative effect will reduce the customer base of the organisation. The authorities of Australian National Security Co. have to supervise the service process of this company for providing better services to the customers of this company. The management of this company should develop the quality of the delivery to attract the customer towards this company. This organisation should provide special offers to satisfy the customers. The discount, which is provided to the customers, can be a very useful strategy for this organisation to increase their customer base. As my opinion, the management of this company should create some training programme for the workers of this company so that they can improve their skills and knowledge for delivering services towards the customers effectively. The implementation of the Contingency theory in the Australian National Security Co. can motivate the workers to satisfy the customers of this company for increasing the brand image and the profitability rate. This company can offer a free service to gain the attention of the customers towards this company. The Australian National Security Co. should implement policies, procedures and rules so that the workers can provide better services to satisfy the customers of this firm. As a manager of the Australian National Security Co., I have to determine some specific solutions for handling the workplace issues for satisfying the customer’s needs and preferences.

Conclusion

Australian National Security Company is facing a crisis when the workers of this company delay to deliver the orders of the products and services from this company (Jones et al., 2016). For solving this problem, this company has taken the contingency theory to create some specific solution for satisfying the client’s needs and preferences.

In this assignment, the principles of Contingency theory are discussed to get a clear solution for solving the client-based problem in Australian National Security Company (KehrèS, 2011). The positive and negative impacts are analysed here to implement this theory properly for improving the quality of providing services of this company. As a manager, some recommendations is given to develop the relevant skills and strategies for the further development of the Australian National Security Company.

References

Bagozzi, R.P., Wong, N., Abe, S. & Bergami, M., 2014. Cultural and situational contingencies and the theory of reasoned action: Application to fast food restaurant consumption. Journal of Consumer Psychology, 9(2), pp.97-106.

ColariÄÂ-Jakše, L. (2015). Actor-Network Theory and Stakeholder Collaboration: The Case of Slovenia. MJSS.

Eskerod, P., Huemann, M. and Ringhofer, C. (2015). Stakeholder Inclusiveness: Enriching Project Management with General Stakeholder Theory. Proj Mgmt Jrnl, 46(6), pp.42-53.

Fiedler, F., 2015. Contingency theory of leadership. Organizational Behavior 1: Essential Theories of Motivation and Leadership, pp.232.

Hanisch, B. and Wald, A. (2012). A Bibliometric View on the Use of Contingency Theory in Project Management Research. Proj Mgmt Jrnl, 43(3), pp.4-23.

Jones, G., Avdelas, A., Hojo, L., Islam, S. and Dhamala, A. (2016). MGMT 100 Australian National Security Co.. [online] Facebook.com. Available at: https://www.facebook.com/l.php?u=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DNjxS2FSD2ds&h=MAQHfwDxk [Accessed 21 Sep. 2016].

KehrèS, J. (2011). Warfare Technique in the Encyclopédie : Contingency and the Travails of Theory. Australian Journal of French Studies, 48(2), pp.173-187.

Hill, C.W., Jones, G.R. & Schilling, M.A., (2014). Strategic management: theory: an integrated approach. Boston: Cengage Learning.

McCleskey, J.A., 2014. Situational, Transformational, And Transactional Leadership And Leadership Development. Journal Of Business Studies Quarterly, 5(4), pp.117-131.

Oreg, S. and Berson, Y. (2014). Personality and Charismatic Leadership in Context: The Moderating Role of Situational Stress. Personnel Psychology, 68(1), pp.49-77.

Sueldo, M. (2016). The impact of integrated organizational communication on organizational sustainability. Management of Organizations: Systematic Research, 75, pp.121-140.

Van de Ven, A., Ganco, M. and Hinings, C. (2013). Returning to the Frontier of Contingency Theory of Organizational and Institutional Designs. The Academy of Management Annals, 7(1), pp.393-440.