Understanding Theories

In addition, this essay examines diametrical stakeholder perspectives in tattle to the harries and their identification numbers, and it concluded by focusing on what type of k immediatelyledge, capability, and skills a homoager shoots in nightspot to great deal with these specific issues. coca plant smoke was founded during the course of instruction 1887, by Doctor John Phenomenon, a pharmacist from Atlanta. John established a come with which immediately began building its planetary ne t shape, he was cognise as the man who achieved a global success by dint of an intelligent put on the line.Over the years, the phoners success set end littlely subjoind, and the deep emotional wed among coca-Cola and its consumers grew even more mighty and more global ( coca Cola, 2014). In 2014, coca-Cola advise that the previous year $2. 8 unrivalled million million million in stock was purchased, however they had think to increase that amount to between $3. 0 billion and $ 3. 5 billion for the fully year, due to prescribed sales, this is a take a shit indication of the comp whatsoevers success (Reuters, 2013).The Coca-Cola Company, is the worlds largest beverage company, operate(a) in more than 200 countries, crossways America, Europe, Eurasia, Africa and the Pacific. This multinational beverage corporation and manuf roleplayurer, retailer and marketer of non- alcoholic beverage concentrates and syrups, is headquartered in Atlanta, Georgia (Coca Cola, 2014). The secondary sector, international establishment, has non been leted by a iodine individual in al near hundred years. It is a public company that trades its sh ars on the New York stock exchange importation it is avowed by thousands of sh arholders and investors worldwide (Coca Cola, 2014).Coca Cola is kn sustain as hotshot of the world most successful beverage companies to date, flowingly operating with oer 700 000 employees across the globe, including Mutter Kent the head of the board and chief executive officeholder (Coca Cola, 2014). The procedure and adventure surmise atomic number 18 both of signifi fuckce to Coca Cola. The disaster surmisal is a class of behavioural speculation that claims that thither is no one dress hat way to lead an organization, organize a corporation or make a decision. Instead, the becharm organizational structure depends on the contingencies veneer the organization (Travis Spread, 2012).Coca green goddess does non lease control everyplace the contingencies that are continuously arising in spite of appearance its inside and away environment this includes political changes, much(prenominal) as the increased health standards for bottling. The accident speculation was chosen as it typifies that implementation of the appropriate organizational structures, depending on the contingencies the organization is facing, go away contri onlye in concern success. The managers at Coca Cola are witting that companies whose characteristics fit with the contingencies in the current stake ordain perform more efficaciously compared to an organization whose characteristics do non.Hence, implementation of this surmisal has al lowed managers to drive home certain characteristics of the organization, such as the structure, to suit contingencies within their environment. The performance theory is pertain with resolving paradoxs that can make up in authorisation relationships that is, between superstars and brokers of the corpuss (Investigated, 2013). Generally, in large companies, with managers acting on behalf of their owners, numerous issues will arise in relation to the principle and the ingredient. Managers tend to misbe stomach if the interests of them and the company owners diverge (Eisenhower, K.M, 1989, paginate 58). The dominance theory is of crucial importance to this study, as it highlights honorable and commercial issues which arise from an agent/ oral sex relationship. A s seen with Coca Cola, 2013 entailed substantial net increase cuts to most top executives, due to over one fourth of the shareholders voting against them. As a solution, many a nonher(prenominal) executives became denominated to work in party favour of shareholders, who they call upd were only acting in their own self-interests. In the article possibility of the Firm Managerial Behavior, Agency be and Ownership Structure Jensen, M.C &038 Neckline separate that if both parties to the relationship are utility increases, it is about certain that the agent will non act in the best interests of the principal Nonsense, M. C &038 Neckline. W. H, 1976, Page 5). The authors propose that many complications can arise as a consequent of a spell of cost, including observe costs, in such a relationship. Jensen and Neckline consequently typify, that the principal whitethorn limit these divergences by implementing appropriate incentives for the agents and and by incurring observe co sts protrudeed to limit the unnatural activities of the agent Nonsense, M.C &038 Neckline. W. H, 1976). The Academy of Management Review by Kathleen M. Eisenhower, is a second study on agency theory, which states that there are two main problems that the agency heron is concerned with resolving. The first problem is the problem of jeopardy sharing, which is the problems that arise when the principal and agent welcome several(predicate) attitudes towards victorious encounter (Eisenhower, K. M, 1989, rogue 64). Due to different risk tolerances, the principal and agent whitethorn individually be inclined to take different actions, which will result in the agency problem.The second problem, known as the agency problem, is the problems which arise, when the goals of the principle and the agent are non aligned. These problems both arise as a result of information asymmetry. Eisenhower highlights these problems in enjoin to remind us that regardless of what we think, organizatio nal life is based on individuals acting in their own self-interest (Eisenhower, K. M, 1989, page 64). Leg Donaldson, in his 2001 paper The eventuality theory of organizational design, provides a comprehensive, in depth analysis of the misadventure theory.He states that a successful organization is not one that adopts the maximum aim, but instead, the appropriate level of structural variables, that depend on near level of the contingency variable (Donaldson, 2001). He then proceeds with exempting that a company may only increase its operation levels by adopting strategies depending on the contingencies the organization is facing (Donaldson, 2001). Similarly, in his paper, Complex Organizations A tiny essay, Charles Proper as healthy as stresses the importance of the contingency theory within organizations.According to Proper, organizations should adopt thorough structures, based on the internal and orthogonal contingencies the company is faced with (Proper, 1979). He states that occupancy structures should be developed according to each individual organization, rather than upon some widely distributed principles or procedures (Proper, 1979). Proper strongly opines that complying with the contingency theory will result in the business achieving utmost success. A number of issues in relation to direction and the organization shake off been raised, as a result of the agency and contingency theories.The agency theory was initially designed in order to assist in the understanding of the agent/principle relationship. Williamson (1985) identified opportunistic doings as a norm within organizations, stating that agency problems are more than likely to occur. He specified that managers often act opportunistically, and that trustworthiness is no longer common. Jensen and Neckline (1976), back up Williamson claim, they believe it is generally im likely that management will act in favor of the principle, as their main focus is to maximise their own wealt h.Coca Cola proved this to be true in 2013, when Californian managers were sued for under succumbing their employees in order to reduce expenses (D. Blackburn. 2013). Jensen and Neckline (1976) in any case believe that the agency theory may also initiate moral issues between the agent and former(a)(a) takeovers, such as the public. As seen with Coca Cola, India, 2002 entailed an agency issue between management and the public. Communities across India living around Coca-Colas bottling plants experienced severe water shortages, as a result of Coca-Colas massive filiation of water from the common groundwater resource.The public criticized the company, stating that Coca Cola is willing to damage the nation, for their own self-interest of cost cutting. The company refused to doctor their procedures until they were forced to by government. (Blackburn, 2013 ) Drain and avant-garde De Even (1985) believe that environmental perplexity can occur as a result of the contingency theory. T hey believe that an issue with the theory is that there are no pre-developed structures that an organization can adopt if internal and outer contingencies, unexpectedly occur.In order to ward off these issues, Drain and Van De Even (1985) state that an organization must(prenominal)(prenominal) develop structures that it can quickly implement if internal and extraneous contingencies, unexpectedly occur. In 1981, Coca cola began to lose market share to Pepsi, as the company had developed a radical racketing procedure, which did not appeal to the public. Coca Cola failed to develop alternate plans if contingencies within the external market, such as increased contention occur. As a result, by 1983, Coca Colas market shared, decreased to an all- epoch low of Just below 24%.Due to this sinister situation, Roberto Goutiest, Coca Colas chairman at the time, decided that in the future, the company will discover out all contingencies and possibilities, and have gain plans, if their current procedures fail. In his article calamity theory Science or Technology Stephen C. Beets insinuates that over the years, many criticisms/limitations of the contingency theory have developed. He states that one criticism of the contingency theory is that the causation of certain contingencies are assumed, but not explained (Beets, 2011).The assumption is that because a set of environmental conditions and organizational design characteristics were found to be correlated that this is the best fit (Beets, 2011). Stephen (2011) then continues to explain that decisions should not be made based on this assumption, instead informed decisions must be made, based on glacial argumentation of each unique situation. Morehouse (2007), believes that the theory fails to explain why some people are more effective leading in some situations than others.Shah (1979) adds on to Northerners claim, he states that the theory has not identified what an organization should do, when there is a mism atch between the managers and the current situation within the workplace. Similarly, in his textual matter Management and organizational theory, Jeffery A. Miles makes aware many limitations of the agency theory. Miles suggests that empirical look into as failed to support basic tenets of the theory, including ways to apologise the agency problem (Miles, 2012). Hence, researchers are now asking for re-examination of the theory so that research can move into new and different directions.Miles (2012), made reference to Proper (1986) who claimed that the agency theory does not clearly spoken language any organizational problems, as well as Hirsch and Friedman (1986) who invited agency theory as excessively narrow, focusing primarily on organizational stock price. Different stakeholders have different views regarding the contingency ND agency theories. Assassinates (1989), highlights that perspectives will differ amongst all stakeholders, regarding risk sharing, which is one of the main problems within the agency theory.Assassinates (1989) stated that managers tend to avoid taking risks, as they fear the possibility of failure, which may result in damaging the organization. On the other hand, other stakeholders, such as shareholders of the company, may support the idea of risk sharing, as certain risks may result in increased profits for the company, thus, increase their shares. As stated prior, Jensen, M. C and Neckline (1976) believe that managers (agent) tend to make decisions that will result in maximizing their own utility. In doing this, agents will momentously benefit, as their own wealth may substantially increase.On the other hand, shareholders of the company (principles) will generally cope with these decisions, as they fear that they arent receiving a bazaar share and getting the best possible investment from the company. Similarly, Woolworth, macrocosm the agent of Coca Cola, attempted to boost its own profit margin, by decreasing Coca Colas prices, onward lacing them on the shelves. Woolworth attempted to maximize their own utility, by decreasing costs of Coca Cola, with the intention of gaining more customers, hence modify their market share.Coca Cola matte as though Woolworth breached their contract terms, as they were gaining an unfair leverage http//www. Afar. Com/p/ business/companies/clash_of_the_titans_woolies_coke_KJLlpFFlJfabEGgdeAnswO . Similarly to the agency theory, stakeholders also have opposing views in relation to the contingency theory and its issue of environmental uncertainty. Managers may appreciate the idea of environmental uncertainty, as it creates a spontaneous environment, which may work in their favor. Managers are able to adopt the business strategies that they know will be effective, due to past experiences.On the other hand, other stakeholders, such as employees may not appreciate environmental uncertainty, as continuously changing management structures, may require employees to attain n ew skills. Hence, employees will be required to spend more time in the training and development process, thus, resulting in increased costs for the business, meaning less suffer and/ or benefits for employees. In introductory years, Coca Cola in India see that environmental contingencies, such as stinting decline, were forcing other Indian companies to change their employee pay rates.As a result, Coca Cola changed their employee pay rates, in line with the other Indian companies. The Indian companies success rates began to increase due to cost cutting, however Coca cola experienced a epochal level of employees voluntarily leaving the company, as they became denominated and felt mistreated (Coca Cola, 2012). Managers/leaders must ensure that prior to managing an organization they have an understating that perspectives will differ, amongst all stakeholders within the company.Managers must ensure that they reason logically and fairly rather than emotionally, this will guarantee th at they do not act in their own self-interest. Therefore, they must pay attention to his/her personalised as well as other peoples assumptions, perspectives, and biases. This process should be approached with integrity, open-mindedness, honesty, and accuracy. It is also authorized for a leader/ manager to assert ethical and moral standards, in doing so employees with feel as Hough they are being treated Justly.As a result, managers are not only increasing efficiency, but also nurturing skills, developing talent, inspiring results, and erasing all employee concerns regarding any issues of mistreatment, such as underpay. Further to this, managers must not only treat employees fairly, but also, all other stakeholders within their company, such as shareholders, customers, suppliers, and so on. In doing so, leaders will ensure that they gain positive relationships, which will result in improving the market share of the company, hence, gaining a significant nominative advantage.