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Unit 2: Development of Management Theories

Though the modern theory has contributed a lot to the organisation, yet it is not free from Notes
criticisms. Notwithstanding its contribution to modern thinking, it has not lived up to the
expectations, it raised at the beginning. It promised to provide an adequate and comprehensive
explanation of the organisation, but this promise does not seem to be fulfilled. It was initially
received enthusiastically but the initial enthusiasm could not be sustained for long. It remains
fragmented because isolated attempts have been made in this direction and no integration of
techniques and concepts into a high level of abstraction was attempted. Its concepts are still
evolving. Though critics regard it as an important theory of organisation, but undoubtedly it
has not yet developed sufficiently as a theory of explanation in the realm of human behaviour.
There is no such transformation in the theory that can eliminate the old and substitute the new.

Case Study Implementing New Systems at VXM

he past three years at VXM software have been very good as the company grew
well in terms of business and growth rate. It managed to get huge contracts for ten
Tvery large companies and is in the process of setting up its fourth office in Pune.
Since its Inception six years back, the company has come a long way and the founder CEO,
Vijay Kamath, has embarked upon a massive expansion plan. He has planned to grow into
international market and double their turnover within the next three years.
As Vijay compared many options available to him for getting the required finance to
support this expansion, he was impressed by the concept of loans by venture capitalists.
He asked the chief financial officer, Suryakant, to get more information on the subject and
discuss it with their advisor. Within five months, the deal was finalised and the company
received a loan of 20 crores to put in their expansion plans. In the coming year, the
company rose up to double their employees and business grew by thirty five per cent. The
business from international market started coming in slowly but by the end of the year
1998, the business from this sector rose to almost double.
Vijay, however, felt that the focus on increase in business had led to other problems like
those of performance and quality. Coming back from a meeting with his old friend and a
market analyst, he kept thinking about their conversation. They had discussed the general
topics and then his friend had said, “You must look at the performance from all levels.
While you are busy in creating and maintaining products, you have so far ignored your
performance on other non-financial parameters such as employee turnover, customer
retention, etc.” Vijay realised that they actually don’t have any objective way of measuring
performance in these areas. So far no system has been developed or used to cover these
factors. He decided that he must do something in this direction and the next morning, on
reaching office he called his top managers for a meeting.

‘With growing business, our focus has been on developing products and expansion
strategies. Last two years have been immensely profitable for us with business coming
from overseas as well. Now, I look back and feel that for a six year old organisation, we
have done reasonably well.
There is one point, however, which we have neglected in this time and that is our
performance measurement. I mean, we don’t have any single and objective tool to judge
and evaluate our performance on non-financial parameters.
I personally feel that we need to have such a system which can guide us internally to
develop insight into our customers, our employees and our strengths and how to improve
upon these areas.” Vijay was addressing his team of functional heads at the meeting.

Contd...

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