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Assignment Title: Research Proposal on Flawed
Management Theories throw negative impact on good
management practices
Module Code: BE4S32

Assignment No: 2

Alan Protheroe
Student No: 11058196

Glamorgan University – Option Question 1
Final Submission Date: 11th November 2011

1

Table of Contents
Title Page

1

Table of Contents

2

Introduction

3-4

Agency Theory research methodology

5

Porter’s Five Forces research methodology

7

Value-Based Management research methodology

9

Triple Bottom Line research methodology

10

Conclusion

12

Bibliography

15

2

Introduction
The relationship between theory and practice is a common area of examination in many disciplines and an ideal area to carry out resea rch. In more recent times there has been a great deal of positive and negative writing within the academic community about good management practice being negatively impacted by flawed management theories, this has been more apparent in light of the recent economic collapse throughout the global community. This research essay will examine the effect of bad management theory and its effect on good management practices by discussing a model called Agency theory and the argument formed of its benefits over ot her management models. Three businesses models will also be researched in this essay to form positive and negative arguments they are: Triple Bottom Line, Value Based Management and Porters Five. I believe in recent years, there has been a more increasing interest in the beliefs and values of several popular management theories which are prevalent and common practice. The main or predominant use of theories such as agency theory, have given these management approaches credibility and positioned them as the de-facto “status quo” approaches in many parts of business communities. People are questioning the realms of agency theory and its role in be a fundamental factor in the collapse of institutions such as Bear Stearns and Enron, Lehman Brothers. A recent innovative approach that is gaining broad appeal and success is (TBL) the Triple Bottom Line model. The triple bottom line business model has been put in by companies as a much needed improvement to the double bottom line and has become a more holistic alternative to models such as Value Based Management and Porters Five Forces. In light of these previous models, using the triple bottom line approach, companies assess their success in relation to net benefit 3

on the company's stakeholders. Value-based management (VBM) refers to a model of getting maximum effect out of the monetary value of a company. This model sets effective goals, performance can be evaluated, and within the model can determine bonuses, guides budgets and assists in asset/liability valuations. The main objective of this model is to instigate better incentives for the agents through performancebased bonuses, which in turn aligns the agent’s self -interest with that of the shareholders. In this theory, shareholder value and short-term cash generation are paramount and are used as the pinnacle of success of both the agents and the company (van Assan, van den Berg & Pietersma, 2009 p. 74). There is increasing concern among research analysts that predominantly incentive-based organizations could in the future create an environment which inevitably results in the agent’s focus on their immediate self-interest and maximizing personal benefit rather than regard for the long term benefits of the company. Porter’s Five Forces is a worldwide used model, clear outlines tofive competitive forces: Buyers, Suppliers, emerging competitors, existing competitors and substitute products. This competitive model also provides insight into the dynamics of the industry while guiding the company management in their strategic decision making process (van Assan, van den Berg & Pietersma, 2009 p. 14). For many companies this model has proven effective to be able to...
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