Examining Management Theory

Contingency theory discusses the idea that the best way to manage an organization is to have a plan that is dependent upon the surrounding environment. Many Risk Managers who work to implement a contingency plan are often limited by the structure of their firm (McDonald, 2010). The contingency theory at this student firm is one that has been refined through the years. Management has found it necessary with the diversity of the sales team to handle each individual sale on a case by case basis. Though many of the transactions and projects are of similar size and scope the ever changing clientele base requires the management team to size up each opportunity differently. According to McDonald, "Though changes are not as easily implemented as planed," several firms prepare with the intentions of addressing the risk potentially faced in their industry. The management team at this students firm decided that the most successful way to handle the situation is to deal on a case by case basis. Most recently two customers were making an acquisition of the same technology, however both were negotiated with differently. On one hand management made sure the customer was satisfied, however Customer 1 was satisfied with an extension on their payment terms, while Customer 2 was satisfied with a credit on future purchases. Both decision though effective required different leadership styles with customer 1 an aggressive approach was needed while with customer 2 it was passive. The firm understands that each customer must be handled with a different style and that though the technology they acquire are similar their use and the characteristics of each organization is vastly different.

References

McDonald, C. (2009), How sound is your firms Disaster Contingency Plan, National Underwriter.