Business Finance
Compare two change models

Question Description

I don’t know how to handle this Management question and need guidance.

Select and compare two of the following change models: environment-industry-organization contingency, organizational life-cycle, action research model, eight-step approach, appreciative inquiry. Pros and Cons of the two models chosen.

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Final Answer

Two Models: Contingency Theory and Organizational Life Cycle

Contingency Theory:

Contingency theory is the behavioral theory that claims that there is no single best way to design organizational structures. The best way of organizing e.g. a company, is however contingent upon the internal and external situation of the company. Managers have always asked questioned such as :

  • what is the right things to do ?
  • Should we have a mechanistic or organic structure?
  • Functional or divisional structure?
  • wide or narrow spans of management?
  • Tall or flat organizational structure?
  • Should we be centralized or decentralized ?
Contingency theory also called situational approach to management assumes that there is no universal answer to these questions because organizations, people, region, behaviors and situation vary and change over time.


  • Contingency theory purports to apply to all aspects of management and not just organizing and leading.
  • Measures the effectiveness of group performance using leadership styles.
  • It is used to help management choosing best leaders.

  • It has been criticized because it has failed to explain fully why people with certain leadership styles are more effective in some situation then others.
  • It fails to explain adequately what organizations should do when there is a mismatch between the leader and the situation in the workplace.
  • Least prefer co worker scale (LPC) because it did not seem valid on the surface.

Organizational Life cycle / Business life cycle:

Organizational Life cycle is a model which purposes that businesses, over time progress through a fairly predictable sequence of development Four of Five stages which are:

  • Introduction or development stage,
  • growth , 
  • maturity , 
  • Diversification (situational )
  • decline and death stage.
This model is linked with the study or organizational growth and development. It is based on the biological metaphor of the organism, which have a regular pattern of development. Diversification stage is optional it occur sometime when management takes decision to divert their business to save from decline or death.


  • It help businesses to make choices.
  • It implies that every one in the whole chain of product life cycle, from cradle to grave, has a responsibility and a role to play taking into account all the relevant impacts on the economy , the environment and the society.
  • It avoid shifting approaches from one life cycle stage to another, from one geographic area to another.


  • When you depreciate your small business assets you can spread the cost of those assets over their full life cycle , this allows you to receive part of the write-off for your assets as  they produce income for you each year.
  • Using life cycle concept can cause hardship in business and cost you more money than you may anticipate.
  • Life cycle costing methods spread the expense of an asset out evenly over several years.
  • Life cycle concept assumes an asset will be as productive in later years as it is when it's new., this may not be the case for example if a machine breaks down when use it for sometime then it will generate less productivity and hence income.
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