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Contingency Theory and Its Implications to Corporate Financial Planning and Organization Structure
Article from Journal - ilmiah nasional - terakreditasi DIKTI
Jurnal Aplikasi Manajemen vol. 13 no. 3 (Sep. 2015)
corporate financial planning
The development of the organization theory has existed for such long periods especially in terms of management theory. The driving force behind the evolution of management theory is that its efforts to look for better ways in managing organizational resources. Contingency theory which is a part of the organizational environment theories has brought many implications in management’s decision at any organization. Especially in finance, contingency theory has been employed in some financial decisions including the decision of corporate financial planning as a part of the most important considerations, and those actions would certainly have implications to the corporate organizational structure. The contingency theory has been implemented by financial managers in decision making especially in strategic long-term and short-term financial planning regarding many assumptions that underlying the decision. In practice, financial managers can implement the contingency theory by using Scenario Planning. The advantages of the contingency theory are that the theory has enriched the management theories by addressing the environment as one of the keys for managerial decision making. The theory has also helped management of organizations in improving the quality of decision making by addressing the contingent variables. The limitation of the contingency theory is that the contingent factors are still in debates until nowadays so that we cannot determine the precise numbers of contingent factors.
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