Contingency or situational approach
Contingency or situational approach is an important addition to the paradigm of the modern management theory and approach. In one way, this is an extension of the system approach. The basic idea of Contingency or situational approach is that there cannot be a particular management action which will be suitable for all situations. Rather, an approach action is one which is designed on the basis of external environment and internal states and needs. Contingency theorists suggest that the system approach does not adequately spell out the precise relationship between the organizations and its environment. Contingency or situational approach tries to fill this gap by suggesting what should be done in response to an event in the environment. Contingency approach has the following features:
1. Management action is contingent on certain action outside the system or subsystem as the case may be.
2. Organization action should be based on the behavior of the action outside the system so that organization should be integrated with the environment.
3. Because of the specific organization environment relationship, no action can be universal. It varies from situation to situation.