Alderfer’s ERG theory

Clayton Alderfer developed a modification of Maslow’s hierarchy with the ERG theory. ERG theory is more flexible than Maslow’s theory in three basic respects.

Firstly, the theory collapses Maslow’s five need categories into three: existence needs relate to a person’s desire for physiological and material well being; relatedness needs represent the desire for satisfying interpersonal relationships; and growth needs are about the desire for continued personal growth and development.

Secondly, while Maslow’s theory argues that individuals progress up the hierarchy as a result of the satisfaction of lower-order needs (a satisfaction–progression process), ERG theory includes a ‘frustration–regression’ principle, whereby an already satisfied lower-level need can become activated when a higher-level need cannot be satisfied.

Thus, if a person is continually frustrated in their attempts to satisfy growth needs, relatedness needs will again surface as key motivators.

Thirdly, according to Maslow, a person focuses on one need at a time. In contrast, ERG theory contends that more than one need may be activated at the same time.

ERG theory categorises needs into existence, relatedness and growth needs.

Existence needs are about the desire for physiological and material wellbeing.

Relatedness needs are about the desire for satisfying interpersonal relationships.

Growth needs are about the desire for continued personal growth and development.


ERG Theory

Source: Marc J Wallace, Jr, and Andrew D Szilagyi, Jr, Managing behavior in organizations (Glenview, IL: Scott, Foresman, 1982).



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Posted by MbaNotesWorld - March 3, 2017 at 11:48 am

Categories: Organisational Behaviour   Tags:

McClelland’s Need Theory

McClelland’s need theory focuses on personality and learned needs.  He categorized motives into three manifest needs: need for achievement, need for affiliation, and need for power.

1.Need for Achievement: The need for achievement refers to seeking excellence in performance and difficult, challenging goals.  Research indicates that people with a high need for achievement outperform those with a moderate or low need for achievement.


2. Need for Power: The need for power is concerned with making an impact on others, influencing others, changing people or events, and making a difference in life.  McClelland further distinguished between socialized power (used for the benefit of many) and personalized power (used for personal gain).


3. Need for Affiliation: The need for affiliation emphasizes the establishment and nurturing of intimate relationships with other people.  In contrast, individuals with a high need for autonomy, as outlined in Murray’s manifest needs theory, value independence and freedom from constraints.  Students will be able to identify the differences between individuals by using an example of telecommuting and by discussing which individual would be more comfortable with this change in organizational interaction.

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Posted by MbaNotesWorld - March 2, 2017 at 3:14 pm

Categories: Organisational Behaviour   Tags:

Handling Conflict and Commitment

The attitudinal approach may be the best approach to handle employees-manager conflicts, because it focuses on the process by which people come to think about their relationships with the organization (relationship between the employees and the management or relationship between employees with each other).

Yes, this approach can increase commitment, because studying the employee-manager relationship and knowing what each party think about the other can help analyze the weaknesses in the relationship that help develop ways to make a better and a stronger relationship between both parties, which in turn helps develop a stronger organizational commitment.

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Posted by MbaNotesWorld - March 2, 2017 at 9:12 am

Categories: Business Organizations   Tags:

Role of Communication in Conflict!

Yes, it can lead to conflict because of different goals, aims, ideas, beliefs, and actions each employee in the organization take or believe in, that takes place when employees or groups meet together either in business meetings or in their daily working life.

Conflicts occur when two employees’ aims, actions or issues tend to disagree with each other, or when one group disagrees about a certain matter, or if two or more groups tend to have contradictory ideas or actions.  Conflicts might occur between management and employees or between units or employees at the same level.

Conflicts can easily show in a multinational or multicultural organization because of the difference in language, norms, personal style, and other personal characteristic which usually hinder the effective communication and set the stage for conflict.

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Posted by MbaNotesWorld - March 2, 2017 at 9:11 am

Categories: Business Environment, Business Organizations   Tags:

Discuss the role that conflict plays in affecting organizational commitment.

Organizational conflict plays a vital role in influencing the employees’ behaviors and their working outcomes, and has a major affect on the organizational commitment of the employees in the company.

Intra-individual conflict is one of the conflicts facing employees in an organization, it occurs when an employee faces different and mutually exclusive goals and roles, or is obstructed from achieving a certain need.

There are three factors of the intra-individual conflict:

  • Role conflict; occurs when an individual faces different and somewhat contradictory expectations from different parties.
  • Goal conflict; occurs when an individual faces the choice between mutually exclusive goals, which could be positive or negative or both.
  • Frustration; occurs when the individual is prevented from ding a desired action or achieving a certain goal.

These three factors of intra-individual conflict are negatively related to commitment, the higher the levels of role conflict, goal conflict and frustration, the lower the levels of commitment.

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Posted by MbaNotesWorld - March 2, 2017 at 9:05 am

Categories: Business Environment, Business Organizations   Tags:

In what way can owners’ equity been seen as

a. An accounting measure? Owners’ equity represents the amount of a company’s assets not offset by liabilities, hence owned by the firm’s investors. Mathematically, owners’ equity equals assets minus liabilities.

b. A legal concept? Owners’ equity represents the legal ownership of the business, the investment of those with the authority to hire (or be) the firm’s management and set company policy.

c. An investment concept? Owners’ equity identifies that some people have contributed money to the firm and represents one measure of the value of the money they have invested.

d. A value claim concept? Owners’ equity indicates that there is a person or group of people who have the last claim to the income produced by the company and to any residual value should the firm dissolve.

e. A risk concept? Owners’ equity represents a class of contributors to the company who bear a relatively high amount of risk in return for potentially high returns.

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Posted by MbaNotesWorld - July 17, 2016 at 12:35 pm

Categories: Financial Management   Tags:

Distinguish among the following common stock concepts

a. Authorized shares the total number of shares a company can issue as approved by the government.

b. Issued shares the total number of shares sold to investors at any time in the past.

c. Outstanding shares the number of shares currently in the hands of investors.

d. Treasury shares the number of issued shares not currently in the hands of investors having been repurchased by the company and “held in the company’s treasury.”

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Posted by MbaNotesWorld - July 17, 2016 at 8:15 am

Categories: Financial Management   Tags:

Common stock concepts

a. Par value the maximum capital contribution required from investors for each share.

b. Book value the accounting value for each share; total owners’ equity divided by the number of shares outstanding.

c. Market value the price of each share in the financial marketplace reflecting investors forecasts of future cash flows the company will produce.

d. Liquidation value the value investors would receive for each share if the company were dissolved and its assets sold.

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Posted by MbaNotesWorld - July 17, 2016 at 4:12 am

Categories: Financial Management   Tags:

Six benefits to owning common stock

Everyone will rank the six benefits in their own order of preference, although most people will put income near the top of the list. In the order presented in this chapter, the six benefits are:

(1) Income the right to a proportional share of the company’s income, either paid out as a dividend or retained and reinvested in the business.

(2) Control the right to vote on company affairs, in particular the election of directors, the selection of external auditors, and proposed amendments to the company’s charter or by-laws.

(3) Information the right to “inspect the company’s books,” usually satisfied by providing stockholders with summary financial statements and commentary in the company’s annual and quarterly reports.

(4) Freedom to sell the ability to sell ownership in the company to anyone else at any time without the need for approval.

(5) Limited liability freedom from legal responsibility for company errors beyond the amount of the money invested in the company.

(6) Residual claim the right to a proportional share of any value remaining after all other claimants have been satisfied, particularly in bankruptcy.

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Posted by MbaNotesWorld - July 16, 2016 at 11:57 pm

Categories: Financial Management   Tags:

Primary and fully diluted earnings per share

What is the difference between primary and fully diluted earnings per share?

Primary earnings per share (EPS) is calculated by dividing a corporation’s reported net income by the average number of shares outstanding during the year. It is a measure of a company’s per-share performance as it actually happened. Fully diluted earnings per share measures what would have happened to EPS if all options on the company’s stock had been exercised at the beginning of the year, increasing the average number of outstanding shares and possibly changing net income. For example, if a company’s outstanding convertible bonds had been exchanged for common stock, interest expense would have been reduced and the number of outstanding shares would have increased. Both measures must be reported with a company’s income statements under GAAP accounting rules.

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Posted by MbaNotesWorld - July 16, 2016 at 7:53 pm

Categories: Financial Management   Tags:

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