The starting point of all managerial theories is the assumption of a divorce of ownership from control. It is also assumed that top managers are able to dominate decision making through their ability to determine company strategy, future investments, promotions and the appointment of persons to key company positions
In common with the traditional neo-classical approach, these are also maximizing theories. However, in place of profit, managers are now assumed to maximise their own utility or satisfaction subject to a minimum profit constraint. Managerial theories differ from one another in terms of the factors or objectives that determine managerial utility, and how those objectives might be achieved
Although profit is no longer seen as the sole aim of the firm, its relevance remains in the sense that a firm’s management can only pursue its own goals when shareholders receive an acceptable minimum level of profit. If this were not the case, managers would risk jeopardising their position, as shareholders will either collectively seek to replace them, or else sell their shares and increase the likelihood of takeover. In such theories, profit therefore appears as a constraint upon managerial behavior
There are a number of management theories each associated with a particular