Why is the classical theory of organisation known as mechanistic theory?

The correct answer is: C. Because it underestimated human factor and oversimplified human motivation.

The classical theory of organization is also known as the mechanistic theory because it views organizations as machines, with each part having a specific function to perform. This theory emphasizes efficiency and order, and it assumes that employees will be motivated by financial rewards and job security. However, this theory has been criticized for underestimating the importance of human factors, such as employee motivation and job satisfaction.

Option A is incorrect because the classical theory of organization does not necessarily have a formal declared pattern of relationship established by law. In fact, many organizations that follow this theory are not legally required to have such a structure.

Option B is incorrect because the classical theory of organization does attempt to explain the dynamics of organizational behaviors. However, it does so in a very simplistic way, assuming that employees will always act in a rational and predictable manner.

Option D is incorrect because the classical theory of organization does recognize that organizations exist within an external environment. However, it does not give much attention to how this environment can affect the organization.

In conclusion, the classical theory of organization is known as the mechanistic theory because it views organizations as machines and underestimates the importance of human factors.