3.2 Flashcards
1
Q
What do managers do
A
- Forecast and plan
- Organize
- Command
- Co-ordinate
Control
2
Q
What should managers do
A
- Set clear objectives that all staff believe in
- Find the right team for meeting the objectives
- Help ensure that all staff are motivated
- Prepare staff for change
3
Q
4 leadership styles
A
- Authoritarian
- Democratic
- Paternalistic
- Laissez-faire
4
Q
Authoritarian
A
- Focus of power is with the manager
- Communication is top down and one way
- Formal systems of command & control
- Use of rewards & penalties
- Very little delegation
- McGregor theory X approach
5
Q
Paternalistic
A
- Leader decides what is best for employees
- Links with Mayo - addressing employee needs
- Akin to a parent/ child relationship
6
Q
Democratic
A
- Focus of power is more with the group as a whole
- Employees have greater involvement in decision making
- have greater involvement in decision making
7
Q
Laissez-faire
A
- Leader has little input day-to-day decision making
- Conscious decision to delegate power
- Managers/employees gave greater involvement in decision making
- Effective when staff are ready and wiling to take on responsibility
- Not the same as abdication
8
Q
Why modern business leadership is moving away from autocratic styles
A
- Changes in society values
- Better educated workforce
- Focus on need for soft HR skills
- Changing workplace organizations
- Greater workplace legislation
- Pressure for greater employee involvement
9
Q
Tannenbaum and Schmidt
A
- A continuum of leadership behavior
- Continuum represents range of activity action related to the:
> Degree of authority used by the manager
> Area of freedom available to non-managers - Links with theory X (boss-centered leadership) and theory Y (subordinated-centered leadership)
10
Q
Tannenbaum and Schmidt continuum of leadership
A
- Tell:
> Leader identifies problems,make decisions and announces to subordinated; expects implementation - Sells:
> Leader still makes decisions, but attempts to overcome resistance through discussions and persuasions - Consults:
> Leader identifies problem and presents it to the group.Listens to advice and suggestions before making a decision - Joins:
> Leader defines the problem and passes on the solving and decision making to the group (which the manager is part of)
11
Q
Factors affecting leadership styles
A
- Personal value systems
- Managers experience
- Confidence in subordinate
- Feeling of security
- Nature of the business problems
- Type of organization (size, Structure)
- Effectiveness of teams and groups
- Skills and experience on subordinates
- Pressure (time, cost)
12
Q
Decision tree
A
- A mathematical (scientific) model
- Used to help managers make decisions
- Uses estimates and probabilities to calculate likely outcomes
- Helps to decide whether the net gain from a decision is worthwhile
13
Q
Net gain
A
- The value to be gained from taking a decision
- Calculated by adding together the expected value of each outcome and deducting the costs associated with the decision
14
Q
Expected value
A
The financial value of an outcome calculated by multiplying the estimated financial effect by its probability
15
Q
Advantages of using a decision tree
A
- Choices are set out with a logical, systematic structure
- All the potential options and choices are considered at the same time
- Use of probabilities enables the risk of the options to be addressed
- Likely costs are considered as well as potential benefits
- Easy to understand and tangible results
16
Q
Disadvantages of decision trees
A
- Probabilities are just estimates - always prone to error
- Uses quantitative date only - ignore qualitative aspects of decisions
- Assignment of probabilities and expected value prone to bias
- Decision-making technique doesn’t necessarily reduce the amount of risk
17
Q
Thought on decision trees
A
- Like investment appraisal, decision trees are popular tool for management decision making
- Output from decision trees very sensitive to the probabilities assigned
- Important not to use the decision tree to justify a decision, but to aid decisions as part of the decision making process
18
Q
Hunch
A
- Based on intuition, gut feel and experience
- Key benefit - quick
- But hard to justify for business decisions involving significant risk
19
Q
Scientific
A
- Based on data and analysis
- Downside; time consuming and costly, no guarantee of the right decision
- Increasingly common and automated, supported by big data and data analytics
20
Q
Hunch Vs Scientific
A
- Most firms want to adopt scientific approach to their decision making which is supported by data
- Modern scientific tools will allow for many situations to be modeled and a range of outcomes can be predicted. Decisions can be justified using models and data
- The scientific approach is likely to be best used in situations with a lot of known relevant data
21
Q
Risk, Reward, uncertainty
A
- Business decisions come with a risk. 70% of new businesses will fail the invective for risk taking is the reward for profit
- Decision making will attempt to reduce the uncertainty in decision making
- Larger companies can afford to take more risks, small start-up will try to reduce their exposure to risk
- The difference between risk and uncertainty is risks can be estimated with some degree of probability where as uncertainty refers to a lack of information which makes it impossible to assess the probability of an event
- Uncertainty can therefore can be a bigger problem for firms as they cannot plan for it
22
Q
Scientific decision making
A
- It involves making decisions based on evidence and adopting a systematic approach rather than intuition hunch or gut reaction
23
Q
Influences on business decisions
A
- Business objectives/ budgets
> Set the scene for how decisions are made - Organisational structure
> Who makes the decisions? - Attitude to risk
> Close link with business culture
> Is risk taking encouraged
> What are the penalties for poor decisions - Availability and reliability of data
> Is the data available to support a scientific approach - The external environment
> How fast is the external environment changing
24
Q
Opportunity cost
A
- The cost of missing out on the next best alternative
- The benefits that could have been gained by taking a different decision
25
Stakeholders
- Any group with an interest in a business
- Modern firms tend to focus on all stakeholders rather than just shareholders
26
Shareholders
- People who own shares this is part of the business
- Shareholders are also Stakeholders
27
Internal stakeholders
- Owners
- Employees
- Managers
28
External stakeholders
- Shareholders
- Customers
- Creditors
- Suppliers
- Local community
- Government
- Environmental
29
Stakeholder mapping
- To manage priorities the needs of stakeholders professor Mendelow devised a matrix model. Remember that firms have limited time and resources to address the wants of all stakeholders
- The matrix balances power a stakeholder has against the degree of interest a stakeholder has
- The least influential stakeholder will have low power and low interest
- The most influential stakeholder will have high power and high interest
30
Stakeholder mapping: The power interest matrix (table)
- Low interest, Low power (Bottom left)
> Monitor
- High interest, low power (bottom right)
> Keep informed
- High power, low interest (Top left)
> Keep satisfied
- High power, high interest (top right)
> Manage closely
31
Stakeholder objectives
- Shareholders: Share growth, income
- Employees: well paid, safe, job security, social needs
- Customers: good quality products. customer service, choice,value for money
- Suppliers: regular contracts, being paid on time
- Local community: employment, wealth, no pollution or congestion
32
The shareholder first view (traditional)
- Traditionally a firms focus was on producing profits in order to satisfy the owner of the business,who had invested their money into the firm
- Legally the people who run the business prime responsibility is to their shareholders
33
Conflicts between stakeholders
- If a firms aims to focus on the profit for shareholders this may result in other stakeholders not achieving their objectives
-Employees: Might be paid low wages
- Supplier: Might not be paid on time
- Local community: Possible noise/pollution
- Customers: Possibility of poor customer service or poor products
34
The stakeholder concept
- Modern firms have the view that their long term interests are best served by looking at the needs of all their stakeholders rather than just their shareholders
- If employees are motivated by goods conditions, if suppliers are paid on time, if the local community is supported then it will benefit the firm
