3.2 Mangers, leadership and decision making

Question 1

Role of Managers

Answer 1

Setting objectives

Analyse & review performance

Leading

Making decisions

Question 2

Levels of management - SENIOR MANAGEMENT

Answer 2

E.g. Board of Directors

Set corporate objectives & strategic direction

Question 3

Levels of management - MIDDLE MANAGEMENT

Answer 3

Accountable to senior management

Run business functions and departments

Question 4

Levels of management - JUNIOR MANAGEMENT

Answer 4

Supervisory role, accountable to middle management

Monitor & control day-to-day tasks, and manage teams of workers

Question 5

Leadership styles - AUTOCRATIC

Answer 5

Authoritarian leadership

Assumes info and decision making are best kept at top management of organisation

Characterised by:
- 1 one way communication
- minimal delegation or decentralisation
- close supervision of employees

Question 6

Advantages of autocratic

Answer 6

Quick decision-making especially in stress-filled situations –> relieves pressure amongst employees

Question 7

Disadvantages of autocratic

Answer 7

Discourages group input –> decreased motivation

Hurts morale and leads to resentment –> dissatisfaction

Ignores creative solutions and expertise from subordinates

Leader can feel overwhelmed

Question 8

Leadership styles - DEMOCRATIC

Answer 8

Decisions agreed by majority

Characterised by:
-Collaboration –> employees share ideas & opinions
-employee engagement
- increased creativity

Question 9

Advantages of democratic

Answer 9

Greater innovation –> creativity/ideas

Group member commitment –> job satisfaction

High labour productivity, increased motivation

Question 10

Disadvantages of democratic

Answer 10

Poor decisions by unskilled employees

Slow decision making

Question 11

Leadership styles - LAISSEZ-FAIRE

Answer 11

‘Let it be’

Characterised by:
- Hands-off approach
- Decisions are left to employees

Question 12

Advantages of laissez faire

Answer 12

Encourages personal growth –> facilitates employee growth and development –> increased motivation

Encourages innovation –> greater employee freedom so creativity

Faster decision-making –> no micromanagement, employees have autonomy to go forward with decisions w/o approval

Question 13

Disadvantages of Laissez-faire

Answer 13

Organisation lacks sense of direction

Leaders don’t take accountability –> avoid responsibility

Leaders have poor involvement within the group –> lack of cohesiveness

Question 14

Stages of Tannenbaum Schmidt Continuum

Answer 14

Four Main Styles of Leadership:

1) Tell - leader identifies problems, makes decisions & announces it to subordinates –> expects implementation

2) Sells - leader identifies problems, still makes decision but attempts to overcome resistance through discussion & persuasion

3) Consults - leader identifies problem, presents to subordinates, listens to advice & suggestions before making a decision

4) Joins - leader defines the problem, but subordinates find solutions and decisions within limits of defined superior

Question 15

Tannenbaum Schmidt Continuum - LEFT & RIGHT SIDES EXPLAINED

Answer 15

Left = Manager centred leadership, autocratic, degree of authority

Right = Subordinate centred leadership, democratic, area of freedom

Question 16

Advantages of Tannenbaum Schmidt Continuum

Answer 16

Gives multiple ways with how to involve and interact with your team, allowing you to become more democratic

Provides an incremental way to increase or reduce your team’s involvement in decision making.

Question 17

Disadvantages of Tannenbaum Schmidt Continuum

Answer 17

No ‘correct’ way of managing groups –> ambiguity for the user of the model

Only examines the process of giving a task to your team, not what happens next- DOESNT show full picture

Question 18

Blake Mouton Grid

Answer 18

Top Left - Country Club

Bottom Left - Impoverished

Top Right - Team

Bottom Right - Produce/Perish

Middle - Middle of Road

Question 19

Blake Mouton Grid - Axis

Answer 19

Y axis - People

X axis - Task

Question 20

Blake Mouton Grid - explained

Answer 20

Country Club - high people & low task, concerned about needs and feelings of others, work environment is likely to be relaxed but work may suffer due to lack of control

Impoverished - low people & low task, ineffective leader, work and people are both neglected

Team - high people & high task, employees are motivated and needs are met

Produce/Perish - high task & low people, v authoritarian, tasks are always done matter the implications for employees

Middle - some focus on task and people, average performance

Question 21

Advantages of Blake Mouton Grid

Answer 21

Used by managers to increase productivity

Helps leaders understand their natural leadership style –> and allows the necessary changes to be made if needed

Question 22

Disadvantages of Blake Mouton Grid

Answer 22

The model is overly simplistic

Too focussed on the leader –> doesn’t pay attention to other factors e.g. development level of your team, the businesses culture etc.

Question 23

Value of decision making
(risk, rewards, uncertainty, opportunity costs)

Answer 23

Risks - the potential that a decision will lead to a loss or an undesirable outcome

Rewards - potential profits from a decision, better recruitment, low costs, opening new markets etc.

Uncertainty - decision making without all the information about the potential risks.

Opportunity costs - represents the benefits that could have been gained by taking a different decision.

Question 24

Other types of decisions

Answer 24

Programmed - familiar routine decisions

Non-programmed - less structured –> require unique solutions

Tactical - short term, fewer resources involved, easier to reverse, junior management

Strategic - long term, large commitment of resources, difficult to reverse, senior management

Question 25

Decision Making - HUNCH & INTUITION

Answer 25

Managers rely on their instincts / gut feeling

Question 26

Advantages of hunch & intuition

Answer 26

Speedy --> decisions are instant, rather than waiting for the results of scientific data analysis Based on personal experience: data isn't always reliable --> manager may feel more comfortable with the gut feeling

Question 27

Disadvantages of hunch & intuition

Answer 27

Can be unsuitable for important decisions May be too hasty, more susceptible to making the wrong decision

Question 28

Decision making - SCIENTIFIC

Answer 28

Based on quantitative data, uses a logical & rational approach Linked to decision trees

Question 29

Decision trees

Answer 29

Estimates and probabilities to calculate likely outcomes NET GAIN = EXPECTED VALUE - INITIAL COST

Question 30

How to calculate decision trees

Answer 30

1) Multiply probability by result (ending bit) on both high and low sales 2) Add the answers of both these together to find the expected value 3) Subtract this answer (expected value) from initial cost to find the net gain 4) DO THE SAME FOR OPTION 2 5) Compare both net gains and see which one is higher to find the better option

Question 31

Decision trees - What if both options’ net gains are negative?

Answer 31

'Do nothing'

Question 32

Advantages of decision trees

Answer 32

More logical way, less rushed --> based on evidence Potential options & choices are considered at the same time Use of probabilities enables the “risk” of the options to be addressed Easy to understand & tangible results

Question 33

Disadvantages of decision trees

Answer 33

Probabilities are just estimates – always prone to error Uses quantitative data only – ignores qualitative data

Question 34

Influences on decision making - MISSION & OBJECTIVES

Answer 34

Mission - sets out broad goal/aim Objectives - quantifiable and time-related targets

Question 35

Influences on decision making - ETHICS

Answer 35

Provides moral guidelines Info spreads quickly --> potentially damages sales? Businesses should consider ethical dimension as they should have genuine desire to operate ethically, while others wish to avoid any adverse publicity

Question 36

Influences on decision making - RISKS

Answer 36

If manager is taking a high risk (non-programmable) they may consider scientific decision making Whereas low risk (programmable) may be done through intuition/hunch

Question 37

influences on decision making - EXTERNAL ENVIRONMENT + COMPETITION

Answer 37

Consists of: - competition - consumer incomes - interest rates - demographic factors - environmental issues

Question 38

Influences on decision making - RESOURCE CONSTRAINTS

Answer 38

Managers need necessary resources to be available e.g. info, time raw materials & labour However most managers don't have all these resources available all the time --> so they have to satisfice ( make best possible decision with resources that are available)

Question 39

Stakeholders

Answer 39

A stakeholder is anyone that is interested and affected by the business Internal - shareholders & owners, managers, employees External - customers, suppliers, local community, pressure groups & government

Question 40

Stakeholders v Shareholders

Answer 40

Stakeholders - interest in the business but don't own it Shareholders - own the business, benefit directly from the business (dividends), expect a return on investment

Question 41

Stakeholder Needs

Answer 41

INTERNAL Shareholders and owners: return on investment, profits & dividends, success + growth, proper running of the business Managers/Employees: good salary, job security & satisfaction, promotion opportunities, motivation etc. EXTERNAL Customers: good quality and range of products at reasonable prices, good customer service Suppliers: receive payments on time, regular orders Local community: looking for employment Pressure groups: compliance with local laws & regulations e.g. noise, pollution) Government: create more jobs to raise more money from taxes, compliance with business legislation

Question 42

Stakeholder Mapping - POWER & INTEREST

Answer 42

High power, high interest - Key players, take notice of them and engage directly with them High power, low interest - keep them satisfied Low power, high interest - communicate regularly with them Lower power, low interest - communicate only when necessary

Question 43

Overlap & conflict of stakeholder needs - EXPAND PRODUCTION

Answer 43

Employees - more jobs available, promotion, higher pay? Customers - new products, lower prices maybe? Shareholders - share price & long-term profits will increase BUT investment needed may cut short-term profits Suppliers - larger/regular orders BUT expectation of reduced prices

Question 44

Overlap & conflict of stakeholder needs - CUT COSTS

Answer 44

Employees - more jobs may result if successful Customers - lower prices maybe BUT quality will be bad Shareholders - increased profits, dividends & share price BUT reduced quality can turn customers away resulting in reduced sales and profit Supplier - business may seek alternative lower cost supplier

Question 45

Overlap & conflict of stakeholder needs - RAISE PRICES

Answer 45

Employees - increased wages, better working conditions BUT sales decline resulting in job losses Customers - unaffordable products --> less value received Shareholders - increase in profit, dividends & share price BUT adverse publicity if its an essential product Suppliers - higher prices BUT orders may fall of price rises reduce demand significantly

Question 46

Overlap & conflict of stakeholder needs - LAUNCH NEW PRODUCTS

Answer 46

Employees - more jobs, higher pay, better working conditions if successful Customers - better choice & improved products BUT increases in prices due to development costs Shareholders - increased sales, prices, profits BUT initial costs of launch may reduce profits Suppliers - increased orders BUT product may require different suppliers resulting in different loss of contract

Question 47

Overlap & conflict of stakeholder needs - USE OF TECHNOLOGY IN PRODUCTION

Answer 47

Employees - new higher paid jobs created to manage technology BUT loss of jobs Customers - lower prices as tech is more efficient BUT standardised products may less likely meet individuals needs Shareholders - higher long term profits BUT business may suffer due to job losses damaging share price Suppliers - increased sales may result in larger orders

Question 48

Influence on the relationship with stakeholders - INTERNAL FACTORS

Answer 48

MANAGEMENT & LEADERSHIP STYLE --> autocratic/democratic & concern for people/production OBJECTIVES --> growth, profits, ethical/social goals SIZE & OWNERSHIP --> social enterprises, sole traders, PLCS

Question 49

Influence on the relationship with stakeholders - EXTERNAL FACTORS

Answer 49

MARKET CONDITIONS --> number and strength of competitors & sales levels and trends STAKEHOLDER POWER --> majority shareholders & dominant customers GOV POLICIES --> codes of conduct & laws

Question 50

Managing relationships with stakeholders - COMMUNICATION & CONSULTATION

Answer 50

Communication - exchange of info or ideas between two or more parties Consultation - process by which one groups discover the views of another

Question 51

Managing relationship with stakeholders - ENGAGEMENT APPROACH

Answer 51

Partnership - high power, high interest stakeholders Participation - high power, low interest stakeholders Consultation - low-power, high interest stakeholders Push communications - low power Pull communications - lower interest stakeholders

Question 52

Managing stakeholder relationships - PARTNERSHIP

Answer 52

Decisions are taken jointly by management team & relevant stakeholders Responsibility will be shared --> lots of two-way communication

Question 53

Managing stakeholder relationships - PARTICIPATION

Answer 53

Stakeholders will be apart of the team and relevant decision making may have responsibility for part of the activity and may implement that part of the decision likely to be engaged in two-way communication

Question 54

managing stakeholder relationships - CONSULTATION

Answer 54

stakeholders will be expected to respond to questions still two-way communication but stakeholders will have limited power to influence decisions and subsequent actions

Question 55

managing stakeholder relationships - PUSH COMMUNICATIONS

Answer 55

One-way communication from the business to relevant stakeholders through emails, letters etc. suited to stakeholders with low levels of interest

Question 56

managing stakeholder relationships - PULL COMMUNICATIONS

Answer 56

stakeholders choose if they want to engage and access communication with the business appropriate for stakeholders with little power & interest