Part 3 - Management styles

Question 1

3 management styles

Answer 1

• Budget constrained
• Profit – conscious
• Non-accounting

Question 2

Budget constrained

Answer 2

• Pressure to hit short-term financial targets
• PM: ROCE, gross profit
• Ad: Ensure short-term targets are met
• Dis: Short-termism (cut investment), Result may be distored, stress for employees and lack of flexibility

Question 3

Profit conscious

Answer 3

• Focus on longer-term performance
• PM: NPV
• Ad: Flexibility to go “off plan” if justifiable
• Dis: Loss of short-term control

Question 4

Non-Accounting

Answer 4

• Little emphasis on financial performance and look at non-financial aspects instead
• PM: Non-financial measures such as customer satisfaction, employee morale or innovation
• Ad: Focus on causes rather than effects, target may be more meaningful to staff
• Dis: Financial implications of behaviour may be neglected