Topic 2 - Managers, Leadership & Decison Making

Question 1

What are the jobs for managers ?

Answer 1

Responsible for ensuring tasks are completed in the day-to-day

Question 2

In a small business is there much difference between leaders and managers ?

Answer 2

leaders and managers are often the same people

Question 3

As businesses grow what happens to the role of leaders and managers ?

Answer 3

As businesses grow, however, the role of leaders and managers can become distinct from one another.
In a growing business, a focus on long-term vision and direction is often needed, and it is the role of a leader to provide this.
Managers focus on ensuring tasks are completed, and deadlines are met, in such a way to support the long-term vision and direction of the leader.

Question 4

What is the role of managers ?

Answer 4

The manager’s role, as a decision maker, includes many different roles:

A manager must set objectives so that success criteria are available to later establish whether or not a task has been completed successfully.

A manager must select strategies and implement these to ensure processes are working efficiently and are supporting overall objectives.

A manager must review and analyse data so that adaptations to current processes can be made if required.

A manager must review the impact of their decisions and use this review to inform the setting of future objectives.

Question 5

What factors influence styles of management and leadership ?

Answer 5

The external environment can affect the type of management or leadership style which is appropriate for a business.

The culture of a business can affect the type of management or leadership style which is best suited to the business’ needs.
For example, in businesses with a very clear and well-defined culture, a change of leadership style may be difficult to introduce without resistance from the majority of employees.

The skill level of the workforce can influence the type of management or leadership style used as managers may, or may not, want to involve employees in the decision making process.
For example, managers and leaders often value the knowledge of skilled and qualified staff but less so when staff are unskilled or inexperienced.

Question 6

What is an autocratic leadership ?

Answer 6

Autocratic leadership refers to an approach by leaders or managers to keep control of decision making and ensure that employees are closely supervised.
If a business has a largely unskilled workforce, a manager or leader may wish to maintain decision making powers and therefore adopt an autocratic approach.

Question 7

What is democratic leadership ?

Answer 7

Democratic leadership refers to an approach by leaders or managers to discuss and consult with employees, delegate decision making authority and empower employees through their involvement.
For example, in businesses which employ highly skilled and highly qualified employees, such as universities, Google and Microsoft, a manager or leader may decide that the contributions of such staff could be highly valuable to the business; here, a democratic approach may be suitable so that employees can contribute their expertise to the decision making process

Question 8

Is autocratic leadership more typical in an organisation where the workers are unskilled or skilled?

Answer 8

Unskilled

Question 9

In an unstructured business, would you expect a change in leadership to face much resistance?

Answer 9

No

Question 10

What is Blake moutons grid ?

Answer 10

Blake Mouton’s grid classifies styles according to whether a manager or leader places more emphasis on concern for people or concern for task completion

Question 11

What are the types of leaders in Blake moutons grid ?

Answer 11

Impoverished leadership
Country club leadership
Middle of the road
Produce or perish
Team leader

Question 12

What are the characteristics of a impoverished manager ?

Answer 12

Impoverished leadership lacks any focus whatsoever on either task completion or concern for people and is therefore ineffective. It is often difficult to find examples for this type of leader as leaders in this category usually fail and do not, therefore, become well known

Question 13

What are the characteristics of a country club leadership ?

Answer 13

With country club leadership, there is a real focus on the business’s employees, though this may be an enjoyable place to work, it can be detrimental to the business’s levels of production.
For example, some Virgin employees have the right to unlimited holidays, which may ensure employee satisfaction, though come at a cost in terms of production and efficiency.

Question 14

What are the characteristics of middle of the road leadership ?

Answer 14

Middle of the road leadership provides some focus on both task completion and concern for people, though neither gains the advantage of a full focus so there will be a poorer performance in each area.

Question 15

What are the characteristics of a produce or perish leadership ?

Answer 15

Produce or perish leadership focusses completely on task completion and lacks any focus on the concern for employees (people); the business is so focussed on production that the effect of this on employees is of no concern to the business in any way. For example, some call centres have been accused of focussing heavily on the number of outbound calls made per hour, with no concern for staff wellbeing.

Question 16

What are the characteristics of a team leadership style of management?

Answer 16

A team leadership approach is one that values highly both the importance of task completion but also the importance of people: people are satisfied, as they feel valued, and production is a focus, too

Question 17

What did Tannenbaum and Schmidt have a theory on ?

Answer 17

theory about different styles of management & leadership. They show this on their ‘management continuum

Question 18

Describe the Tannebaum Schmidt continuum?

Answer 18

Towards the left of the continuum, employees are still informed of decisions, though will be involved in discussions to provide employee buy-in.
Towards the centre-left of the continuum, employees are invited to question and debate ideas, though overall authority is still maintained by the manager.
Towards the centre of the continuum, employees are given an opportunity to inform and challenge decisions and their views may be considered and taken into consideration.
Towards the centre-right of the continuum, employees are actively asked questions and are encouraged to make contributions.
Towards the right of the continuum, employees are given defined freedom to contribute and make decisions.

Question 19

What is the leadership style on the far left of the Tannebaum schmidt continuum?

Answer 19

At the far left of the continuum, managers maintain full authority and decision making power.
At the far left of the continuum, managers communicate such decisions to employees who have to comply.
The left of the continuum is similar to an approach of autocratic leadership.

Question 20

What is the leadership style of the far right of the Tannebaum Schmidt continuum?

Answer 20

At the far right of the continuum, employees are given authority and decision making power.
The right of the continuum is similar to an approach of democratic leadership.

Question 21

If there is a state of emergency what do managers and leaders do ?

Answer 21

If there is a state of emergency, managers and leaders may prefer to retain all decision making and authority.
If managers and leaders require communication to be fast, for example in cases of emergency, like BP’s Deepwater Horizon oil spill which killed 11 people in 2010, a position on the left of the continuum may be appropriate.
If employees’ views are valued, managers and leaders may adopt a position on the right of the continuum so that these views can be gathered from employees.

Question 22

When will democratic leaders switch to an autocratic style of leadership

Answer 22

In a state of emergency

Question 23

What are two ways that managers support their decision making ?

Answer 23

scientifically using data available to the manager
based upon intuition and the experiences of a manager

Question 24

What are the advantages of scientific decision making ?

Answer 24

reduces the risk of making mistakes as decisions are based on data
data provides guidance for managers who may have limited intuition through lack of experience

Question 25

What are the disadvantages of scientific decision making ?

Answer 25

can be time-consuming to collect the data required.
Relying on data may mean that the experience or expertise of staff may not be considered.
Using out of date or poor data is unreliable and can affect the quality of the decision made.

Question 26

What are the factors that effect scientific decision making?

Answer 26

The availability and reliability of data are essential if a manager chooses to use scientific decision making. If data is not available, the scientific decision-making approach cannot be used.

The manager’s experience is vital, as inexperienced managers are more likely to use scientific decision making because they have no experience or expertise.

The risk that a business is willing to accept is crucial. Scientific decision making typically carries less risk so suits businesses that are less willing to accept risk.

Question 27

What is one version of scientific decision making, and what does it do ?

Answer 27

A decision tree to help them. A decision tree allows a business to compare outcomes of two or more options or decisions.
A decision tree will examine the probability of each outcome for each decision made.
A decision tree will multiply the probability with each outcome to calculate an estimated value (EV) for each option or decision being considered.

Question 28

For using a decision tree

In option 1, there may be a 70% chance of receiving a £10,000 pay-off or a 30% chance of a £20,000 pay-off.

In option 2, there may be a 20% chance of receiving a £7,000 pay-off or an 80% chance of a £15,000 pay-off.

What is the best decision to make ?

Answer 28

To calculate the EV for option 1:
Multiply 0.70 (probability expressed as a decimal) by £10,000 to get £7,000.
Multiply 0.30 (probability expressed as a decimal) by £20,000 to get £6,000.
Using these probabilities and outcomes, the estimated value (EV) of option 1 is £13,000.

To calculate the EV for option 2:
Multiply 0.20 (probability expressed as a decimal) by £7,000 to get £1,400
Multiply 0.80 (probability expressed as a decimal) by £15,000 to get £12,000
Using these probabilities and outcomes, the estimated value (EV) of option 2 is £13,400

Comparing estimated values for option one and two, scientifically it can be seen that option 2 is probably the best course of action for the manager to take based on the data available

Question 29

A business is deciding whether to launch a new product (option 1) or enter a new market (option 2).

Option 1 has an 80% chance of receiving a £35,000 pay off or a 20% chance of receiving a £50,000 pay off. Option 2 has a 40% chance of a £40,000 pay off or a 60% chance of a £50,000 pay off.

Which option is preferable for the business?

Answer 29

Option 2

Question 30

What does EV stand for in a decision tree ?

Answer 30

Estimated value

Question 31

What is intuition decision making ?

Answer 31

managers do not use data to inform their decisions but instead use their gut instinct, or perhaps a hunch

Question 32

What are the advantages of intuitive decision making ?

Answer 32

Some managers may have gut feelings and hunches following years of experience and so their intuition is accurate.
With decision making based on intuition, decisions can be made quickly as there is no need to collect and analyse data

Question 33

What are the disadvantages of intuitive decision making ?

Answer 33

In new situations, or for staff lacking experience, mistakes can be made as there is not enough prior experience to provide accurate intuition.
With intuition, decisions can be made for illogical reasons as data is not considered.

Question 34

What factors effect intuition decision making ?

Answer 34

If data is not available or lacks reliability, intuition decision making may be appropriate as scientific decision making cannot be used.
Experienced managers are more likely to use intuition, as they have experience which they can call upon to inform their decisions.
Intuition decision making carries greater risk, as it does not consider data, so this approach may only be suitable for businesses willing to accept higher levels of risk.

Question 35

What factors effect decision making ?

Answer 35

Levels of risk and uncertainty
Reward for managers
Opportunity cost

Question 36

How do levels of risk and uncertainty affect decision making ?

Answer 36

All decisions carry an element of risk; however the risk associated with some decisions is much higher than for other decisions, so the business must decide how much risk it is willing to accept.

Question 37

How do rewards for managers effect decision making ?

Answer 37

Hopefully, a decision will result in a reward for the manager and business. However, managers must consider the level of reward likely to be achieved, and decide whether this level of reward is worth any risk associated with the decision.

Question 38

How does opportunity cost effect decision making ?

Answer 38

When managers commit to a decision, they must consider the impact of this decision on the alternative projects they could have chosen instead.
For example, if a manager has £100,000 to invest in a project, and is currently choosing between option A and option B, which both cost £90,000 each, the opportunity cost of choosing one option is that the manager will no longer be able to afford the alternative option.

Question 39

A manager has £200,000 to invest in a new project. Option A costs £160,000 and Option B costs £80,000. Can the manager do both projects?

Answer 39

N

Question 40

What factors influence business decisions ?

Answer 40

Business missions
Business objectives
Ethical position
External environment
Resources

Question 41

How do business missions influence decision making ?

Answer 41

A business’ mission must be considered when decisions are being made as the decision must support the overall mission of the business. For example, a decision to lower prices does not support a mission to be seen as a premium and high-quality retailer, such as Rolls Royce.

Question 42

How do business objectives influence decision making ?

Answer 42

When decisions are made, they must support the business’ objectives, otherwise, the decision will not be in the business’ best interest. For example, a decision to attract new customers may be a poor decision if a department objective is to focus on retaining existing customers.

Question 43

How does ethical position influence decision making ?

Answer 43

The business’ ethical position influences decisions made as all decisions must comply with the ethical position of the business, especially if this position is used as a unique selling point (USP) for customers. For example, The Body Shop uses its ethical stance as a USP, and so if a decision was made to abandon this commitment, there would be serious consequences for their reputation.

Question 44

How does the external environment (PESTLEC factors) influence decision making ?

Answer 44

The external environment, including political, environmental, social, technological, legal and ethical factors, as well as competition, must be considered when decisions are being made. For example, when the law changed to ban cigarette adverts, a manager would have to abandon any projects they may have been working on which involved publishing adverts for these products. Another example is that as technology advances, supermarket managers must consider the decisions they are making if they do not currently operate self-serve checkouts, as this may reduce competitiveness.

Question 45

How do resources influence decision making ?

Answer 45

When making a decision, a business must also consider the availability of its resources. For example, if a manager decides to launch a promotional campaign but does not have the funds or staffing to support this campaign, because resources are limited, the overall campaign will be unsuccessful.

Question 46

Who is credited with creating Scientific Management (also called Taylorism). This involved measuring how long a task took for every worker and setting benchmarks ?

Answer 46

Fredrick Taylor

Question 47

Who was the CEO of General Electric for 20 years. He wrote a book called ‘Straight from the Gut’ supporting intuitive and gut decision making ?

Answer 47

Jack welch

Question 48

Who has advocated trusting and using your intuition when certain is met ?

Answer 48

Daniel Kahneman

Question 49

What are Daniel Kahenmans 3 criteria or trusting you intuition ?

Answer 49

The situation is regular, constant or repeatable
Lots of practice
Immediate feedback

Question 50

What are the two types of stakeholders?

Answer 50

Internal
External

Question 51

What are internal stakeholders?

Answer 51

Employees are an internal stakeholder as they are affected by the decisions made by the business in terms of salaries and wages, recruitment policies and job security.

Question 52

What are external stakeholders ?

Answer 52

Suppliers are an external stakeholder as they are affected by the decisions made by the business in terms of order quantities and payment terms.
Communities are an external stakeholder as they are affected by the decisions made by the business in terms of local jobs and traffic congestion in residential areas because of deliveries.
Customers are an external stakeholder as they are affected by the decisions made by the business in terms of products and services sold and prices charged.

Question 53

How can businesses manage their relationships with stakeholders?

Answer 53

using communication and consultation

Question 54

How does communication help business manage relationships with stakeholder ?

Answer 54

Communication can be used between a business and its stakeholders to share information, through methods such as email and newsletters, so that stakeholders can remain informed of developments within the business

Question 55

How does consultation help business manage relationships between stakeholders ?

Answer 55

Consultation can be used to investigate the views and feeling of stakeholders so that they feel involved in any decisions made by the business, though the power of stakeholders to change decisions made is still limited as the business defines the stakeholder’s influence.

Question 56

What is stakeholder power ?

Answer 56

Stakeholders can have different levels of power and interest and a business must consider this power and interest when deciding how to manage their relationship.
The business may wish to ensure that certain stakeholder groups remain satisfied and this may require consultation instead of communication.

Question 57

What is stakeholder mapping ?

Answer 57

A stakeholder map can be used to display the relative power and interest of different stakeholder groups.

Question 58

What needs to be done for stakeholders with high power and high interest ?

Answer 58

Stakeholders with high power and high interest will need to be managed closely and consultation may be appropriate for these individuals and groups

Question 59

What needs to be done for stakeholders with high power and low interest?

Answer 59

Stakeholders with high power and low interest will need to be kept satisfied as they have the power to influence the business if they become dissatisfied.

Question 60

What needs to be done for stakeholders with low power and low interest ?

Answer 60

Stakeholders with low power and low interest will need to be monitored though they lack influence and interest in many business decisions.

Question 61

What needs to be done for stakeholders with low power and high interest ?

Answer 61

Stakeholders with low power and high interest need to be kept informed and consultation may be appropriate.

Question 62

How is Morrisons an example of a stakeholder ?

Answer 62

For example, Morrison’s shareholders have high power, as they can vote at AGMs, and they have high interest, as they receive dividend payments, so Morrisons must manage this relationship closely

Question 63

How is google an example of a stakeholder ?

Answer 63

For example, Google employees have high interest, though relatively low power, as they cannot influence decisions, so Google may decide to keep them informed of major changes, but they may not consult with staff.

Question 64

How are there different relationships with stakeholders ?

Answer 64

Power and influence can affect a business’ relationship with stakeholders, though there are several additional influences which can affect this relationship:
The expertise and skill level of staff may affect the relationship between an employer and its employees as an employer may wish to consult with staff if they are able to contribute their expertise to a decision being made.
The business’ performance may affect the relationship between stakeholders, as poor financial performance may require the business to build a stronger relationship with customers and suppliers so that more favourable payment terms can be negotiated.