A LEVEL BUSINESS STUDIES UNIT 2 - Managers, leadership and decision making

What do managers do?

• Set objectives

• Analyse performance

• Review performance

• Make decisions

• Lead others

What is the difference between a Manager and a Leader?

1. “Leadership”

• Deciding on the direction of a business or a department of a business

• Inspiring and motivating employees to achieve these objectives.

  2. “Management”

• Getting things done

• They plan, organise and coordinating others.

Briefly explain the 3 traditional levels of management in a business?

a. Senior management

• They set corporate objectives and make strategic decisions

b. Middle management

• They run business functions and departments

c.

• Monitor and control day to day tasks and manage teams of workers.

The Tannembaum Schmidt Continuum -

What is a continuum?

Continuum - A continuous sequence in which adjacent elements are perceptibly different from each other, but extremes are quite distant.

1. Telling?

Definition and cons?

Telling - This where the leader makes decisions without consulting the team. This approach may be useful when in emergencies. This may lead to a lack of motivation as employees don’t feel included in decisions. Also limits innovation and creation since it does not allow the sharing of opinions.

2. Selling

Definition and cons?

Selling - leader still makes the decision, but tries to continue the team about the benefits of the decision. However there’s no room for the team to contribute their perspectives, which may lead to resentment or completely ignoring orders.

3. Suggesting

Definition and cons

Suggesting - This leader presents a potential decision as a suggestion, and invites discussion. This is good as the leader is guiding them to a decision whilst valuing their input. However, can seem like a waste of time if the leader is not genuinely open to other options

4. Consulting

Definition and cons -

Consulting - In this approach the leader seems the team’s opinions in a more open format before actually deciding.

Best suited when the leader values the team’s expertise, and wants to enhance morale and experience by involving them in the decision.

This style may value input, however the leader still makes the final decision this may lead to disappointment if staff’s input is not valued

5. Joining

Definition and cons -

Joining - The leader collaboratively makes the decision with everyone. This method works best in teams with high levels of trust and collaboration.

This approach requires more time and active involvement from the entire team, which might not always be practical or efficient. Staff may be hesitant to share opinions as the leader usually fills the room anyway.

6. Delegating

Definition and cons

Delegating - delegating decisions to the team can be problematic if the team lacks the necessary info or experience to make good decisions.

The leader passes the decisions - making passes to the team. However if the idea goes wrong the responsibility will lie on the leaders

7. Abdicating

Definition and cons

Abdicating - The leader gives total control to the team without any input. This approach might be appropriate in a very flat structures or when the decisions doesn’t significantly impact other aspects of work.

This approach risks decisions being made without a full understanding of their implications. It may also lead to a sense of dissarray if no one takes responsibilities for the decision or it may make the leader seem lazy.

Different types of decision making -

What is intuition decision making?

Intuition decision making - decisions based off a managers intuition/gut feeling and experience.

What is scientific based decision making?

Scientific based making - this involves making decisions that are based off of evidence and in methodical way.

Benefits of Scientific based decision making?

• If its based off of data it means its based off of what is most likely to work.

• This replaces some but not all instinctive elements from decisions.

• Removes not all but most of the bias.

Drawbacks of Scientific decision based making?

• Does not guarantee that the decision the business made is correct.

• May still rely on assumptions.

What are the steps of scientific - based decision making? Steps 1,2,3

1. Set objectives - what do the business want to achieve?

2. Collect data

3. Analyse the data what is the data telling the business.

1. What are the steps of scientific - based decision making? Steps 4,5,6.

4. Make decision - based on the data which decision is going to achieve the objectives the business set?

5. Implement the decision - put it into practice.

6. Review decision - if the decision isn’t going to meet the goals set then the objectives might need to be changed.

What are the main features of scientific - based approach?

• It is a methodical approach

• It aims to remove bias and personal opinions

• Aims to reduce risks

• Aims to ensure decisions are based off of well-researched and factual evidence.

What are decisions based on intuition based on?

They are made on a gut feeling

What positives can come of intuitive based decisions?

• They can lead to informative and creative decisions

• They are usually made by one person.

What negatives can come of intuitive based decisions?

• Decisions are not based on evidence this can lead to poor/ill judged decisions.

• Can result in bias

What types of business usually base there decisions off of intuition?

• More common in small businesses and single ownerships.

What are some benefits of intuitive based decisions?

• Doesn’t require a large and regular collection of data

• It is faster than scientific based decisions.

• The ability of a manager to predict or anticipate may be a better option.

Decision trees.

What are decision trees?

What do they usually apply to?

They are a diagram representation of a business decision.

They usually apply to problems using numerical data where both, probability of different consequences and the what the estimated financial outcome may be.

3.2.3 Understanding the role and importance of stakeholders

What is a stakeholder?

Stakeholders are groups or individuals that are affected by and or have an interest in the operations/objectives of the business.

We can split different types of stakeholders into different groups -

Internal and External - What are some internal stakeholders? + def

Internal stakeholders are people whose interest in the business comes from a direct relationship from within the business.

• Owners

• Managers

• Employees

• Shareholders.

What are some external stakeholders? + def

External stakeholders are people who do not directly work for the company but are affected in some way by the actions/outcomes of the business.

• Investors

• Government

• customers

• Suppliers

Or we can classify them into primary and secondary stakeholders -

What are primary stakeholders?

Primary stakeholders - These people are directly involved and affected either positively or negatively by the business’ decisions.

What are secondary stakeholders?

Secondary stakeholders - These are stakeholders that are indirectly affected by the business’ decisions.

What are the objectives of the internal stakeholders - shareholders?

To maximise profit and long term growth.

What are the objectives of the internal stakeholders - Managers?

To have a good salary and career progression.

What are the objectives of the internal stakeholders- employees?

To have good pay and job security.

What are the objectives of the external stakeholders - customers?

To receive good quality goods/services at fair prices

What are the objectives of the external stakeholders - suppliers?

To receive payments on time and to have a good relationship with the business.

What are the objectives of external stakeholders - local community?

They want the business’ to provide employment and respect the area.

What are the objectives of external stakeholders - government?

To create jobs and to collect taxes.