business 3.2: managers, leadership and decision making

managerial functions

1. Tell it / risk adverse

2. planning - setting day-to-day business aims, deciding on strategies used and determoning timescales

3. organising - managers ensure resources e.g. equipment, workers, supervision are in place

4. directing - managers lead and motivate others, communicating clear expectations

5. controlling - track progress to make sure objectives are met

leadership attributes:

1. Sell It

2. vision - setting direciton and inspiring others

3. influence - creating a common goal

4. people - a focus on peopel’s needs and motivtion

5. long term vision and strategy

6. risk taker

7. creative - encourage

Autocratic leadership - definition

1. a leader who holds absolute power and authority

2. without seeking input, complete control over decision making process

Autocratic leadership - best situations for:

1. crisis situations - when quick and decisive decision making is required

2. hierarchical organisations - the need for coordination and efficiency, with clear and direct orders given e.g. McDonald’s

3. inexperienced / unmotivated teams - providing clear and close supervision to reach goals efficiently

Autocratic leadership - disadvantages

1. reduced employee moral as workers have no input in decision-making

2. limited creative - employees under strict instructions reduces problem-solving ideas and innovation

Paternalistic leadership - definition

when the leader takes on a parental role, making deciison in best interest of staff

this can involve explaining reasons for decisions

Paternalistic leadership - advantages

1. making decisions for the employees, showing concern can increase well-being and development of subordinates

2. leader takes responsibility for welfare of staff

3. can form employee obedience and sese of security

Paternalistic leadership - disadvantages

1. can still be seen as controlling, limiting creativity and innovation

2. can create dependency on leader

democratic leadership - definition

leaders actively involving employees in the decision making progress, encouraging discussion, although the leader will still have the final say

democratic leadership - adv

1. encourages participations, increasing employee engagement and job satisfaction

2. encouraging creativity and innovations, allowing sharing ideas and thinking outside the box

3. improved problem solving and innovation

democratic leadership - disadvantages

1. decision making progress is longer, making it time consuming

2. conflict may arise when different views are sought

3. can result in compromise on decisions, which may lead staff to be dissatisfied

Laissez-faire leadership - definition

leaders play a minimal role in managing their business team allowing for autonomy and freedom

normally most appropriate with a highly skilled / self motivated team

Laissez-faire leadership - adv

1. encourages creativity and innovation, giving employees freedom to explore ideas independently

2. employees are more empowered due to greater autonomy / ownership over work

3. flexibility to adapting to changing circumstances and decisions

Laissez-faire leadership - dis

1. the absence of guidance can lead to employees struggling with decision making

2. less efficient employees may have a lack fo co-ordination and productivity compared to others

3. can lead to the risk of inconsistency

4. harder to monitor aspects such as, progress, issues and goal achievement

influences on type of leadership used

1. leaders personality - a confident, risk-taking person may verdict others more e.g. Elon Musk

2. business traditions - history with sharing power prefer democratic leaders e.g. Google and Microsoft

3. nature of labour force - high skilled and long-term staff tend to be more democratically

4. nature of the task - routine, low-risk tasks can be delegated

5. external - pandemics, scandals, economy, competition

Tenenbaum-Schmidt continuum, 4 levels

tell - leader states decisions in full and how they will be done, with staff obeying with no proposal to question the plan

sell - the leader decides but explains the reasons to try and win commitment

consult - leader outlines a decision and then seeks ideas before making the final decision

join - leader presents problems and sets boundaries, co-deciding the group

delegate - leader define broad goal and hands full decision-making / execution to the team

types of decisions - strategic decisions

big, long-term decisions which set the overall direction of the business,

these use a large resources and involve high uncertainty, made by senior management and shape everything within a firm

types of decisions - tactical decisions

medium-term decisions, turning strategy into reality

made by middle managers to improve performance and keep strategy on track

types of decisions - programmed decisions

routine, repeat decisions handled by rules or software e.g. re-ordering stock

decision making often automated or delegated to junior staff

types of decisions - non-programmed decisions

one-off, unfamiliar and high risk decision, often responding to large data breach, merger or key changes during a crisis

make by senior management or crisis teams to rescue / transform the business due tot he large issue

difference between risk and uncertainty

risk - measurable using data and probability

uncertainty - cannot be measured, so good judgement are needed

e.g

Boeing Risk - rising design changes risked safety

uncertainty - set aside $4.9 billon to cover legal payouts

opportunity cost

the cost on missing out on the next best alternative

stages in scientific decision making

1. set objectives

2. gather information

3. choose an option

4. implement said option

5. review that decision

scientific decision makign example: Tesco

1. setting objectives - 4% sales growth

2. gathering info - mined 23 million club cards to spot which items most influence where people shop

3. choosing an option - expanding clubcard prices and alid price match introduced

4. implementing - rolled prices into stores, now with the use of a bold yellow Clubcard label

5. review - market share had grown over 4.1%

benefits and limitations - scientific decision making

benefits:

1. reduced risk - based on evidence, not guesswork

2. justifies investment

3. supports continuous improvement

limitations:

1. large cost and time involved, can be unaffordable for smaller businesses

2. overreliance - ignoring gut feeling or ethics can cause opportunity cost

3. data quality issues

intuition decision making - definition and best situations

intuition - when managers rely on gut feel, experience, or pattern spotting rather than data analysis for choosing an action

best situations

1. little time for data

2. no clear precedent

3. decision rests on human taste

adv and dis of intuitive decision making

adv:

1. speed

2. creativity

3. deep expertise used

dis:

1. bas and overconfidence

2. hard to justify

3. riskier for large decisions

adv and dis - decision trees

adv:

1. construction reveals options once not considered

2. managers forced to consider risks

3. required deep research to be carried out

dis:

1. data can be difficult to gain, needing time and can show bias

2. estimates may not be accurate

   1. time lag between construction and implementation can reduce reliability

expected monetary value: Formula

(expected value of success X probability) ( Expected value fo failure X probability)

net value equation

EMV - initial cost

Internal influences on decision making

mission - the organisaitons purpose e.g. John Lewis commits ot ‘working in Partnership for a Happier World’

objectives - day-to-day decisions aiming to hit agreed targets e.g. Tesco’s 24/25 goals of 4% sales growth

ethics - ethical principles e.g. fairtrade, sustainability and social justice

resource constraints - fitting the monye, time, skills and capacity available e.g Arrival put it’s electric bus project on home due to lack of capacity

external influences on decision making

competition - e.g. Lidl’s reputation as a cheap supermarket has been determined due to competitor action

economic conditions (interest rates, GDP, inflation) - e.g. the Bank of England reported many firms cut investment plans due to rising interest rates

social change - shift in customer’s taste e.g. McDonald’’s Vegan menu

technological change - e.g. self-service machines

internal stakeholders and their objectives:

owners - often provide an income for a business, in return, will want a share of profits and a successful business

employees - have job security, be paid fairly and be in a safe working environment

management - operate businesses efficiently, maximise profits and meet company’s goals and objecitves

external stakeholders + their objectives

customers - want high quality, but as a fair price with good customer service

shareholder’s - maximise their return on investment

suppliers - quick payments with long-term trade arrangements

local community - a positive impact e.g. providing jobs, environmentally responsible and contributing to local causes

government - operate within the law, have people in employment

pressure groups - promoting their specific cause / agenda and taking action on issues

stakeholder mapping - summary

the strategic process used to identitfy and analyse individuals or groups interest in a business

it looks at level of interest as well as degree of power, with appropriate strategies being used for each

Stakeholder mapping case study - low interest + power - Universal Bedford

1. they may not engage until the teme parks opening

2. they are counted in the long term vistors being over 8 million

3. use of light-touch monitoring of travel trend data and social meddia

Stakeholder mapping case study - high interest, low power - Universal Bedford

Keep informed

1. concerns over traffic, flooding, and house prices have been seen in the local press

2. regular newsletters an dpublic engagement websites have been set up

Stakeholder mapping case study - low interest, high power - Universal Bedford

keep satisfied

1. coverage in national media e.g. the sun and daily mail can affect public mood and investor confidence

2. regular visual updates and proactive press days planned

Stakeholder mapping case study - high interest, high power

key players

1. Bedford council - cotrols local planning and concerned with impact on local services

2. UK government - signed investment deal and wants a £50bn economic boost

stakeholder conflict definition and example

when stakeholders have conflicting interests and objectives, which can create challenges for businesses to balance the competing demands of different stakeholder groups

examples:

1. employees and employers - steelworkers protesting against job losses

2. pressure groups and government

3. local communities and developers - e.g. HS2 opposition

4. managers and employees - e.g. Royal Mail scandal

internal factors that influence stakeholder relationships

leadership styles - ;leaders decide on how much they listen to stakeholders or decide to follow their advice

business aims and objectives - certain stakeholder groups oppose the overall aims and objectives of businesses

business size - smaller firms can talk to stakeholder one-to-one, with larger ones needing formal systems and policies

business ownership - who owns the company has the largest stakeholder voice

external factors that influence stakeholder relationships

stakeholder group power - groups with financial, public power can force changes

market conditions - booms, slumps and inflation can shift barganing power

government policy - new lawsand subsidies can add to the need of stakeholder groups

social / technological change

the 5 approaches to improving stakeholder relationships

partnership - the organisation and stakeholders share decision making and responsibility

consultation - a business seeks views before deciding

push communication - sending out news to stakeholders in a one-way systems

pull notification - information is made available to access when they choose