Unit 2

Leadership – ability to influence and direct people in order to meet the goals of a group

Management – process through which company resources are used and decision made in order to meet the objectives of the company.

What managers do:

· Set objectives

· Analyse factors contributing towards achievement

· Leading staff through communication and motivation

· Make decisions

· Review performance against objectives

Factors influencing leadership style:

Internal	External
Expertise and experience	PESTLE
Personal traits
Power given

Leadership styles:

· Autocratic – The leader makes decisions without consultation

· Democratic – leader consults the team and often will allow hem to vote in the decision-making process

· Laissez-faire – Leader allows the team to make decisions

· Paternalistic – Leader acts in a fatherly way towards the workforce, making decision based on there needs as well as the business

· Bureaucratic – leaders work to rules and regulations, ‘by the book’

The Tannenbaum and Schmidt continuum is a model of leadership that shows the relationship between the level of freedom and the level of authority. As the teams’ freedom increases, the managers authority decreases.

The forces in the manager:

· Personality and characteristics

· Experience

· Attitude and trust towards subordinates

Forces in subordinates:

· Personality and characteristics

· Experience

· Attitude and trust in leader

The forces in the situation:

· The nature of the problem

· Resource constraints

· Culture of the organisation

Opportunity cost – Next best alternative forgone.

Decisions can be scientific or based on intuition. They carry risks and rewards as well as being based on uncertainty.

For risks, it is possible to add a probability to quantify the degree of risk and it is measurable.

For uncertainties, it is not possible to add a quantifiable probability as the outcome is too unpredictable.

Scientific	Intuition
Supported by quantifiable evidence	Allows for quick decision making
Encourages logical thinking	Encourages innovation and creativity
May require expensive data	Difficult to justify
Time consuming	Reliant on experience and expertise

Decision trees – a tool with various options of a decision, including the probability of different consequences and the financial outcomes of each option. They assess the risks and reward of a decision.

Benefits	Drawbacks
Process may uncover other possibilities that had not been considered before	Do not include qualitative issues
More logical, less rushed process based on evidence rather than gut feeling	Depends heavily on estimated probabilities
Forces managers to quantify the impact of each decision
Provide a logical comparison of the options available

Stakeholder – anyone with an interest in the activities of a business

Primary stakeholders – Individuals or groups that are affected by business activity

Secondary stakeholders – Groups or individuals that do not have a direct relationship with the business but are effected/ can influence actions.

Stakeholder mapping – maps the relative power of each stakeholder group against the degree of interest

High power, low level of interest:

Keep satisfied – Potentially influential group so may be better to consult with them to increase level of interest.

High power, high level of interest:

Manage closely – Most important group of stakeholders and business should involve them in decision-making.

Low power, low level of interest:

Monitor – Only necessary to make a minimum amount of effort with this group

Low power, high level of interest:

Keep informed – Involving these stakeholders and keeping them up to date with developments can help build good relations. Likely to be secondary stakeholders.