3.2 Managers, Leadership And Decision Making Flashcards
What is an autocratic leadership style?
A leadership style in which leaders dictate without consultation of subordinates
What is an advantage of an autocratic leadership?
Quick decision making in stressful situations
What is a disadvantage of autocratic leadership?
It is too dependant on the leader.
What is democratic leadership style?
Where the leader allows employees to take part in decision making.
Advantage of democratic leadership style?
Employees feel motivated.
What is a disadvantage of democratic leadership style?
Depends on the skills and knowledge of employees
What is paternalistic leadership?
Where leaders make the right decision for employees they’re responsible for as though they are part of an extended family.
Advantages of paternalistic leadership style?
Loyalty from employees - increased staff retention.
Disadvantages of paternalistic leadership
This is still quite autocratic, employees may feel demotivated because of this.
What is a laissez faire leadership?
Leadership where subordinates may carry out activities and decisions freely
Advantage of laissez-faire
Suitable for creative industries
Disadvantage of laissez faire
May lead to poor productivity.
What is the Tannenbaum and Schmidt continuum?
Demonstrate the relationship between level of freedom that a manager chooses to give a team and the level of authority used by manager.
What is level 1 on the Tannenbaum Schmidt continuum?
TELL - manager tells staff about decisions.
What is level 2 on the Tannenbaum Schmidt continuum?
SELLS - manager sells or convinces staff about decision.
What is level 3 on the Tannenbaum Schmidt continuum?
CONSULTS - manager invites questions.
What is level 4 on the Tannenbaum Schmidt continuum?
CONSULT - manager makes decision subject to change.
What is level 5 on the Tannenbaum Schmidt continuum?
CONSULT - manager gets suggestions and makes decision
What is level 6 on the Tannenbaum Schmidt continuum?
SHARE - Manager sets parameters but lets staff makes decisions.
What is level 7 on the Tannenbaum Schmidt continuum?
SHARE - managers allows team to set parameters and make decisions.
What is the difference between leader and manager?
Leadership fosters creativity and encourages new ideas. In contrast, management prioritises efficiency and streamlining operations.
Leadership is risk taking while management is risk averse.
What is scientific decision making?
A scientific decision making is a method of making based on evidence and quantitative data
Scientific decision making benefits and drawbacks
+ evidence based for example historic data of sales
+supported decisions so that the final choice could be justified to those higher up in the hierarchy
-reduces creativity up in a businessand slows up the
Decision making process,
- Data can be wrong sometimes, out of date or biased
What is intuitive decision making?
Decisions carried out using feelings, opinions,thoughts, qualitative information
Intuitive decision making benefits and drawbacks?
+ allows for creative solutions to problems
+helps businesses to take quick decisions possibly giving them first mover advantage
- decision may be just a bad call
- decision may be subject to bias by decision maker
What is a decision tree?
A business can’t afford to follow every option so it may use a decision tree to analyse the probability of a success in a choice of strategies.it is a pictorial quantitative approach.
In a decision tree, what does the square represent?
Decision point → a business needs to make a decision,at this point.
In a decision tree, what do the lines represent?
The possible choices a business can choose from
In a decision tree what does the circle represent?
The different outcomes of the choices
What do the lines coming out the circle (outcome of choices) represent?
The probability of whether it is a success or failure
What do decision trees also show?
- Payoff of each outcome
- cost of the decisions
How to calculate the expected value?
(probability success x payoff) +(probability failure x payoff)
What is expected value?
A weighted average of each choice.
How to calculate net gain?
Expected value - cost of choice
What are the risks of not planning or making decisions
- May risk losing out to competitors.
- an example of not doing efficient decision making
Would be being too slow to respond to changing
Consumer trends and tastes
Examples of rewards
- better work/life balance
- job security
- keeping profit
Decision making uncertainty
- even if the decision involves high risk and uncertainty that doesn’t mean the business should avoid taking this decision, high risk decisions involve higher potential rewards.
- if a business aims to expand internationally, it should carry out some market research to see if there is enough demand. - business should aim to minimise uncertainty by undertaking research to avoid potential failure
Decision making: opportunity cost
Opportunity cost is the cost of making a choice or the sacrifice of the next alternative that would have been chosen. An example is when a business needs to choose between opening anew factory in the uk or starting a new promotional ad campaign.
The use and value of decision trees in decision making
The data in decision trees is usually based on historical business, for example they would know the probability of success of launching a new product would be based on previous product launches and how well they turned out
What is a stakeholder?
Anyone who has an interest in the business and is impacted by the way it trades
Owners
- internal stakeholder
- owners established the business, they are interested in making a profit and achieving a profit and achieving the business objectives
Employees
- internal stakeholders
- interested in business, want job security, also interested in promotional aspects
Managers
- internal stakeholders
- interested in business as they may get a financial bonus if they reach targets they set, also interested in resource management costs, budgets and targets
Competitors
- external stakeholders
- want to know what other businesses in the same industry are doing so that they can plan to keep ahead, for example, marketing mix, human resource management etc.
Suppliers
External shareholders
Interested in future orders, if they’ll get paid for their services, may also be interested in building a relationship with the business in order to have a JIT system
Customers
- external stakeholders
- want products and services to satisfy their needs
- want to know if their products will continue to be sold
Government
- external stakeholders
- want to know if the business will pay their taxes
- also want to know if business will adhere to any laws that may apply, Health and safety at work act
Local community
- external stakeholders
- community may not want business to open as it may harm local business trade
- business may pollute environment
What are pressure groups?
- external stakeholders
- try to influence business in interest of a particular cause for example, trade unions
How are shareholders stakeholders?
- they are interested in a business because they want to know if a profit will be made and if they’ll be paid a dividend
Stakeholder mapping meaning
- a stakeholder map is a visual representation of individuals, groups or organisations that have an influence on the business.
- stakeholders are mapped on how much power and how much interest they have in the business, for example, investors would be high.
Stakeholder mapping uses
- helps managers to gain valuable insights into the stakeholders of a business, which should help it to become more successful and achieve its objectives.
- keeps stakeholders happy will help reduce the risks of a business.
On the stakeholder map, would does a business have to do for high stakeholder power, but low interest
Keep satisfied
On the stakeholder map, would does a business have to do for high stakeholder power and high interest
Manage closely
On the stakeholder map, would does a business have to do for low stakeholder power and interest
Monitor (low effort)
On the stakeholder map, would does a business have to do for low stakeholder power and high interest
Keep informed
Where would suppliers fit in the stakeholder mapping in terms of power
High
Where would competitors fit in the stakeholder mapping in terms of power
Low
Where would customers fit in the stakeholder mapping in terms of power
High
Where would local community fit in the stakeholder mapping in terms of power
High
Where would government fit in the stakeholder mapping in terms of power
High
Where would pressure groups fit in the stakeholder mapping in terms of power
Low
Where would investors and shareholders fit in the stakeholder mapping in terms of power
High
Where would employees fit in the stakeholder mapping in terms of power
Low
Where would managers fit in the stakeholder mapping in terms of power
High
Example of stakeholder conflict
- employees may want high wages, while managers and owners are seeking to cut costs
- suppliers want to be paid high prices, owners want to cut costs
- customers want low priced quality products, owners want high profits and low costs
- pressure groups want company to trade ethically, this is expensive, owners want low costs and high profits
