Business Topic 2 Flashcards
What is a manager?
A manager is someone responsible for overseeing people, resources, or processes within an organization to achieve specific goals efficiently and effectively.
What are Peter Drucker’s five key tasks for a manager?
- Setting objectives and planning
- Organizing a group
- Motivating and communicating
- Measuring performance
- Developing people
What are Henri Fayol’s five main tasks for a manager?
- Planning
- Organizing
- Commanding
- Coordinating
- Controlling
What is the main difference between Drucker’s and Fayol’s views on management tasks?
Drucker emphasizes motivating and developing people, focusing on a human-centered approach, while Fayol highlights command and coordination for structural efficiency.
What are the three key levels of management in a business?
- Senior Management
- Middle Management
- Junior Management
What is the primary role of senior management?
Setting corporate objectives, shaping strategy, and ensuring the organization meets long-term goals.
Who are examples of senior managers in a business?
CEO and Board of Directors.
What is the focus of middle management?
Translating strategic objectives into departmental goals and overseeing operations.
What is the primary responsibility of junior management?
Monitoring daily operations, managing employee performance, and ensuring short-term goals are met.
How does seniority influence the tasks performed by managers?
- Junior managers focus on task supervision and daily operations.
- Middle managers ensure departmental alignment with strategy.
- Senior managers handle high-level strategy and organizational direction.
What does the Blake Mouton Grid measure?
It measures a leader’s focus on tasks versus their focus on people when making decisions.
In the Blake Mouton Grid, what does “task” refer to?
The job that needs to be completed.
In the Blake Mouton Grid, what does “people” refer to?
The individuals responsible for completing the task.
What are the five types of managers identified in the Blake Mouton Grid?
- Country Club
- Team Leader
- Middle of the Road
- Impoverished
- Produce or Perish
What is the focus of a Country Club Manager?
Creating a safe environment with little conflict, emphasizing people over tasks.
What is the focus of a Team Leader Manager?
Balancing a strong focus on both people and tasks, involving staff actively.
What does a Middle of the Road Manager prioritize?
Compromises between people and tasks, without strongly favoring either.
What characterizes an Impoverished Manager?
Low focus on both people and tasks, resulting in less control and responsibility for outcomes.
What is the focus of a Produce or Perish Manager?
A high focus on tasks, often using an autocratic approach with little regard for people.
How does the Blake Mouton Grid help leaders?
It helps them understand their leadership style and adapt it to the business’s needs at a given time.
What are the two axes on the grid?`
- Concern for People (y-axis).
- Concern for Completing Task (x-axis)
What does the Tannenbaum and Schmidt Continuum illustrate?
A range of potential leadership and management styles.
What factors influence the leadership style in the Tannenbaum and Schmidt Continuum?
- The leader’s personality
- The perceived qualities of subordinates
- Situational factors, such as urgency in decision-making
What does the Tannenbaum and Schmidt Continuum emphasize in leadership?
The balance between the degree of authority used by the leader and the area of freedom available to subordinates.
How does the Tannenbaum and Schmidt Continuum accommodate situational leadership?
It recognizes that leadership styles can vary based on the urgency or context of decision-making.
What is the relationship between authority and freedom in the continuum?
The continuum shows the transition from leaders using high authority (directive styles) to granting more freedom to subordinates (participative styles).
What is opportunity cost?
Opportunity cost is the cost of missing out on the next best alternative when a choice is made.
Why is opportunity cost important in business?
It represents the benefits sacrificed when choosing one option over another, especially in situations where resources are scarce.
How does scarcity influence opportunity cost?
Scarcity forces businesses to make decisions, and taking one action often means giving up the ability to pursue an alternative.
What is an example of opportunity cost in work-leisure choices?
The opportunity cost of not working an extra 10 hours a week is the lost wages that could have been earned.
How does opportunity cost apply to government spending priorities?
If a government spends £10 billion on healthcare, the opportunity cost might be less spending on education or defence.
What is the opportunity cost of investing in capital goods today?
The production of consumer goods sacrificed for the current investment in capital goods.
How does opportunity cost apply to the use of farmland?
Using farmland to grow wheat for bio-fuel means less wheat is available for food production, potentially increasing food prices.
What is a trade-off in business decisions?
A trade-off occurs when gaining more of one thing results in having less of another due to limited resources.
How are trade-offs related to opportunity cost?
Trade-offs highlight the need to choose between alternatives, with opportunity cost measuring the value of the option foregone.
What factors influence how business decisions are made?
- Business objectives and budgets
- Organizational structure
- Attitude to risk
- Availability and reliability of data
- The external environment
How do business objectives and budgets influence decision-making
- They set the framework for decisions.
- Strong budgetary control promotes data and evidence-driven decisions.
How does organizational structure affect decision-making?
- Determines who has authority to make decisions.
- Affects whether employees are empowered to make decisions, such as for responsive customer service.
- Decision-making can be centralized (top-level control) or decentralized (distributed authority).
What role does attitude to risk play in decision-making?
- It reflects the business culture.
- Influences whether risk-taking is encouraged.
- Determines the penalties for poor decisions, which can shape future risk behavior.
How does the availability and reliability of data influence decisions?
- Availability of data supports a scientific, evidence-based approach.
- The skills and experience of management in using data are critical.
How does the external environment impact business decisions?
- Rapid changes in the external environment can make scientific approaches less reliable.
- Uncertainties in the environment may require flexible and adaptive decision-making.
What is the scientific approach to decision-making?
It involves using data and logic to make decisions, rather than relying on hunch or intuition.
Why do businesses adopt scientific decision-making?
To reduce uncertainty and risk by applying logic and using relevant data to inform decisions.
What methods and tools are used in scientific decision-making?
- Data mining and big data to source information
- Predictive models and software logic to analyze scenarios
- Forecasts to evaluate the implications of decisions
What are some business models linked to scientific decision-making?
- Decision trees
- Investment appraisal
- Sales forecasting
- Sensitivity analysis
- Network analysis
Why is scientific decision-making becoming more popular?
- Widespread availability of data
- Advanced data analytics and skilled analysts
- Management expectations to use data for significant business decisions
How does scientific decision-making still involve qualitative judgment?
While it uses data and logic, decisions often require interpretation and judgment alongside analytical results.
What is intuition in decision-making?
Intuition refers to using “gut feeling” to make decisions rather than relying on data, analysis, or rational models.
What are the advantages of using intuition in decision-making?
- Speed: Decisions can be made instantly without waiting for data analysis.
- Based on personal experience: Managers may trust their instincts when data seems unreliable.
Why is intuition unsuitable for certain business decisions?
It is risky for decisions involving high stakes, such as launching a new product, takeovers, or major investments.
How is intuition often combined with scientific decision-making?
- Scientific methods quantify costs and returns (e.g., in investment appraisal).
- Intuition helps in applying discount factors and interpreting results.
What is a good example of combining intuition and scientific decision-making?
Investment appraisal, where data quantifies costs/returns, and managerial judgment determines discount rates and interprets results.
What is a decision tree?
A mathematical model that helps managers make decisions by using estimates and probabilities to calculate likely outcomes.
What are the main purposes of a decision tree?
- To decide if the net gain from a decision is worthwhile.
- To calculate likely outcomes based on probabilities and financial estimates.
What are the key components of a decision tree?
- Decisions (start point with options, including “do nothing”).
- Outcomes (represented by circles for uncertain results).
- Costs, probabilities, and financial results for each outcome.
What is probability in the context of decision trees?
- The chance that an event will occur, ranging between 0 (impossible) and 1 (certain).
- Total probabilities of all outcomes must sum to 1.
How is the expected value calculated in a decision tree?
Multiply the estimated financial result of an outcome by its probability.
How is the net gain calculated in a decision tree?
Add the expected values of all outcomes and subtract the associated costs of the decision.
What are the benefits of using decision trees?
- Logical structure for choices.
- Considers multiple options simultaneously.
- Addresses risk using probabilities.
- Considers both costs and benefits.
- Easy to understand and provides tangible results.
What are the drawbacks of using decision trees?
- Probabilities are estimates and prone to error.
- Focuses only on quantitative data, ignoring qualitative factors.
- Probabilities and values may be biased.
- Does not necessarily reduce decision-making risk.
Who are stakeholders?
Stakeholders are individuals, businesses, or government agencies affected by a business.
What are the two main types of stakeholders?
- Internal stakeholders: Employees, shareholders, and managers.
- External stakeholders: Customers, banks, suppliers, and others outside the organization.
Why is it important to consider stakeholder needs in decision-making?
Decisions impact stakeholders and can have short- or long-term consequences. For example, ignoring workforce concerns might reduce costs in the short run but harm motivation and production quality in the long term.
What is stakeholder mapping?
A model that identifies stakeholders’ relative power and interest in a business to help managers prioritize and address their needs effectively.
How can stakeholders increase their influence?
- Employees: Through trade union membership.
- Shareholders: By increasing their investment in the business.
What are some common stakeholder needs?
- Employees: Fair pay and good working conditions.
- Customers: Quality products at a fair price.
- Banks/Financiers: Repayment of loans on time.
- Suppliers: Timely payments and fair contracts.
Shareholders: 5. Dividends and capital growth. - Local community: Safety and contributions to society.
What is a common conflict between stakeholder needs?
The main conflict is between maximizing profit for shareholders and providing rewards to other stakeholders (e.g., fair wages or community contributions).
How does corporate social responsibility (CSR) relate to stakeholder interests?
CSR reflects a business’s role in supporting the wider society, such as local charities, ethical sourcing, and sustainable practices.
What factors influence relationships with stakeholders?
- Management expertise and experience.
- Understanding stakeholder needs.
- Building and maintaining trust through effective communication.
How can businesses manage relationships with stakeholders?
- Effective communication: Clear, timely, and honest.
- Consultation: Listening to stakeholder opinions before decisions.
- Engaging with pressure groups: Addressing concerns raised by interest groups.
What are pressure groups?
Organizations set up to influence business behavior by applying collective pressure.
Why is consultation important in stakeholder management?
It allows stakeholders to express their views, helping them feel heard and possibly influencing the final decision.
What is the definition of a stakeholder?
A person or another business that has an interest in a business.
What is stakeholder mapping used for?
To identify the relative power and influence of each stakeholder in a business.
Who is a stakeholder?
A stakeholder is any individual or organisation who has a vested interest in the activities and decision-making of a business.
Who is a shareholder?
A shareholder is an owner of a company.
How are stakeholders and shareholders different?
Stakeholders have an interest in the business but do not own it, while shareholders own the business and may also work in it.
Can a stakeholder also be a shareholder?
Yes, shareholders are a subset of stakeholders because they have an interest in the business by owning it.
Give examples of stakeholders.
Employees, customers, suppliers, communities, and shareholders.
What is the focus of the stakeholder concept?
The purpose of a business is to create value for all stakeholders, not just shareholders.
What groups does the stakeholder concept emphasize?
Customers, suppliers, employees, communities, and shareholders.
Why is the stakeholder concept important for business sustainability?
It ensures that the interests of various stakeholder groups are aligned and working in the same direction.
What does the shareholder concept argue?
The primary responsibility of a business is to act in the interest of its owners, the shareholders.
According to the shareholder concept, how should business decisions be made?
Decisions should be based on their effects on shareholders, rather than on the wider stakeholder groups.
How do shareholders benefit directly from a business?
Through increases in the value of the business.
What is a key critique of the shareholder concept?
It neglects the broader impacts on other stakeholders such as employees, customers, and the community.
