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Business > Business Topic 2 > Flashcards

Business Topic 2 Flashcards

1
Q

What is a manager?

A

A manager is someone responsible for overseeing people, resources, or processes within an organization to achieve specific goals efficiently and effectively.

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2
Q

What are Peter Drucker’s five key tasks for a manager?

A
  1. Setting objectives and planning
  2. Organizing a group
  3. Motivating and communicating
  4. Measuring performance
  5. Developing people
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3
Q

What are Henri Fayol’s five main tasks for a manager?

A
  1. Planning
  2. Organizing
  3. Commanding
  4. Coordinating
  5. Controlling
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4
Q

What is the main difference between Drucker’s and Fayol’s views on management tasks?

A

Drucker emphasizes motivating and developing people, focusing on a human-centered approach, while Fayol highlights command and coordination for structural efficiency.

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5
Q

What are the three key levels of management in a business?

A
  1. Senior Management
  2. Middle Management
  3. Junior Management
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6
Q

What is the primary role of senior management?

A

Setting corporate objectives, shaping strategy, and ensuring the organization meets long-term goals.

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7
Q

Who are examples of senior managers in a business?

A

CEO and Board of Directors.

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8
Q

What is the focus of middle management?

A

Translating strategic objectives into departmental goals and overseeing operations.

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9
Q

What is the primary responsibility of junior management?

A

Monitoring daily operations, managing employee performance, and ensuring short-term goals are met.

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10
Q

How does seniority influence the tasks performed by managers?

A
  1. Junior managers focus on task supervision and daily operations.
  2. Middle managers ensure departmental alignment with strategy.
  3. Senior managers handle high-level strategy and organizational direction.
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11
Q

What does the Blake Mouton Grid measure?

A

It measures a leader’s focus on tasks versus their focus on people when making decisions.

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12
Q

In the Blake Mouton Grid, what does “task” refer to?

A

The job that needs to be completed.

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13
Q

In the Blake Mouton Grid, what does “people” refer to?

A

The individuals responsible for completing the task.

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14
Q

What are the five types of managers identified in the Blake Mouton Grid?

A
  1. Country Club
  2. Team Leader
  3. Middle of the Road
  4. Impoverished
  5. Produce or Perish
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15
Q

What is the focus of a Country Club Manager?

A

Creating a safe environment with little conflict, emphasizing people over tasks.

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16
Q

What is the focus of a Team Leader Manager?

A

Balancing a strong focus on both people and tasks, involving staff actively.

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17
Q

What does a Middle of the Road Manager prioritize?

A

Compromises between people and tasks, without strongly favoring either.

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18
Q

What characterizes an Impoverished Manager?

A

Low focus on both people and tasks, resulting in less control and responsibility for outcomes.

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19
Q

What is the focus of a Produce or Perish Manager?

A

A high focus on tasks, often using an autocratic approach with little regard for people.

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20
Q

How does the Blake Mouton Grid help leaders?

A

It helps them understand their leadership style and adapt it to the business’s needs at a given time.

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21
Q

What are the two axes on the grid?`

A
  1. Concern for People (y-axis).
  2. Concern for Completing Task (x-axis)
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22
Q

What does the Tannenbaum and Schmidt Continuum illustrate?

A

A range of potential leadership and management styles.

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23
Q

What factors influence the leadership style in the Tannenbaum and Schmidt Continuum?

A
  1. The leader’s personality
  2. The perceived qualities of subordinates
  3. Situational factors, such as urgency in decision-making
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24
Q

What does the Tannenbaum and Schmidt Continuum emphasize in leadership?

A

The balance between the degree of authority used by the leader and the area of freedom available to subordinates.

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25
Q

How does the Tannenbaum and Schmidt Continuum accommodate situational leadership?

A

It recognizes that leadership styles can vary based on the urgency or context of decision-making.

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26
Q

What is the relationship between authority and freedom in the continuum?

A

The continuum shows the transition from leaders using high authority (directive styles) to granting more freedom to subordinates (participative styles).

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27
Q

What is opportunity cost?

A

Opportunity cost is the cost of missing out on the next best alternative when a choice is made.

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28
Q

Why is opportunity cost important in business?

A

It represents the benefits sacrificed when choosing one option over another, especially in situations where resources are scarce.

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29
Q

How does scarcity influence opportunity cost?

A

Scarcity forces businesses to make decisions, and taking one action often means giving up the ability to pursue an alternative.

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30
Q

What is an example of opportunity cost in work-leisure choices?

A

The opportunity cost of not working an extra 10 hours a week is the lost wages that could have been earned.

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31
Q

How does opportunity cost apply to government spending priorities?

A

If a government spends £10 billion on healthcare, the opportunity cost might be less spending on education or defence.

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32
Q

What is the opportunity cost of investing in capital goods today?

A

The production of consumer goods sacrificed for the current investment in capital goods.

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33
Q

How does opportunity cost apply to the use of farmland?

A

Using farmland to grow wheat for bio-fuel means less wheat is available for food production, potentially increasing food prices.

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34
Q

What is a trade-off in business decisions?

A

A trade-off occurs when gaining more of one thing results in having less of another due to limited resources.

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35
Q

How are trade-offs related to opportunity cost?

A

Trade-offs highlight the need to choose between alternatives, with opportunity cost measuring the value of the option foregone.

36
Q

What factors influence how business decisions are made?

A
  1. Business objectives and budgets
  2. Organizational structure
  3. Attitude to risk
  4. Availability and reliability of data
  5. The external environment
37
Q

How do business objectives and budgets influence decision-making

A
  1. They set the framework for decisions.
  2. Strong budgetary control promotes data and evidence-driven decisions.
38
Q

How does organizational structure affect decision-making?

A
  1. Determines who has authority to make decisions.
  2. Affects whether employees are empowered to make decisions, such as for responsive customer service.
  3. Decision-making can be centralized (top-level control) or decentralized (distributed authority).
39
Q

What role does attitude to risk play in decision-making?

A
  1. It reflects the business culture.
  2. Influences whether risk-taking is encouraged.
  3. Determines the penalties for poor decisions, which can shape future risk behavior.
40
Q

How does the availability and reliability of data influence decisions?

A
  1. Availability of data supports a scientific, evidence-based approach.
  2. The skills and experience of management in using data are critical.
41
Q

How does the external environment impact business decisions?

A
  1. Rapid changes in the external environment can make scientific approaches less reliable.
  2. Uncertainties in the environment may require flexible and adaptive decision-making.
42
Q

What is the scientific approach to decision-making?

A

It involves using data and logic to make decisions, rather than relying on hunch or intuition.

43
Q

Why do businesses adopt scientific decision-making?

A

To reduce uncertainty and risk by applying logic and using relevant data to inform decisions.

44
Q

What methods and tools are used in scientific decision-making?

A
  1. Data mining and big data to source information
  2. Predictive models and software logic to analyze scenarios
  3. Forecasts to evaluate the implications of decisions
45
Q

What are some business models linked to scientific decision-making?

A
  1. Decision trees
  2. Investment appraisal
  3. Sales forecasting
  4. Sensitivity analysis
  5. Network analysis
46
Q

Why is scientific decision-making becoming more popular?

A
  1. Widespread availability of data
  2. Advanced data analytics and skilled analysts
  3. Management expectations to use data for significant business decisions
47
Q

How does scientific decision-making still involve qualitative judgment?

A

While it uses data and logic, decisions often require interpretation and judgment alongside analytical results.

48
Q

What is intuition in decision-making?

A

Intuition refers to using “gut feeling” to make decisions rather than relying on data, analysis, or rational models.

49
Q

What are the advantages of using intuition in decision-making?

A
  1. Speed: Decisions can be made instantly without waiting for data analysis.
  2. Based on personal experience: Managers may trust their instincts when data seems unreliable.
50
Q

Why is intuition unsuitable for certain business decisions?

A

It is risky for decisions involving high stakes, such as launching a new product, takeovers, or major investments.

51
Q

How is intuition often combined with scientific decision-making?

A
  1. Scientific methods quantify costs and returns (e.g., in investment appraisal).
  2. Intuition helps in applying discount factors and interpreting results.
52
Q

What is a good example of combining intuition and scientific decision-making?

A

Investment appraisal, where data quantifies costs/returns, and managerial judgment determines discount rates and interprets results.

53
Q

What is a decision tree?

A

A mathematical model that helps managers make decisions by using estimates and probabilities to calculate likely outcomes.

54
Q

What are the main purposes of a decision tree?

A
  1. To decide if the net gain from a decision is worthwhile.
  2. To calculate likely outcomes based on probabilities and financial estimates.
55
Q

What are the key components of a decision tree?

A
  1. Decisions (start point with options, including “do nothing”).
  2. Outcomes (represented by circles for uncertain results).
  3. Costs, probabilities, and financial results for each outcome.
56
Q

What is probability in the context of decision trees?

A
  1. The chance that an event will occur, ranging between 0 (impossible) and 1 (certain).
  2. Total probabilities of all outcomes must sum to 1.
57
Q

How is the expected value calculated in a decision tree?

A

Multiply the estimated financial result of an outcome by its probability.

58
Q

How is the net gain calculated in a decision tree?

A

Add the expected values of all outcomes and subtract the associated costs of the decision.

59
Q

What are the benefits of using decision trees?

A
  1. Logical structure for choices.
  2. Considers multiple options simultaneously.
  3. Addresses risk using probabilities.
  4. Considers both costs and benefits.
  5. Easy to understand and provides tangible results.
60
Q

What are the drawbacks of using decision trees?

A
  1. Probabilities are estimates and prone to error.
  2. Focuses only on quantitative data, ignoring qualitative factors.
  3. Probabilities and values may be biased.
  4. Does not necessarily reduce decision-making risk.
61
Q

Who are stakeholders?

A

Stakeholders are individuals, businesses, or government agencies affected by a business.

62
Q

What are the two main types of stakeholders?

A
  1. Internal stakeholders: Employees, shareholders, and managers.
  2. External stakeholders: Customers, banks, suppliers, and others outside the organization.
63
Q

Why is it important to consider stakeholder needs in decision-making?

A

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.

64
Q

What is stakeholder mapping?

A

A model that identifies stakeholders’ relative power and interest in a business to help managers prioritize and address their needs effectively.

65
Q

How can stakeholders increase their influence?

A
  1. Employees: Through trade union membership.
  2. Shareholders: By increasing their investment in the business.
66
Q

What are some common stakeholder needs?

A
  1. Employees: Fair pay and good working conditions.
  2. Customers: Quality products at a fair price.
  3. Banks/Financiers: Repayment of loans on time.
  4. Suppliers: Timely payments and fair contracts.
    Shareholders: 5. Dividends and capital growth.
  5. Local community: Safety and contributions to society.
67
Q

What is a common conflict between stakeholder needs?

A

The main conflict is between maximizing profit for shareholders and providing rewards to other stakeholders (e.g., fair wages or community contributions).

68
Q

How does corporate social responsibility (CSR) relate to stakeholder interests?

A

CSR reflects a business’s role in supporting the wider society, such as local charities, ethical sourcing, and sustainable practices.

69
Q

What factors influence relationships with stakeholders?

A
  1. Management expertise and experience.
  2. Understanding stakeholder needs.
  3. Building and maintaining trust through effective communication.
70
Q

How can businesses manage relationships with stakeholders?

A
  1. Effective communication: Clear, timely, and honest.
  2. Consultation: Listening to stakeholder opinions before decisions.
  3. Engaging with pressure groups: Addressing concerns raised by interest groups.
71
Q

What are pressure groups?

A

Organizations set up to influence business behavior by applying collective pressure.

72
Q

Why is consultation important in stakeholder management?

A

It allows stakeholders to express their views, helping them feel heard and possibly influencing the final decision.

73
Q

What is the definition of a stakeholder?

A

A person or another business that has an interest in a business.

74
Q

What is stakeholder mapping used for?

A

To identify the relative power and influence of each stakeholder in a business.

75
Q

Who is a stakeholder?

A

A stakeholder is any individual or organisation who has a vested interest in the activities and decision-making of a business.

76
Q

Who is a shareholder?

A

A shareholder is an owner of a company.

77
Q

How are stakeholders and shareholders different?

A

Stakeholders have an interest in the business but do not own it, while shareholders own the business and may also work in it.

78
Q

Can a stakeholder also be a shareholder?

A

Yes, shareholders are a subset of stakeholders because they have an interest in the business by owning it.

79
Q

Give examples of stakeholders.

A

Employees, customers, suppliers, communities, and shareholders.

80
Q

What is the focus of the stakeholder concept?

A

The purpose of a business is to create value for all stakeholders, not just shareholders.

81
Q

What groups does the stakeholder concept emphasize?

A

Customers, suppliers, employees, communities, and shareholders.

82
Q

Why is the stakeholder concept important for business sustainability?

A

It ensures that the interests of various stakeholder groups are aligned and working in the same direction.

83
Q

What does the shareholder concept argue?

A

The primary responsibility of a business is to act in the interest of its owners, the shareholders.

84
Q

According to the shareholder concept, how should business decisions be made?

A

Decisions should be based on their effects on shareholders, rather than on the wider stakeholder groups.

85
Q

How do shareholders benefit directly from a business?

A

Through increases in the value of the business.

86
Q

What is a key critique of the shareholder concept?

A

It neglects the broader impacts on other stakeholders such as employees, customers, and the community.

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