Topic 2: Managers, Leading and Decision Making Flashcards
What is the difference between leadership and management?
Leadership - taking initiative to set clear objectives and motivating staff towards the achievement
Management - organizing staff to implement strategies need to achieve the objectives
What is leadership + what is it about?
The way in which one person influences the behavior or actions of others
about:
-inspring employees
-creating a vision
-building effective teams
Three levels of management
Senior, Middle and Junior
What are the four leadership styles?
Autocratic
Democratic
Paternalistic
Laissez-faire
Autocratic leaders:
Definition
Advantage and disadvantage
When is it appropriate
When a manager/leader tells their employees what to do + don’t listen to what workers have to say (little delegation)
Adv: fast decision making
dis: can be demotivating which can lead to low staff retention
Appropriate in a business crisis where decisions need to be made quickly or when dealing with new/unskilled workers
Democratic leaders:
Definition
Advantage and disadvantage
When is it appropriate
Managers DELEGATE decision-making to the workers and more power is within the group
Adv: inc motivation as they have been given more responsibility
Disadvantage: slow down decision-making process
Paternalistic leaders:
Definition
Advantage and disadvantage
When is it appropriate
Still little delegation but managers deciding what is best for their employees and may CONSULT with staff
CONSULT, EXPLAIN, PERSUADE
Adv: inc motivation as they have some involvement and have been consulted
Disadv: in long term same dis as authoritarian
Laissez-faire leaders:
Definition
Advantage and disadvantage
When is it appropriate
Effectiveness of different leadership styles
Effectiveness of different leadership styles
How are business decisions approached?
INTUITION
- gut feeling
- key benefit - quick
- hard to justify for decisions involving risk as there is no hard data
SCIENTIFIC
- based on data + analysis
- can be time-consuming + no guarantee of right decision
- adopts a systematic approach rather than intuition
Different forms of decision making
Tactical decisions
Operational decisions
Strategic decisions
Key Considerations in decision making
Risk
Reward
Uncertainty
Opportunity cost
Why is opportunity cost important?
For start-up business’ resources are limited
as resources are scarce decisions about what to spend become risky
managers take calculated risks and weigh up the opportunity cost
Opportunity costs in developing a business idea
missing out on regular income
benefits lost from investing time + money into the business
Opportunity costs in deciding between opportunities
estimating potential sales
suitable skills
cash requirements
What is a decision tree
diagrams that set out all options available when making a decision + an estimate of likelihood occurring
EV (Expected Value) Caculation
probability of each outcome X expected value
Net Gain Calculation
EV - Cost of choice
Value of decision trees
gets managers to think through options
probability of different outcomes
and the financial consequences - which are accurately estimated
influences on relationship with stakeholders
business objectives
management and leadership styles
size of business
market conditions power of stakeholder groups
government policies
How to manage the different relationships with different stakeholders
Excellent communication - especially during periods of change within the business
Consult with different stakeholder groups prior making the decision
What is a stakeholder?
An individual or group that influences and is affected by the activities of an organization
Distinction between stakeholders and shareholders
stakeholders - have an interest in the business but do not own it
shareholders - own the business + benefit directly from increases in value
Internal Stakeholder groups
employees
managers
owners
External Stakeholder groups
customers
local community
shareholders
suppliers
Value of Stakeholder Mapping
enables managers to:
see which stakeholder groups have the greatest interest
recognize which stakeholder has the most power to influence decisions
What do the values of stakeholder mapping allow managers to do
-focus on managing change - ensure support from most powerful
-ensure stakeholders with most interest are involved with decisions
-recognize likely areas of conflict
- negotiate with groups that may disagree
What are shareholders/owners interested in?
- return on investment + profits and dividends
- success + growth of the business
What are managers/employees interested in?
- rewards (salary/wages)
- job security
- promotion opportunities
What are customers interested in?
- utility from money spent on products
- quality product + customer service
Advantages of decision trees
- they make managers consider all possible alternative outcomes
- snow average expected values and probability of each outcome occurring
- they allow for uncertainty
- they encourage aquantative app roach
Disadvantages of decision trees
- only uses quantitate data + ignore qualitative aspects of decision-making
- the probabilities are just estimates
- can be difficult to get meaningful data
