Topic 2: Managers, Leading and Decision Making

Question 1

What is the difference between leadership and management?

Answer 1

Leadership - taking initiative to set clear objectives and motivating staff towards the achievement
Management - organizing staff to implement strategies need to achieve the objectives

Question 2

What is leadership + what is it about?

Answer 2

The way in which one person influences the behavior or actions of others
about:
-inspring employees
-creating a vision
-building effective teams

Question 3

Three levels of management

Answer 3

Senior, Middle and Junior

Question 4

What are the four leadership styles?

Answer 4

Autocratic
Democratic
Paternalistic
Laissez-faire

Question 5

Autocratic leaders:
Definition
Advantage and disadvantage
When is it appropriate

Answer 5

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

Question 6

Democratic leaders:
Definition
Advantage and disadvantage
When is it appropriate

Answer 6

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

Question 7

Paternalistic leaders:
Definition
Advantage and disadvantage
When is it appropriate

Answer 7

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

Question 8

Laissez-faire leaders:
Definition
Advantage and disadvantage
When is it appropriate

Question 9

Effectiveness of different leadership styles

Question 10

Effectiveness of different leadership styles

Question 11

How are business decisions approached?

Answer 11

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

Question 12

Different forms of decision making

Answer 12

Tactical decisions
Operational decisions
Strategic decisions

Question 13

Key Considerations in decision making

Answer 13

Risk
Reward
Uncertainty
Opportunity cost

Question 14

Why is opportunity cost important?

Answer 14

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

Question 15

Opportunity costs in developing a business idea

Answer 15

missing out on regular income
benefits lost from investing time + money into the business

Question 16

Opportunity costs in deciding between opportunities

Answer 16

estimating potential sales
suitable skills
cash requirements

Question 17

What is a decision tree

Answer 17

diagrams that set out all options available when making a decision + an estimate of likelihood occurring

Question 18

EV (Expected Value) Caculation

Answer 18

probability of each outcome X expected value

Question 19

Net Gain Calculation

Answer 19

EV - Cost of choice

Question 20

Value of decision trees

Answer 20

gets managers to think through options
probability of different outcomes
and the financial consequences - which are accurately estimated

Question 21

influences on relationship with stakeholders

Answer 21

business objectives
management and leadership styles
size of business
market conditions power of stakeholder groups
government policies

Question 22

How to manage the different relationships with different stakeholders

Answer 22

Excellent communication - especially during periods of change within the business
Consult with different stakeholder groups prior making the decision

Question 23

What is a stakeholder?

Answer 23

An individual or group that influences and is affected by the activities of an organization

Question 24

Distinction between stakeholders and shareholders

Answer 24

stakeholders - have an interest in the business but do not own it
shareholders - own the business + benefit directly from increases in value

Question 25

Internal Stakeholder groups

Answer 25

employees
managers
owners

Question 26

External Stakeholder groups

Answer 26

customers
local community
shareholders
suppliers

Question 27

Value of Stakeholder Mapping

Answer 27

enables managers to:
see which stakeholder groups have the greatest interest
recognize which stakeholder has the most power to influence decisions

Question 28

What do the values of stakeholder mapping allow managers to do

Answer 28

-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

Question 29

What are shareholders/owners interested in?

Answer 29

• return on investment + profits and dividends
• success + growth of the business

Question 30

What are managers/employees interested in?

Answer 30

• rewards (salary/wages)
• job security
• promotion opportunities

Question 31

What are customers interested in?

Answer 31

• utility from money spent on products
• quality product + customer service

Question 32

Advantages of decision trees

Answer 32

• 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

Question 33

Disadvantages of decision trees

Answer 33

• only uses quantitate data + ignore qualitative aspects of decision-making
• the probabilities are just estimates
• can be difficult to get meaningful data