A-level Business notes

Unit 2: Management, leadership and decision making

What managers do

MAIN ROLE OF A MANAGER:

 Set aims and objectives

ADDITIONAL ROLES OF A MANAGER:

 Analyse data
 Lead
 Make decisions
 Review business performance
 Organisation and planning
 Delegation

LEADERSHIP STYLES:

Autocratic:

 Strict, direct everything, assertive, strongheaded

 Authoritarian, do not consider subordinate viewpoints.

Democratic:

 Considers worker’s views

 Make decision based on those views

Paternalistic:

 Like a father figure

 Explains decision / persuade you into it
 Still make the decisions

Laissez-faire:

 Laid back, let workers get on with their job.

FACTORS THAT AFFECT MANAGEMENT:

INTERNAL EXTERNAL (PESTEL)

 Urgency of task  Political
 Skill and motivation  Economic
 Size of workforce  Social
 Type of task  Technological
 Environmental
 Legal

KEY TERMINOLOGY:

Subordinate – worker

Opportunity cost – The next forgone alternative

LEADERSHIP MODELS:

TANNENBAUM SCHMIDT CONTINUUM:

100% FROM 0 – 100:

Tells – All authority by manager (Autocratic)

Authority by
manager Sells – Manager makes decisions then sells it to staff

Suggest – Manager makes suggestions and

subordinates respond to them

Consult – Manager consults subordinates before

Team implementing a decision
participation Joins – Allows for more involvement from staff

Delegates – Passes on roles and responsibilities

0% Abdicates – The ultimate Laissez-faire

BLAKE MOUTON GRID:

Team style – Has high concern for workers and production.

(Best style of management)

Country club – More concerned about the people than the task
(can be motivational but can also lead to workforce being less
productive)

Produce or perish – High concern for the task but no concern for
the people. This can be good in times of crisis but can be
demotivational and cause a lower quality “rushed” product.

Impoverished – Low concern for people and the task. This is the
worst type of management.

Middle of the road – In the middle- has elements of each.

_______________________________________________________________________________________________

*Always refer to corporate objectives

STRENGTHS OF BLAKE’S GRID: STRENGTHS OF SCHMIDT’S CONTINUUM:

Measures two factors: Concern for people and
performance.
Schmidt’s continuum only measures the people aspect.
Blake’s grid is more widely known than the continuum
as it shows some leader’s sole drive for results.
The labels (such as ‘country club’) make it easy to
visualise and remember the type of person.
Gives detail about the range of approaches between
the two extremes (autocratic vs. laissez-faire).
The continuum gives a basis for action as well as
analysis (i.e. how to become more democratic).
Helps leaders measure their own approach and shows
that ‘tell’ is an extreme approach to management.
HOW DECISIONS ARE MADE:

There are two types of decision makers:

 Scientific
 Intuitive Business
objectives
*Scientific decision making is more popular among leaders where it is possible.

SCIENTIFIC:
Strategic
Economic Finance
Scientific decision makers follow a process to make a decision:
conditions Decision- and HR
making
Set objectives Expected
competitor
actions

Review decision Collect data

Scientific
Decision-
making
Implement
Cycle Analyse data
decision

Make decision

INTUITIVE:

Other managers do not follow this process and make decisions based on:

 Gut instinct
 The situation in front of them (EG: crisis)

A decision involves an opportunity cost. The official definition is: “The next forgone alternative”.

This actually means that in a choice, you choose one route and sacrifice the other in order to achieve your task.

IMPLICATIONS OF MAKING A DECISION: Mission Objectives

Influences on decisions Resources Ethics
Every decision has the following three elements:
External environment

Risk Reward Uncertainty

RISK – Financial loss, lack of security, business failure REWARD – Profit, success, independence