MANAGEMENT STYLES

OF BUSINESS
INTRODUCTION
• Management consists of the planning, prioritizing, and organizing work efforts
to accomplish objectives within a business organization.
•  A management style is the particular way managers go about accomplishing
these objectives. It encompasses the way they make decisions, how they plan
and organize work, and how they exercise authority.
• Management styles vary by company, level of management, and even from
person to person. A good manager is one that can adjust their management
style to suit different environments and employees. An individual’s
management style is shaped by many different factors including internal and
external business environments, and how one views the role of work in the
lives of employees.
• The type of leader you are has a significant impact on the success of
your team. A strong leader is likely to inspire loyalty, hard work, and
high levels of morale, whereas a poor leader can result in frequent
turnover, loss of productivity, and unmotivated employees.
• There are many steps you can take to make sure you’re in the former
category. One of the actions you can take today is to understand and
implement the types of management styles that will inspire your
team to do their best work.
• Company leaders and managers interact with their employees in a
variety of ways – from collaborating on projects to providing feedback.
So it shouldn’t be surprising to learn that leaders also have a lot of
influence on how employees feel about their jobs. In fact, a study found
that nearly half of employees said they’ve quit a job because of a bad
manager.
• If you take a closer look at the situation, you can find several direct
correlations between the quality of a manager and important factors
like employee engagement, retention, and happiness. That’s why
mastering the most effective management styles is one of the key
components to nurturing and growing a successful team.
1. Visionary Management Style

• The visionary leader excels at articulating a high-level, strategic direction

for the company and mobilizing the team towards this goal. In other
words, the visionary leader is the person who provides a roadmap for the
company, and the employees are the ones who use this map as a guide to
pave the path forward.
• However, this doesn’t mean that the visionary management style
encourages authoritarian decision making. Even though it’s the leader
who ultimately decides on the direction of the company, this vision is
shaped based on what’s best for both the organization and its employees.
That’s why visionary leaders need to be open minded – this allows them to
absorb feedback from employees and make changes when obstacles arise.
• One of the benefits of this type of management style is that it inspires
trust between the leader and the employees. Visionary leaders rely
on their teams to get the work done and, as a result, employees have
more autonomy over their day-to-day roles. This is a productive way
to build a strong relationship with your employees.
• Another benefit is that this management style is extremely flexible.
One of the great things about a vision is that there’s more than one
“right” way to reach it, which gives companies the ability to test out
different paths and methods.
The characteristics needed to master this
management style include
• High emotional intelligence
• Flexibility when obstacles come up
• Being open-minded to feedback
• The ability to inspire, motivate and mobilize groups
• Strategic and long-term thinking skills
What the Visionary Management Style looks like in action:

• A startup is launching a new product. The CEO sits down with her
leadership team and, together, they come up with a high-level
strategy for the release. She hosts an all-hands meeting to share the
vision with the whole company and have a discussion around it. From
there, she empowers her staff to come up with next steps.
• The CEO is available to provide guidance along the way and checks in
with team leads regularly to make sure everything is headed in the
right direction, but doesn’t get involved in the day-to-day activities.
2. Democratic Management Style

• A leader who follows the democratic management style collects the

perspectives and feedback of their employees to inform decisions.
This is done with the intention of building consensus among key
stakeholders. Unlike top-down management styles, where decisions
are made only by the leadership team, the democratic management
style is transparent, encourages participation from employees, and is
relatively objective.
• This is beneficial because it ensures that the whole organization is
aligned or, at the very least, understands how a major decision was
made. This is important because employees can feel left out when
decisions are made without their input.
• A Democratic Management Style is also effective because it gives
everyone at the company a voice, which can lead to more diversity of
thought.
• This style has benefits for the leaders and managers of a company as
well. Having the opportunity to consistently check in with employees
and collect their feedback can lead to critical insights into the overall
sentiment, frustrations, and desires for the future of the organization.
The characteristics needed to master this
management style include:
• A sense of objectivity
• Excellent communication skills
• The ability to make sense of many opinions and perspectives
• Decision-making skills
• Open-mindedness
What the Democratic Management Style looks like in action:

• A manager has to decide whether or not their team should scrap a

project that’s producing ambiguous results. Instead of making the
decision on his own, he has one-on-one meetings with everyone
involved in the project, puts out an anonymous survey, and gathers
additional data.
• After collecting all the feedback, he decides to cancel the project
because most of the feedback suggested that it wasn’t a productive
use of time.
3. Coaching Management Style

• This management style puts the emphasis on the professional and

personal growth of employees. Leaders who follow this style are
deeply invested in the needs of their team and take on more of a
mentor role versus a traditional “boss” role.
• This means they’re available to share advice and guidance, willing to
serve as an advocate, and always looking for opportunities to help
their employees thrive.
• What does this look like in practice? For instance, let’s say an
employee demonstrates a lot of interest and promise in the field of
inbound marketing. A leader who follows a coaching management
style will find opportunities for this employee to work on inbound
marketing projects, encourage him or her to attend relevant events
and provide the space and resources to further develop the skills
needed to succeed.
• The coaching management style is a great one to master because it
demonstrates to employees that their leaders care about their
success and wellbeing. This inspires employees to produce high-
quality work and makes it more likely that they’ll feel safe confiding in
their managers about any issues that arise in their jobs. This is a much
better alternative to having an employee who doesn’t trust their
manager and leaves the company without warning.
The characteristics needed to master this
management style include:
• A strong desire to help employees grow personally and professionally
• Strong listening and feedback skills
• Empathy and the ability to connect with others
• Problem-solving skills
• The ability to build trust and meaningful relationships
What the Coaching Management Style looks like in action:

• A manager has a struggling employee named MILIMO. She recognizes that

MILIMO is a smart person and a hard worker but is going through a slump, so
she uses an upcoming performance review as an opportunity to see how she
can better support him. The manager uses strategic performance review
phrases such as:
• You excel at [action], and I would love to continue seeing that from you.
• or
• I encourage you to keep doing [action]. I’ve received positive feedback that
this has really helped the team [result].
• To deliver feedback in a clear but empathetic way, and this opens up a
productive dialogue around the challenges MILIMO is facing at work
• Together, they come up with a plan of action that includes adding
more variety to MILIMO ’s workload and giving him the opportunity
to refresh his skill set through company-sponsored online courses.
• The manager checks in with MILIMO regularly to make sure he feels
like he has everything he needs to succeed.
4. Laissez-Faire Management Style

• The laissez-faire management style is very hands-off and encourages

employees to take initiative on most of the decision making, problem-
solving, and work. When implemented in the right work environment,
employees will appreciate having the trust, space, and autonomy to
work in ways that will maximize their output
• Typically, companies that have a flat structure or don’t want to follow
a rigid hierarchy are the best candidates for this management style.
It’s also important to make sure you have a team of extremely driven
and competent employees who are comfortable with having minimal
oversight from leadership.
• Managers should also be prepared to go into conflict management
mode whenever their employees lose focus or butt heads.
• The benefit of this type of leadership is that it can lead to increased
innovation, creativity, and productivity since there are no restrictions
placed onto the way employees have to work or think. Similar to the
Visionary Management Style, the amount of freedom granted to
employees is also a great way to build a strong relationship based on
trust.
The characteristics needed to master this
management style include:
• An immense amount of trust in your team members
• The ability to be hands off but available when needed
• Conflict management skills
• Comfortable with decentralized structures
• A knack [an acquired or natural skill at doing something] for checking
in on progress without being overly involved.
What the Laissez-Faire Management Style looks like in action:

• The Head of Marketing is launching a new project with his highly

motivated, competent, and independent team. He assigns large
chunks of the project to employees based on their strengths, gives
them a deadline, and lets them run with their individual tasks. He’ll
check in occasionally with the team members to see if there’s
anything they need from him but, otherwise, remains completely
hands off until the deadline.
• Ultimately, the type of management style you decide to go with is completely up to you. If
you need some guidance on how to make this decision, here are a few key questions you
can ask yourself to get started:
• Which of these management styles aligns most with my existing strengths?
• What are the gaps in my management style right now, and do any of these other
alternatives fill those gaps?
• What are the needs of my organization at this moment?
• Have my employees shown a preference for one type of management style over another?
• What type of management style do the company leaders I admire use?
• Keep in mind that you’re not committed to a single type of management style throughout
your career. You can test out a few and see what feels right to you, or you can create your
own management style by blending your favourite parts of each one.
TYPES OF BUSINESS
ORGANISATIONS
• A business is an organization that uses economic resources or inputs
to provide goods or services to customers in exchange for money or
other goods and services. Business organizations come in different
types and forms.
• There are four (4) types of Business:
1. Service Business
• A service type of business provides intangible products (products with
no physical form). Service type firms offer professional skills,
expertise, advice, and other similar products. Examples of service
businesses are: schools, repair shops, hair salons, banks, accounting
firms, and law firms.
2. Merchandising Business
• This type of business buys products at wholesale price and sells the
same at retail price. They are known as "buy and sell" businesses.
They make profit by selling the products at prices higher than their
purchase costs. A merchandising business sells a product without
changing its form. Examples are: grocery stores, convenience stores,
distributors, and other resellers.
3. Manufacturing Business
• Unlike a merchandising business, a manufacturing business buys
products with the intention of using them as materials in making a
new product. Thus, there is a transformation of the products
purchased. A manufacturing business combines raw materials, labour,
and factory overhead in its production process. The manufactured
goods will then be sold to customers.
4. Hybrid Business
• Hybrid businesses are companies that may be classified in more than
one type of business. A restaurant, for example, combines ingredients
in making a fine meal (manufacturing), sells a cold bottle of wine
(merchandising), and fills customer orders (service). Nonetheless,
these companies may be classified according to their major business
interest. In that case, restaurants are more of the service type – they
provide dining services.
Forms of Business Organization
• These are the basic forms of business ownership:
1. Sole Proprietorship
• A type of business unit where one person is solely responsible for
providing the capital and bearing the risk of the enterprise, and for
the management of the business. 
• A sole proprietorship is a business owned by only one person. It is
easy to set-up and is the least costly among all forms of ownership.
• The owner faces unlimited liability; meaning, the creditors of the
business may go after the personal assets of the owner if the business
cannot pay them.
• The sole proprietorship form is usually adopted by small business
entities.
Characteristics of sole proprietorship form of
business organisation
(a) Single Ownership:
• The sole proprietorship form of business organisation has a single
owner who himself/herself starts the business by bringing together all
the resources.
(b) No Separation of Ownership and Management:
The owner himself/herself manages the business as per his/her own skill
and intelligence. There is no separation of ownership and management
as is the case with company form of business organisation. A sole
proprietor contributes and organises the resources in a systematic way
and controls the activities with the objective of earning profit.
(c) Less Legal Formalities
• The formation and operation of a sole proprietorship form of business
organisation does not involve any legal formalities. Thus, its formation
is quite easy and simple.
• (d) No Separate Entity
The business unit does not have an entity separate from the owner. The
businessman and the business enterprise are one and the same, and
the businessman is responsible for everything that happens in his
business unit.
No Sharing of Profit and Loss
• The sole proprietor enjoys the profits alone. At the same time, the
entire loss is also borne by him. No other person is there to share the
profits and losses of the business. He alone bears the risks and reaps
the profits.
Unlimited Liability
• The liability of the sole proprietor is unlimited. In case of loss, if his
business assets are not enough to pay the business liabilities, his
personal property can also be utilised to pay off the liabilities of the
business.
One-man Control
• The controlling power of the sole proprietorship business always
remains with the owner. Hwill.e/she runs the business as per his/her
own
Merits of Sole proprietorship
• a) Easy to Form and Wind Up.
• (b) Quick Decision and Prompt Action.
• (c) Direct Motivation.
• (d) Flexibility in Operation.
• (e) Maintenance of Business Secrets.
• (f) Personal Touch.
Limitations of sole proprietorship
• (a) Limited Resources.
• (b) Lack of Continuity.
• (c) Unlimited Liability.
• (d) Not Suitable for Large Scale Operations.
• (e) Limited Managerial Expertise.
2. Partnership
• A partnership is a business owned by two or more persons who
contribute resources into the entity. The partners divide the profits of
the business among themselves.
• In general partnerships, all partners have unlimited liability. In
limited partnerships, creditors cannot go after the personal assets of
the limited partners.
Characteristics of partnership form of
business organisation
• Based on the definition of partnership as given above, the various
characteristics of partnership form of business organisation, can be
summarised as follows:
(a) Two or More Persons
• To form a partnership firm at least two persons are required. The
maximum limit on the number of persons is ten for banking business
and 20 for other businesses. If the number exceeds the above limit,
the partnership becomes illegal and the relationship among them
cannot be called partnership.
Contractual Relationship
• Partnership is created by an agreement among the persons who have
agreed to join hands. Such persons must be competent to contract.
Thus, minors, lunatics and insolvent persons are not eligible to
become the partners. However, a minor can be admitted to the
benefits of partnership firm i.e., he can have share in the profits
without any obligation for losses.
Sharing Profits and Business
• There must be an agreement among the partners to share the profits
and losses of the business of the partnership firm. If two or more
persons share the income of jointly owned property, it is not regarded
as partnership.
Existence of Lawful Business
• The business of which the persons have agreed to share the profit
must be lawful. Any agreement to indulge in smuggling, black
marketing etc. cannot be called partnership business in the eyes of
law.
Principal Agent Relationship
• There must be an agency relationship between the partners. Every
partner is the principal as well as the agent of the firm. When a
partner deals with other parties he/she acts as an agent of other
partners, and at the same time the other partners become the
principal.
Unlimited Liability
• The partners of the firm have unlimited liability. They are jointly as
well as individually liable for the debts and obligations of the firms. If
the assets of the firm are insufficient to meet the firm’s liabilities, the
personal properties of the partners can also be utilised for this
purpose. However, the liability of a minor partner is limited to the
extent of his share in the profits.
Voluntary Registration
• The registration of partnership firm is not compulsory. But an
unregistered firm suffers from some limitations which makes it
virtually compulsory to be registered. Following are the limitations of
an unregistered firm.
• (i) The firm cannot sue outsiders, although the outsiders can sue it. (ii)
In case of any dispute among the partners, it is not possible to settle
the dispute through court of law.
• (iii) The firm cannot claim adjustments for amount payable to, or
receivable from, any other parties.
Merits of partnership form
• (a) Easy to Form
• (b) Availability of Larger Resources
• (c) Better Decisions
• (d) Flexibility
• (e) Sharing of Risks
• (f) Keen
• (g) Benefits of Specialisation
• (h) Protection of Interest
• (i) Secrecy
Limitations of partnership form
• A partnership firm also suffers from certain limitations. These are as
follows:
• (a) Unlimited Liability
• (b) Instability
• (c) Limited Capital
• (d) Non-transferability of share
• (e) Possibility of Conflicts
3. Corporation
• A corporation is a business organization that has a separate legal
personality from its owners. Ownership in a stock corporation is
represented by shares of stock.
• The owners (stockholders) enjoy limited liability but have limited
involvement in the company's operations. The board of directors, an
elected group from the stockholders, controls the activities of the
corporation.
• In addition to those basic forms of business ownership, these are
some other types of organizations that are common today
REASONS FOR BUSINESS SUCCESS
An innovative business idea
If you want a shot at surviving, especially in a competitive industry, you
need to determine what sets you apart from the other available
options. Clever marketing or an exciting technology alone won't
guarantee that your target customers will be wowed by what you're
offering -- you have to offer real value and/or a new experience.
The right talent

• The long-term success of your business requires that you assemble

the right talent to build your brand. Your team is the company's
backbone, and one cancerous person can completely derail your
progress. Whether you are building an on-site team or 
a remote workforce, one thing remains the same -- the right talent
matched with the same vision will greatly improve the chances of
success.
 Your network

• Building a personal network of like-minded entrepreneurs has several

benefits. It gives you a sounding board for when you have questions
or want advice, which is a huge help, especially in the early stages of a
business. As your network grows, so do your resources.
 Hard work

• If you're not willing to get your hands dirty and work in the trenches,
you might as well not even start. A lot of potential entrepreneurs
have a false sense of what it's really like to own a business.
• The media likes to glorify the start up life, but it's not all
Lamborghinis and private planes. You have to be willing to 
put the work in if you want to be successful.
 Sales

• There is one thing that will quickly prove the viability of your product
or service -- sales. Not only do sales prove you have something viable,
but it also injects revenue into your business, allowing you to grow.
• The maturity to treat employees, suppliers and partners fairly and
respectfully.
• Trust and respect result in productivity increases in ways that may be
difficult to see and quantify.
• Superior location and/or promotion creating a connection between
your product and where it can be obtained.
• Studies have shown it can take seeing your product or name seven
times before a customer is ready to buy.
•  Marketing. Your ability to determine and sell the right product to the
right customer at the right time
• Finance. Your ability to acquire the money you need, and account for
the money you receive
• Production. Your ability to produce products and services at a high
enough level of quality and consistency over time
• Distribution. Your ability to get your product or service to the market
in a timely and economic fashion
• Research and development. Your ability to continually innovate and
produce new products, services, processes and responses to your
competition
• Regulation. Your ability to deal with the requirements of government
legislation at all levels
• Labour. Your ability to find the people you need, deal with unions,
establish personnel policies, training and organizational development
REASONS FOR BUSINESS FAILURE
• Lack of direction. Business owners often fail to establish clear goals
and create plans to achieve those goals, especially before starting out,
when they fail to develop a complete business plan before launching
their company.
• Impatience. This occurs when business owners try to accomplish too
much too soon, or expect to get results far faster than is truly
possible. A good rule to remember is that everything costs twice as
much and takes three times as long as expected.
• Greed. When entrepreneurs try to charge too much to make a lot of
money in a short period of time, failure isn't far behind.
• Taking action without thinking it through first. An entrepreneur acts
impetuously and makes costly mistakes that eventually cause the
business to fail.
• Poor cost control. An entrepreneur spends too much, especially in the
early stages, and spends all their startup capital money before
achieving profitability.
• Poor product quality. This makes it difficult to sell and difficult to get
repeat business.
• Insufficient working capital. An entrepreneur expects--and requires--
immediate, positive cash flow that doesn't occur, leading to the
failure of the business.
• Bad or nonexistent budgeting. An entrepreneur fails to develop
written budgets for operations that include all possible expenses.
• Inadequate financial records. An entrepreneur fails to set up a
bookkeeping or accounting system from the beginning.
• Loss of momentum in the sales department. This leads to a decline in
cash flow and the eventual collapse of the enterprise.
• Failure to anticipate market trends. An entrepreneur doesn't
recognize changes in demand, customer preferences or the economic
situation.
• Lack of managerial ability or experience. An entrepreneur doesn't
know or understand the important skills it takes to run a business
• Indecisiveness. An entrepreneur is unable to make key decisions in
the face of difficulties, or decisions are delayed or improperly made
because of concern for the opinions or feelings of other people.
• Bad human relations. Personal problems and conflict with staff,
suppliers, creditors and customers can easily lead to business failure.
• Diffusion of effort. An entrepreneur tries to do too many things, thus
failing to set priorities and focus on high-value tasks.