Unit 2: AS Business Studies Notes


Unit 2: Chapter 4: Understanding Management, Leadership & Decision-Making

The four functions of management are planning, organising, directing and controlling.   

Simply, plan goals / strategies, set resources into implementation plans, leading employees from the front and then lastly monitoring / evaluating performance.

Planning is basically the foundation of all functions. Management evaluates the current and future business position and makes choices. Objectives may be set, forecasts of key data, plans for finance, HR, etc. This process is continual and may change with the external environment. Plans can reduce failure, highlight problems and solutions. A contingency plan can be made in case of emergency too.

Organising is assembling all these resources. Management will determine the internal organisation structure and allocate resources. 

Directing is when management can oversee what’s going on and provide resources. May do so with motivation, like financial incentives, and communication, like praise. 

Controlling is the reviewing of the progress so far. This can be done by publishing financial and employee reports and looking at social performance too, like ethical choices and offering employment. 

The second stage, organising, mentions you decide what leadership style is appropriate. There are four leadership types - autocratic, paternalistic, democratic and laissez-faire.

Autocratic is where the leader makes decisions alone. They identity objectives and say exactly how to achieve them. This is a good type with unskilled workers and in crisis management and has little delegation / decentralisation.

Advantages include quick decisions, good for unskilled workers, everyone below leader is equal and no initiative is needed. Disadvantages include frustration at dependency at leader, no motivation for employees, may be suffocating and limit creativity, it is hard to operate when business grows.

Paternalistic is where the leader consults the workers with decisions and explains why we’re taking them. It is softer than autocratic. 

Advantages include employees are involved in decision making, feedback and answers, social needs are met, educational and lower turnover therefore. Disadvantages include employee dissatisfaction if wrong decisions are made and dependency on leader too.

Democratic is where the leader encourages workforce participation. Employees are consulted with decisions and responsibility is delegated. Communication and confidence must be high.  It encourages delegation / decentralisation.

Advantages include creative ideas, employees feel valued, motivated and able to utilise their capabilities. Disadvantages include too many ideas hinder progress, takes a long discussion and isn’t good for urgent decisions, employees may not contribute equally either.

Laissez-faire is the weakest leadership form where leaders offer support but rarely interfere with business, so employees make majority of decisions. 

Advantages include employee empowerment, high productivity and an innovative team. Disadvantages include employees may slack off, isn’t appropriate for unskilled people and it’s hard to pinpoint who to blame or praise.

There are influences on the style of management and leadership. These are tradition, the labour force, nature / timescale of task and manager personality. A business may have a tradition of particular management styles. The labour force may be unskilled or skilled. The nature of the task and timescale may


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