business unit 2

• the main types of market are primary, secondary, tertiary and quaternary
• leadership


  the action of leading a group of people or an organization to achieve a goal
• management


  The process of dealing with or controlling things or people, the

  responsibility for and control of a company or organisation
• Autocratic leadership


  Autocratic leadership style is when management make decisions with little or no input from employees
• Democratic leadership


  Democratic leaders allow employees to help in the

  decision-making process
• paternalistic leadership 


  A leader who is being paternalistic makes the right decision for the employees that they are responsible for
• Laissez faire leadership

  In a business where there is a laissez-faire style of leadership employees can carry out activities and make decisions freely
• Benefits of autocratic leadership

  Clear chain of command in the

  hierarchy

  Works well in environments

  where clear directive leadership

  is needed

  Allows for quick decision-making

  Useful in stressful or

  life-or-death situations (public

  services)
• Drawbacks of autocratic leadership


  Can have a negative impact on

  employee motivation

  Ignores the creative solutions to

  problems, that the employees

  might have

  Relies heavily on the

  competency of the leader

  Creates a culture of dependency
• benefits of democratic leadership

  Employees are motivated as

  they feel valued and listened to

  Allows and encourages

  employees to grow and develop

  into their roles

  Suitable in situations where the

  employees are highly skilled

  Business benefits from the ideas

  of the employees
• drawbacks of democratic leadership

  Decision-making may take time,

  as employees need to be

  consulted on the decision

  making

  Depends on the skills and

  knowledge of the employees

  Staff may have their own agenda

  or be unreliable
• benefits of paternalisitc

  Loyalty from employees, who

  will feel protected and cared for

  Low rate of employee turnover,

  which will reduce recruitment

  costs

  Effective in environments with

  lots of low skilled and

  inexperienced workers, who

  require direction and guidance
• drawback of paternalisitic


  If the wrong decision is made,

  the employees can become

  demotivated and productivity

  will suffer

  Not using the skills and

  knowledge of the employees

  Still a dictatorial style of

  leadership where employees are

  told the outcome of a decision
• benefit of laissez faire 


  Suitable for creative

  environments such as artistic

  studios

  It encourages the employees to

  grow and develop

  It encourages innovation, often

  found in high-tech industries

  It allows for faster

  decision-making
• drawback of laissez faire

  Disadvantage; lack of

  supervision may lead to poor

  productivity and lack of

  motivation

  Can be regarded by employees

  and customers as avoidance of

  responsibility

  Can lead to blame culture when

  objectives are not met
• scientific decision making

  Scientific decision making is a method of making a decision based on

  evidence and quantitative data.
• intuitive decision making

  Intuitive decision-making is carried out using feelings, opinions,

  thoughts, hunches and qualitative information
• decision tree


  A business can’t afford to follow every option so it may use a decision tree to analyse the probability of a success in a choice of strategies
• entrepreneur


  a person who is prepared to take a business risk in return for a reward Business decisions therefore contain an element of risk and reward.
• risks


  If a business fails to plan (make decisions) for the future it may

  risk losing out to competitors
• rewards

  A business reward is a benefit gained as a result of good decision

  making
• uncertainty

  Even if the risk involves high risk and uncertainty it does not mean that businesses should avoid taking this decision, high-risk decisions usually involve higher potential rewards
• stakeholders


  anyone who has interest in the business and is impacted by it trades
• Internal stakeholder: owner

  the owner is the person who started the business
• Internal stakeholder: employee


  they work behind the business so are internal
• internal stakeholders: Manager


  work inside the business and are in charge of the employees on a day to day basis
• external stakeholders: competitors

  a rival business in the same industry
• external stakeholders: supplier


  are interested in the business to know whether they get paid
• external stakeholder: Customers 


  are interested in the business because they want to know whether they can get a good product for a low price
• External stakeholders: government


  are interested in the business because they want to know if they will pay taxes
• External stakeholders: local community


  Interested in the business as it may pollute the environment or cause noise with loud lorries