Unit 1/2

• What is Net Gain? How is it calculated?

  The value to be gained from taking a decision

  
  

  = Total expected value of each outcome (good and bad) - costs associated with the decision
• What is Expected Value? How is it calculated?

  The financial value of an outcome

  
  

  = Estimated financial effect x its probability
• What is a decision tree?

  A decision tree is a mathematical model used to help managers make decisions

  It uses estimates & probabilities to calculate likely outcomes

  It also helps businesses decide whether the net gain from a decision is worthwhile
• What is a scientific choice in decision making?

  What are the benefits and drawbacks of it?

  Scientific choices are based on data and analysis

  The downsides are that it's time-consuming and costly. It can also be biased and there's no guarantee of the right decision

  The upside is that it's increasingly common and automated, supported by Big Data and data analytics
• What is a hunch in decision making?

  What are the advantages and disadvantages of it?

  A hunch is based on intuition, gut feel and experience

  The key benefit is that it's quick

  But it's hard to justify for business decisions involving significant risk
• What is consultation?

  Talking to interested parties to explain developments & issues, this is done to gather views & ideas which can contribute to the communication process
• What is the importance of profit? (4 points)

  - Reinvestment (to improve service, quality, machinery etc)

  - To pay dividends (pay shareholders, help shareprice and investment)

  - To pay costs

  - Motivation (profit payment scheme)
• What is the 4th (right-most) section of the Tannenbaum Schmidt continuum? What does the manager do here? What style of leadership is this?

  This is the 'share' section.

  The group can make their own decisions here, following the defined limits from the manager, allowing them to develop.
• What is the 3rd (from the left) section of the Tannenbaum and Schmidt continuum? What does the manager do here? What style of leadership is this?

  This is the 'consult' section.

  This is a bigger section. To the left-side of it, the manager presents ideas and invites questions. To the right side, they present the problem, get suggestions and then makes a decision.

  
  

  This reflects a paternalistic-style of leader / democratic towards the right-side of the section.
• What is the second (from the left) section of the Tannenbaum Schmidt continuum? What does the manager do here?

  This is the 'sell' section.

  Here, the manager still decides what to do, but sells the subordinates so they are motivated to get it done.
• What is the first (left-most) section of the Tannenbaum Schmidt continuum? What does the manager do here? What style of leadership is this?

  This is the 'tell' section.

  The manager, singlehandedly, makes a decision and announces it.

  
  

  This reflects an autocratic style of leader
• What is the Tannenbaum Schmidt Continuum?

  A 'continuum' of leadership behaviour.

  It is a range of action related to the:

  - Use of authority by the manager

  - Area of freedom by the subordinates

  
• What style of leadership is Theory Y? What does the manager assume of their workers when they are in this category?

  It is a democratic approach in which the manager delegates responsibly, involving staff much more in the decision making.

  
  

  The manager assumes the workers:

  - enjoy work and seek satisfaction from it

  - they will organise themselves and take responsibility if trusted to do so

  - wish to, and should, contribute to decisions.
• When can a Theory X leader be useful?

  A Theory X approach can be useful in a crisis situation or in organisations with many changing or part-time workers who need clear instructions and clear supervision.
• What style of leadership is Theory X? What does the manager assume of their workers when they are in this category?

  It is an authoritarian approach where the manager tells workers what and how to do things.

  
  

  The manager assumes the workers are:

  - lazy, dislike work and are primarily motivated by money

  - need to be supervised

  - have no wish to make their own decisions

  - lack ambition
• What is McGregor's leadership spectrum?

  A spectrum between 2 extremes, Theory X and Theory Y. Those 2 types are what the majority of managers' approaches to workers can be grouped into.
• What is the name of the Blake Mouton leadership style that has a high concern for both people and production? What are some of their qualities?

  The Team Leader

  
  

  They believe empowerment and communication are very important.

  They are very democratic.
• What is the name of the Blake Mouton leadership style that has a moderate concern for both people and production? What are some of their qualities? In what kind of groups can this leadership style work?

  The Middle of the Road leader.

  
  

  They want to be liked and go with the majority. They feel group dynamic is important and are quite democratic.

  They operate well in informal groups.
• What is the name of the Blake Mouton leader who has little concern for production but high concern for people? What are some of their qualities? In what kind of situation does this leadership style work?

  The Country Club leader

  
  

  They want to be liked and only have the feelings and emotions of employees in mind.

  This leadership style only works in a business when it is already profitable and has little competition.
• What is the name of the Blake Mouton leader who has low concern for people but high concern for production? What are some of their qualities?

  Authoritarian

  
  

  They adopt an autocratic leadership-style, expect compliance, are controlling and exercise power and authority.

  It is also known as 'produce or perish
• What is the name of the Blake Mouton leader who has low concern for people and production? What are some of their qualities?

  They are called impoverished leaders

  
  

  They usually only ever do enough to keep their jobs, but don't go above and beyond. They are also known as the 'caretaker' leadership style.

  Most people who adopt this leadership style are only waiting for retirement.
• What does the Blake Mouton Grid show?


  It shows where a leader is depending on their concern for people against their concern for production.
• What is the unit cost? How do you find it?

  Unit costs means cost per 1 item

  = total cost / units of output
• What are some characteristics of a Laissez Faire leadership style?

  Minimal input from leader ; staff essentially run the business

  Lacks coordination, often viewed as weak

  - effectiveness depends on staff (useful if staff are experienced and skilled)
• What are some characteristics of a Paternalistic leadership style?


  Parent-child relationship

  Wants respect & opinions of subordinates but will make own decisions

  Workers are closely supervised, no delegation

  Leaders try to look after the needs of workers

  Motivational because workers feel their needs are being considered
• What are some characteristics of a Democratic leadership style?

  Decisions are always made by a majority consensus

  Acts on advice & opinions of subordinates

  Good for morale building and can lead to better decisions if others have experience you do not
• What are the characteristics of an Autocratic leadership style?

  They give out orders, do not delegate and have strict control

  - They are useful for when rapid decisions / changes need to be made.
• What does the role of manager include?

  - setting objectives

  - analysing

  - leading

  - marketing decisions

  - reviewing
• What are the 4 leadership styles?

  Autocratic, Democratic, Paternalistic and Laissez Faire
• If the base year's house price is £200,000, what is the index number in a year where the price is £230,000?

  115

  (230 / 200) x 100
• How do you calculate an index number?

  Index number in Year Y = (Data value in Year Y / Base Year value) x 100
• What is an index number?

  - A way of expressing data & comparing / contrasting information

  - It reflects price of quantity compared to a base value

  - The base is always 100

  - Therefore, the index number is expressed as 100 x the ratio to the base value
• What structure do we use when writing a 25 marker conclusion?

  AJIM

  Answer the question

  Justify your reasons

  It depends on

  Most importantly
• What does floating on the stock market mean?


  When a company first goes onto the stock market
• What is Ordinary Share Capital?

  Money given to a company by shareholders in return for a share certificate that gives them part ownership of a company. It is also known as equity or risk capital.
• How do you calculate Share Capital and Market Capitalisation?

  Share Capital:

  The number of ordinary shares (originally issued shares) * The price they were issued for

  
  

  Market Capitalisation:

  Number of originally issued shares * The new share price
• When might shareholders not get dividends?

  - If the profits are getting reinvested (which is decided at AGMs)

  - If the company is making a loss (needs to pay off debts
• What influences share values?

  - Performance of the company

  - Competition

  - Proposed takeovers

  - Investors' expectations and response to rumours

  - Social aspects (trends, PR etc)
• What rights do shareholders have?

  - They can vote at Annual General Meetings

  - They can inspect company records

  - They are entitled to receive a portion of dividends
• What are the 8 kinds of non-profit organisations?

  - Charities (e.g - Oxfam)

  - Trusts (e.g - the National Trust)

  - Social Enterprises (e.g - The Eden Project)

  - Mutual Societies (e.g - Nationwide)

  - Pressure Groups (e.g - Greenpeace)

  - Cooperatives (e.g - African coffee cooperatives)

  - Trade Unions (e.g - Unison)