Teaching guide: Management, decision making and the importance of stakeholders (podcast)

These podcast teaching guides cover topics from our AS and A-level Business specifications. You can download them below.

Podcast 2: Management, decision making and the importance of stakeholders

This podcast covers the specifications' second subject area, ‘Managers, Leadership and decision making’. It includes: Understanding management, leadership and decision making; Understanding management decision making; and Understanding the role and importance of stakeholders.

Transcript

Hello and welcome to the AQA AS and A-level Business podcast, supporting your teaching of our new specifications, available from September 2015.

We believe that our holistic approach to the study of business equips students with the academic as well as the practical skills they need to succeed – and helps the students of today develop the fundamental skills needed by the business leaders of tomorrow.

This podcast is the second of six, and covers the second subject area ‘Managers, Leadership and decision making’ in which we cover the following topics:

* Understanding management, leadership and decision making;

* Understanding management decision making; and

* Understanding the role and importance of stakeholders.

Topic one: Understanding management, leadership and decision making

A central part of this specification is decision making, so we want to consider early on what managers do and the decision making cycle. Managers at all levels and in all areas of the business are decision makers and so we want to consider how decisions might be made.

A useful starting point is the cycle of setting objectives, gathering data, analysing this data, selecting a course of action, implementing and then reviewing the outcomes. Of course life is often more complicated than this.

For example, when we gather data we may review our objectives, but in some situations may rely more on gut instinct than a data-driven approach.

Nevertheless this logical, sequential approach is a good starting point for decision making. You should be able to relate this to how students chose their subjects of A-level:

* what do they want to achieve long term?

* how did they find out about subjects?

* how did this help them decide which subjects to choose?

how and when will they review their decision?

The decision making cycle forms the basis of the specification both in year 1 and in year 2.

In year 1 each subject area of the specification is written in terms of objectives, data analysis and actions that could be taken. You can cover topics like: what are typical marketing objectives or what data will managers need to interpret and how will this affect their decisions?

In Year 2 this process is examined at a more strategic level: what does the business want to achieve? What is its strategic position at the moment? What are its strategic options and how are these implemented?

This means that throughout the course you should be able to relate your teaching to a particular stage of the cycle. This will help students to see where they are at any stage and give them a model that can help organise their analysis.

When considering managers you can highlight that anyone overseeing other people can be classed as managers – indeed, you can also use your students’ workloads as an example of the way we have to manage ourselves. Organisations are full of managers managing their team, their department , their section – all the way up to the Chief Executive Officer.

There is no need to draw any particular distinction between managers and leaders except to say that leading is one aspect of management.

Of course there are different ways in which managers can actually manage their team. Our teaching topics resource offers some really interesting frameworks you can use to explore this topic: just visit aqa.org.uk/teachingtopics

The Tannenbaum Schmidt continuum highlights that there is a wide range of styles from autocratic to democratic – for example managers may simply tell employees what to do, they may sell the idea, they may want to consult for ideas, they may discuss or they may delegate.

The Blake Mouton grid also highlights different styles: in this case it distinguishes between the extent to which managers focus on the task in hand, or the extent to which they focus on their people. Are they most concerned about the welfare of their staff or in getting the job done? Can they adopt a style where getting the job done is satisfying for their staff?

Students need to understand these models to be able to identify where a particular style might sit. However what is important is the discussion about why managers adopt different styles. Some influencing factors include:

* personality

* the nature of the task

* the people they are managing

* the time they have available

You might want to finally discuss… how much does it actually matter? Is a “tell” approach better than a “sell” approach? What impact does it have on the team and their performance? Does the style need to be adapted for different situations and if so how and why? Is the decision making style of a newly appointed manager facing a crisis likely to be different than that of a well established highly successful manager of a division doing very well with highly experienced and talented employees?

Topic two: Understanding management decision making

In this section we look in more depth at the nature of decision making and focus particularly on scientific decision making based on data. It may well be that many decisions are partly rational, partly experience based and partly emotional.

It is likely that the need and desire for data may be greater the more significant the decision – you may “risk” trying a new cake at Starbucks without much data but you will probably spend quite a lot of time worrying over the numbers before buying a house – even if you end up buying it because you like the garden!

The scientific approach is worth looking at because it brings out many of the issues in decision making. A basic decision tree provides a model to help students to analyse. It shows:

* the possible options in a given situation

* the costs of different options

* the different outcomes of a particular decision

* the likelihood of outcomes

It therefore highlights opportunity costs through alternatives, risk and rewards.

From a decision tree we can calculate the expected value of a particular decision and taking into account the initial cost of it we can calculate the net gain or loss.

Decision trees realise many interesting points for discussion.

* How do we know the different options available? Is there a danger we don't include the best option because we don't think about it?

* How we know the outcomes of a decision if we have not taken it yet? How do we estimate these?

* How do you know the likelihood of an outcome? Can we influence the probability of success?

At the same time a decision tree highlights that:

* decisions have a cost and you may not be able to do everything you want at the same time

* decisions bring outcomes and we will probably have to quantify these to gain investors support

* decisions have risks involved

* decisions will involve a degree of uncertainty.

In reality managers may not use decision trees but they bring out some useful analytical points we can use when considering the factors involved in decision making.

Of course there are many factors influencing the decisions that managers take. Students could look in the news to see the types of decisions being made all the time: organisations relocating, developing new services, recruiting, making redundancies, changing prices and so on.

These decisions will have been prompted by something: what made a manager decide to invest more in a promotion? Why did a manager decide to restructure the business? Students could consider the influences on these decisions. For example was it prompted by a need to respond to disappointing financial performance? Changing market conditions? New opportunities emerging? And given the different options available, what made managers choose one option rather than another?

Some factors could include:

* their attitude to risk – some of us would shy away from high risk decisions others would embrace them!

* the ethical aspects involved in alternatives – it may be some options are regarded as unacceptable in terms of the effect on the environment or the number of jobs lost.

resource constraints – we may not have the skills, the time, the finance, the capacity or the flexibility to undertake a particular course of action.

This is therefore a very important section as it forms the basis for much of students’ future study of business. It provides an invaluable framework for analysis, which can be built upon throughout the course.

Topic three: Understanding the role and importance of stakeholders

Businesses do not operate in isolation and, as such, decisions are not taken in isolation. Decisions taken will often affect many groups of individuals, or stakeholders. Stakeholders will influence what the business does, how it operates, where it is based and a myriad of other factors.

There are many different stakeholders who are important to business decision making and performance, including investors, pressure groups, employees, the government and customers. We want students to be able to recognise the existence of these groups, understand what they might want in any situation and consider their impact on the business and how the business might respond.

There will be many examples in the news of situations where stakeholders are involved in a decision. Students might consider:

* which stakeholder groups are involved

* what they want

* the extent to which their needs overlap or differ

* how managers may respond to them.

You might also relate to your own school or college and the staff, students, parents, community and other stakeholders involved in a decision there.

What is important in this analysis is for students to avoid just learning a list of stakeholders but to think carefully about the particular individuals and groups involved in a given situation and to realise that they will not all be equally important or powerful.

This is the perfect time to introduce stakeholder mapping. This activity allows students to analyse stakeholders in terms of their interest in a decision and their relative power. In any given situation some stakeholders may be more interested and more powerful than others. For example, redundancies will impact most on employees, whereas a proposal for fracking may lead to a strong response from communities and pressure groups. Stakeholder mapping makes students evaluate the position of different groups and makes students think whether this affects how managers might treat them.

Students should also consider how stakeholders might alter their position on the map. If a workforce joins a union, for example, it may gain more power. If a government introduces new legislation it may become more powerful. From a management perspective students should consider the extent to which managers might want to consider and meet the needs of different stakeholder groups. This may depend on factors such as the decision, the particular group involved and the mission and objectives of the business.

Thank you for listening to this AQA business podcast. You can find information on the specifications and the resources available to support your teaching of them on the AQA website: just visit aqa.org.uk/business