IB Business Management SL 2.3.3 Leadership styles

[Maximum number: 2]

SGS

SGS operates a worldwide delivery business. SGS's aim is to deliver all packages on time, at low prices, anywhere in the world. Its Chief Executive Officer (CEO) Jean-Paul Lominé is known even by customers as an autocratic leader. Twice a year he sets prices and targets for costs and customer satisfaction.
S G S has three main competitors, Company A, B and C.

Table for Question 2.3.3—Leadership styles question 1 — IB Business Management SL

Primary market research revealed that customers value delivery on time, but many would pay higher prices for a more environmentally friendly service. It also showed that customers did not know whether SGS followed socially responsible "green" (environmentally friendly) practices. Customers also believed that the company's current autocratic leadership style did not fit with "green" practices.

Jean-Paul decided to change his leadership style from autocratic to situational*. He wrote a new aim for S G S : to make it the world's greenest delivery company. He ordered the Operations Department to recommend possible strategies. The Operations Department suggested two:
- purchase new, energy-efficient airplanes
- adopt new software to set fuel-saving air routes.

The Finance Department calculated that purchasing new airplanes would be a significant cost resulting in higher prices to customers. Tactically SGS would purchase a new airplane each time an existing airplane required significant expenditure to keep it flying. Adopting new software would require major computer upgrades, but the cost of the investment would be quickly recovered from fuel savings. The Marketing Director reported to Jean-Paul that if customers did not realize that SGS was now more environmentally friendly, they might think that it had only increased prices. Jean-Paul, however, refused to listen to the Marketing Director.

\footnotetext{
* situational: style of leadership that is also called situation leadership
}

Explain one disadvantage of Jean-Paul changing to a situational leadership style.

The central idea of situational leadership is that leaders should adapt their style of leadership according to the situation. There is no best leadership but rather that different contexts (or situations), require different styles of leadership. Possible disadvantages of Jean-Paul changing to a situation leadership style is that:
- He has a bias toward an autocratic leadership style and changing leadership style according to contexts is not always easy. In the stimulus, Jean-Paul decides he will become more democratic, yet ample evidence in the stimulus indicates that a democratic style is not innate to him.
- People in the organization have probably grown accustomed to Jean-Paul's autocratic style and might often feel disoriented were he to change style. In the stimulus, workers and managers accustomed to "fearlessly autocratic" leaders may not find having the authority to make decisions on their own that easy.
- A third disadvantage is that people at S G S may not know when the style changed and the degree to which Jean-Paul wants change according to different situations. Thus, some workers may perceive more freedom when Jean-Paul did not intend that.

Accept any other relevant disadvantage with explanation.
N.B. when the answer is theoretical, with no real application to the stimulus, award a maximum of [1 mark]. Also, it is possible for some candidates to be awarded [1 mark] for correctly explaining a disadvantage without making fully clear that they understand what situational leadership is. For example, a candidate could explain that a change in leadership styles can disorient employees used to a different style of leadership for [1 mark] without otherwise clarifying what situational leadership is.

Award [1 mark] for a response that indicates some understanding of what situational leadership is (though they must go beyond the tautology that situational leadership is when leaders adopt a style according to the situation). Award [2 marks] for an explanation of a disadvantage of Jean-Paul changing to a situational leadership style. Award up to a maximum of [2 marks].

IB Business Management SL 2.3.3 Leadership styles Question Bank

Exam points

2.3.3—Leadership styles question 1