Money and Banking – Lecture 01 finance and banking

Thank you so much professor.

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The rich stay by spending like poor and investing nonstop while the poor stay by spending like the rich and yet not making any investment

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May your marginal benefit be more than your marginal cost

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Clear explination. Thank you Sir!

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Hello Professor, thank you for the lecrures.
I'm an undergraduate student, want to study finance from home.
Can you please tell what courses to start with?
I have finished Microeconomics already.

2.6. Handy’s best-fit theory identified four variables:

๏ Leader

๏ Subordinates

๏ Task

๏ Environment.

Handy said that each of these variables could be what he described as ‘loose’ or ‘tight’.
A tight leader is very autocratic. Tight subordinates like being told what to do and want to avoid

risk. They want repetitive tasks; tighter tasks are routine and well understood, relatively simple. And

a tight environment would be one where, perhaps, time is short or there isn’t much resource to go

around.

‘Loose’ would mean that the leader is very participative or democratic; subordinates want to

participate and contribute to solutions. The tasks are novel, complex, high risk; the environment is

one which is more generous in time and resources to allow complex tasks to be dealt with.

Handy said that provided all four variables line up, either all loose or all tight, things will work fairly

well. So an autocratic manager in charge of staff who want to be told what to do, doing routine,

repetitive tasks in an environment which is rather constrained will tend to work. However, he said

that once you get a crossover you are in trouble. If you put an autocratic leader in charge of highly

trained subordinates who are used to contributing towards solutions or problems, and who are

used to participation, and these people are given routine tasks with not much time to do them in,

then it’s not going to work very well. The subordinates will not get on with their leader; the

subordinates will not enjoy the task.

So when it comes to “How shall we manage?”, Handy is saying it depends on the situation and the

variables. The best way of managing is to make sure the leader, subordinates, task, and

environments all match. Note that this is quite different from saying that tight is better than loose

or loose is better than tight. What we are saying is that either will work provided the four variables

match.
2.7. Adair – action-centred leadership
Adair is associated with action-centred leadership.
How shall we manage? Well, according to Adair, it depends. On some occasions there may be a
very urgent task and we have to reduce our concern for individuals and the group and concentrate
on the task. Sometimes there may be crisis within a group; perhaps their leader has left, perhaps
there is disagreement within it, and then the manager or leader should pay more attention to
making sure that the group operates properly. Of course, sometimes the proper approach to
leadership will mean concentrating on an individual and seeing to their needs, perhaps like giving
advice or training.
2.8. Entrepreneurship and intrapreneurship
An entrepreneur is someone who is willing to make the effort and to take the risks to set up a new
business. Generally these people have strong wills, determination and a belief that they are right
and that the business opportunity they have spotted and are working on will be a success. They are
not always easy to get along with and often have an abrasive management style. Also, although
they are inspired by the excitement and challenge of starting a new venture they often become
bored with day-to-day management and administrative tasks. Professional managers, not
entrepreneurs, are often better a running a business once it is established.
An intrapreneur is an employee who promotes innovation and new business ideas within an
existing organisation. Intrapreneurs bear much less risk than entrepreneurs and investment capital
is supplied by the company that employs them. However, intrapreneurs are different from
traditional managers. For example:

There is a growing trend for companies to encourage employee entrepreneurship to discover
and exploit new goods and services. Particularly when a business is dealing with rapidly changing
products and services (such as in IT, pharmaceuticals, entertainment) new employees might have
better and more up-to-date ideas than established managers – who might be somewhat staid.
The following can encourage intrapreneurship:
๏ Let it be known that spending time on new ideas is welcomed.
๏ Remove administrative and cultural barriers. For example, make it easy for employees to meet
up with others to discuss and develop ideas.
๏ Give ownership. If employees have promising ideas let them present them to management
and fully involve the employee in developing that idea.
๏ Embrace failure. Nothing ventured – nothing gained. Many employee ideas will lead to
nowhere, but better floating ideas in the first place than having none.
Examples of innovation that arose from intrapreneurship:
๏ DreamWorks (a film production company) provides staff with scripting courses then
encourages them to present their ideas for new films to senior management.
๏ Google started as a search engine, but an employee had the idea to create Gmail.
๏ 3M – allowed employees to spend time on their own ideas. One discovered the technology
that led to Post-It notes.

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