Investigative Report: Leadership Styles in SMEs - BUS308, Sem 1 2018

This report examines the impact of leadership styles on the success and failure of Small and Medium Enterprises (SMEs). It includes executive summaries of two articles, one focusing on Cadence Capital Limited and its leadership approach, emphasizing transformational and democratic leadership, knowledge sharing, and entrepreneurial skills. The other article discusses reasons for SME failures, highlighting poor leadership, insufficient capital, and lack of innovation, using the example of a failed Australian café to illustrate the importance of diversity and effective management. The report concludes that strong leadership skills, adaptability, and a focus on innovation and diversity are crucial for SME success, while poor management, lack of planning, and insufficient capital can lead to failure. Desklib offers a range of study tools and solved assignments to help students further explore these concepts.

Running head: CONTEMPORARY LEADERSHIP
Contemporary Leadership
Name of Student:
Name of University:
Author’s Note:

1CONTEMPORARY LEADERSHIP
Executive Summary of Article 1:
The aim of this report is to discuss about the specific leadership style which causes the success of
Cadence Capital Limited. The Cadence Capital Limited is an investment firm which invests in
listed equities. The paper discusses about different styles of leadership which are applicable in
different organisations. The role of a leader is very important for an organisation. A leader is
responsible for the development of the goals, the values as well as the vision and management of
the reasons for an organisation is crucial. There are several leadership styles which are visible in
different organisations. It is seen that different leaders employ different leadership styles in
several organisations depending on the specific situations which demand it. Transformational
leadership is one of the most important kinds of leadership where the leaders inspire their
followers also influence them in order to lead to the transformation of their personalities and
performances. Transformational leadership is the ideal form of leadership in majority of the
situations. This style of leadership has been seen to have a very strong link with the authentic
styles of leadership and these are very crucial. There are four well known theories of leadership
which include that of idealized influence, inspirational means of motivation, intellectual
stimulation as well as that of individual consideration. The concept of idealized influence is used
to refer to the ability of a leader to successfully impact the followers in a way that the changes in
their attitudes and behaviours can start to surface. All the four dimensions are found to be
extremely significant in case of a leader. These four dimensions help in honing the personality
and skills of a person. This style of leadership is very much important in case of a leader.
Transactional leadership helps in employing a specific command chain. This type of leadership is
crucial because the performance of an employee either good or bad and this employee is
punished or rewarded accordingly. This type of leadership is important because this is comprised

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of the interactions between the leaders and their followers. This helps in the proper and effective
mitigation of risks and helps in keeping the employees motivated and directed towards their
work purposes. In the transactional style of leadership is suitable enough as per the fast paced
dynamic environments at the cases where fast transactions take place. The transactions are seen
to be dependent on the short term planning and the goals which are short term. There is a certain
amount of pressure also which is created on the employees. There is also the exchange of task
objectives and there is the maintenance of discipline in the organisation. Autocratic is a more
extreme practice of transactional leadership where the leader practices extreme authority and
control over the followers. Autocratic leadership is not much supported in organizations. In this
style of leadership control is crucial and the margin of error in this circumstance is very less.
Autocratic leadership is concerned with making the team members perform to the best of their
ability and the decisions or power influences are not shared in detail with any subordinates.
Democratic style of leadership is basically the participative style of leadership which encourages
all the stakeholders of the organization to give their respective opinions. In the business
environment at Cadence Capital Limited, there is a high amount of risk in the business
environment. The democratic style of leadership is employed in this organisation where the
employees can worker effectively and problems can be avoided. The democratic style of
leadership actually focuses on the equality of the group and the leaders help in the provision of
guidance and also to the team members regarding the retention of the decision. The leader also
needs to possess a suitable amount of information which can be utilized to ensure that the best
possible outcome is obtained. There is a sense of equality which is felt in the style of democratic
leadership. The leader of the company has to take several vital decisions regarding the
management of the organisation and it has been seen that the democratic style of leadership is

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applied here. SMEs are very distinct in terms of the entities which they are and therefore there is
the need to have a distinct style of leadership. It has been seen after proper research that the
better performance of SMEs have been seen to repeatedly found to be very much strongly linked
to the entrepreneurial style of leadership. The four major dimensions of this specific vision
include that of vision, proactiveness, risk-taking and innovation. Innovation leads to the success
which enables an organisation by the introduction of newer and better products and services.
There are different specific aspects of the leadership style at Cadence Capital, which include
those of knowledge sharing, the highly motivated environment for employees and also the
entrepreneurial skills. The leaders of the organisation help in the sharing in the knowledge
sharing approach which helps in the upper management or in the junior level. The organisation
helps in the preparation of the employees for understanding the complexity of a specific situation
and taking tough decisions in unfavourable conditions. The Cadence Capital limited needs very
loyal employees as they have to deal directly with the clients as also the employees regarding the
future investments. Entrepreneurs require the capability of taking risks where other people are
not ready to do so. It is not crucial for a business to help in the initiatives and performance. In
this connection it has been mentioned that certain noteworthy traits of critical thinking,
optimism, tolerance of risk need to be possessed by the entrepreneurs. All in all it has been seen
that the leaders and their leadership has a huge impact on the all round performance of an
organisation.

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Executive Summary of Article 2:
This article discusses about the small and medium sized enterprises. It has been discussed
in this assignment that the major reason for the small to medium sized enterprises failing is
because of the poor styles of leadership. Throughout the necessary stages of the life cycle of a
business it is crucial to understand the financial needs and options that are utilized for the
purpose of change. There are several actions for the suitable management of the businesses
which are important for the prevention of failures. It can also be stated that business failure has
rthe capability of influencing the physical as well as the psychological health of the
entrepreneurs along with their respective families. Behaviour is responsible for the contribution
to both the success as well as the failure of the businesses. There need to be suitable actions to be
taken for the effective management of the businesses which are important for the prevention of
failures that might crop up. This is because of the reason that failures have the change of making
a business gain and bad reputation of the image which might result in a lesser amount of
customers. The identification of the behaviours which are related to the failure of the businesses
is extremely important. There are several other reasons as well which include the lack of
acceptance to a proper culture of innovation. There have been several companies in Australia
which have failed due to different kinds of reasons. It is desirable to have the financial needs and
requirements taken care of with respect to the different categories of change. Specific behaviour
contributes to both the success as well as failure of different business. The example of a
company which closed down in Australia has been cited which is the Forbes and Burton Café.
This was due to the refusal of the owner of the café in letting a black barista work. This puts a
focus on the concept of racial discrimination. It is the responsibility of the leaders in the business
to encourage diversity in order to gain a certain amount of reputation as well as clients. The

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concept of diversity is basically about understanding the differences in each person. Diversity in
the workforce should be allowed and in fact encouraged in order to allow the people work with
different kinds of people coming from different backgrounds. It is clearly understood that it was
the duty of the owner and leader of the Forbes and Burton Café to be aware of the accountability
in the entire work environment. Steve, the leader of the company was not able to entirely fulfil
his capabilities as a responsible leader. There have been certain reasons which have been cited
for the enterprise’s failure which are insufficient capital, poor management and leadership,
expansion in a very short span of time, failure in proper marketing and advertising, lack of
proper planning, underestimating competition and the unwillingness to delegate duties. It is
usually considered that one of the greatest challenges which the managers face in organisations is
to encourage a certain amount of diversity to gain proper reputation as well as suitable clients.
Diversity is comprised of every person’s responsibility to help follow the background of work.
The amount of diversity at work includes a certain amount of respect mutually, the resolution of
conflict, promotion on the job and major amount of exposure to the employees from different
cultures and backgrounds which help the businesses in gaining a proper amount of reputation.
The management of workplace diversity includes the provision of training to the employees so
that they can work with different sorts of clients and employees. Diversity is best learned by
following the behaviour as well as the actions of the leaders in their respective organisations.
The article also discusses the fact that successful entrepreneurs possess strong skills of leadership
and have the capability of dealing with clients by means of specific talents. These people are
creative, collaborative as well as confident enough to solve problems which help them in
overcoming any sort of obstacles which are encountered in their respective businesses. Therefore
it is desirable for the leaders to be always supportive and be proper decision makers. They also

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need to be honest to the customers regarding their specific businesses. The capability of
becoming a good leader has not been demonstrated properly by Steve in case of the café which
has been discussed above. There are certain reasons which have been attributed to the fact why
the small and medium sized enterprises fail. These reasons include those of insufficient capital as
the management of cash flow might cause a business to run out of capital. There is also the poor
level of management and leadership. Business needs to be run by means of effective
management and leadership which are done in order to increase the amount of profit and
productivity. Other reasons include too quick expansion, failure in the fields of marketing and
advertising, lack of proper planning, understanding relevant competition as well as the
unwillingness to delegate responsibilities.