Business_Relationships_Imposing_Great_Influences_on_Company’S_Operations_and_Profits

Business relationships imposing great influences on company’s operations and profits Introduction Mostly everyone dreams of establishing a company belonging to him. Once the dream really comes true, people will quickly find out that managing a company and making profits of it is more difficult issue rather than establishing. John has confronted many problems in managing his new established DLP Company which sells products related to milk. He finds business relationships are out of control and lead to a disorder in the operation of company. Now, he has a risk of being sued by his label supplier Phil. What more, as the owner of the company, the business relationship with employees is standoff. His requires and orders are lost power to be excused within company. John’s behaviours and operations have led to great damage of business relationship even though he just wants to make his company more competitive and profitable. However, incorrect management of business relationships including the business relationship with supplier Phil and business relationship with manger Freda, have make the company come into a mess. A bad management of business relationships causes the misunderstanding between company with his suppliers and employees and make the workforce efficiency and enthusiasm go down. So that it is a critical work of sustain a good business relationships surrounded the company. Literature review In this paper, the business relationships to be analysed are related to the scope of law and leadership theory. The business relationship with supplier is in the field of law while the business relationship with organisation’s managers is in the field of leadership theory. The business relationship between John and Phil will be analysed by the Common Law, and relationship between Johan and Freda will be analysed by Fiedler’s contingency model leadership theory. The first theory mentioned is the Common law theory. Common law judges sues of disputed parties by the similar tribunals happened in the past (Charles, 2008), so it is always called a case law or precedent. The working principle of Common law is that it is unfair to treat similar facts differently even if they may be on different conditions (William, 2006). The common law is charactered by the feature of precedent which decides the future outcomes. If a similar dispute has been solved in the past, the outcomes of the new ones can be expected. Only if the current dispute is fundamentally different from none case in the past, judges will have the authority and duty to make an outcome by law, this new outcome becomes a precedent (Stephen, 2007). The second theory used in the paper is one of many theories related leadership theory, called Fiedler’s contingency model theory (Fiedler, 1967). Fiedler’s contingency model theory claims that the leadership’s effectiveness is decided by two factors: leadership style and situational favourableness which is related to the organisation environment. The suitable leadership style should consider the organisation’s “least preferred co-worker” (called LPC), which is used to measure an individual’s leadership orientation (Schriesheim & Kerr, 1977). For example, a high LPC score indicates that the leader has a human relationship orientation, on the contrast, a low LPC indicates the leadership is a task oriented (Vecchio, 1977). Moreover, according to Fiedler (1981), there is on ideal leader, and only good or bad leadership exists. Both a low LPC and high LPC leadership can ensure a management success and effective if the leadership fit the organisation’s situation. General speaking, when an interval’s leadership is well in leader-member relation, a highly structured task, and high leader position power, that is the ideal organisation situation. Business relationship between John and Phil From the case, the business relationship between John and Phil seems to have a great potential of ending up. If the situation would not go worse, it will not happen, because the business relationship provides benefits for both sides of contract. For John, the business relationship provides his company with a satisfied label price and stable supply. What’s more, John has ended up contract with its former label supplier. If the business relationship with Phil breaks up, John’s company will face a condition that before find a new label supplier, the new products will have no label to use. Finally, according to the Common Law, if Phil appealed on the contract, John has to compensation. According to the Common law, the innocent party may choose to keep the contract and sue for loss caused by the breach. Ending up the business relationship has no good for Phil, too. We know from the context that Phil’s company is “business had not been good and John’s interest represented a major opportunity”. If the business relationship ends up, Phil’s company will face a tough condition that see a sale and profit decline. Even though Phil can reduce the loss by appealing to Common law, the compensation to gain is not much. As Phil has accepted a very low price in the contract with a hope to “getting an agreement first, and seek a higher price later”, Phil will not choose to appeal this issue to court. Who should be responsible for the worse condition of business relationship' John should be responsible for the majority this worse condition, while Phil is not out of responsible. First of all, refusing to excuse the contract has violated law. Although the new label may be not suitable, it is a bad result from lacking communication between John and Phil. Just to say “That will be Phil’s problem” is unfair. Above all, executing the contract obligation is a must. Additionally, John makes a big decision without a discussion with another company's manager. Before making an influenced decision, John is expected to discuss with Freda. Freda is not only the manager of the company, but also a profession in the diary industry. This decision is bound to lead to a bad result for John’s lacking professional knowledge. Finally, John and Phil are not honest during they cooperation. John and Phil have their different plans respectively and what’s more, their plan seems to be conflicted. On the one hand, John just wants to get the label price as lower as possible, and has no consideration on Phil. One the other hand, Phil first consideration is not to reach a reasonable and sustainable contract, but get an agreement first. So Phil accepts the low price which has little profit. To sustain a stable business relationship between companies and its suppliers, both of two sides should be honest and have more consideration for others. What more, keeping communication is critical for understanding and enforce the business relationship. Business relationship between John and Freda If we say that the Phil should not be out of responsibility of the worse business relationship between John and Phil, there is little to criticize for Freda. What we can say about John is that John is really not suitable to be a manager even though he has been a hard working man. According to Fiedler (Fiedler et al., 1976), the situation components including Leader-Member relation, task structure, and leader position power. Leader-Member relation means the extent of mutual trust, respect and confidence between leader and his subordinates. Task structure refers to the degree of the clarification of task and its obligation. Leader position Power refers to the power which comes from the leader’s position, personality, and professional knowledge (Schriesheim & Kerr, 1977). These conditions determines which leadership style should be taken to make the management more effective. Freda works as the manager of the company for many years, and under her management, the company’s organisation situation is more suitable for a human relationship orientation leadership. First of all, Freda is trusted and respected by employees in the company. When John makes the company in great mess, the employees choose to seek help from Freda and say “We can trust you, Freda. You always do the right thing”. Meanwhile, Freda trust and respected her subordinate. For example, employees who are not on work as expected will not be questioned and recorded. It is not necessary for them to find an excuse for their absent of work when they feel they need a rest or something else. From the perspective of Freda, it is “if they are not sick but do not want to be here then maybe they are not the sort of person who will fit in”. What’ more, the task structure in company is clear and workers and managers in different departments have established an effective means to work together and cooperation (Hooijberg & Choi, 1999). For example, when John makes an urgent meet with Dan, managers of other departments also attend this meeting with the invitation of Dan. Finally, Freda has established a positive leader position power. Employees are willing to conform and accept the order of Freda. When the company comes into a dilemma, employees come to Freda for help and say that” You always do the right thing”. Moreover, Freda is professional in management. She knows that money and compulsory order cannot stimulate employees’ motivation and devotion. The only way to improving the employees’ motivation and devotion is that letting the employees believe employees and company are not separated. So she encourages employee training and development, hold regular family picnics, and provide bonus for employees who think they are deserved by themselves (King et al. 1978). Freda has managed to make the company become the best place to work for, as the local community say “once you came to work at DPL you never left”. However, since John’s settling in and a series of performance, the organisational environment has been damaged. The bad result has not only made a great damage to the employees, but also made a great loss of John. John’s intervene to the organisation’s management is the cause for this disorder of the company. To recover the company from the bad condition, John should leave the management operation to Freda. Conclusion When operating a company, managers should cope with many different business relationships. How to proper manage these business relationships is a great challenge for managers. A bad management of these business relationships will risk all people related to the company including suppliers, managers, employees and owner himself. If you are an owner of a company, remember that do not try to intervene a well operated company as your subjective acquaintance. The future research should focus on the influences on organisation’s stakeholders. Now we are living a society formed by various companies. We are surrounded by companies and they provide everything we need such as food, job, and information. We might be a one of these victims of these companies which have handled business relationship improperly. Reference Charles, Arnold-Baker. (2008). The Companion to British History. London, UK: Loncross Denholm Press. Fiedler, F. E. (1967). A Theory of Leadership Effectiveness. New York: McGraw-Hill. Fiedler, F. E. (1981). Leader Attitudes and Group Effectiveness. Westport, CT: Greenwood Publishing Group. Fiedler, F. E., Chemers, M. M., & Mahar, L. (1976) Improving Leadership Effectiveness: The Leader Match Concept, New York: John Wiley and Sons Hooijberg, R., & Choi, J. (1999). From Austria to the United States and from Evaluating Therapists to Developing Cognitive Resources Theory: An Interview with Fred Fiedler. Leadership Quarterly, 10(4): 653–666. King, B., Streufert, S., & Fiedler, F. E. (1978). Managerial Control and Organizational Democracy. Washington, DC: V. H. Winston and Sons. Schriesheim, C. A., & Kerr, S. (1977). Theories and Measures of Leadership. Leadership: The Cutting Edge, Carbondale, 9 (45), 235-241. Stephen, P, Buhofer. (2007). Structuring the Law: The Common Law and the Roman Institutional System. Swiss Review of International and European Law, 24 (5), 141-146. Vecchio, R. P. (1977). An Empirical Examination of the Validity of Fiedler’s Model of Leadership Effectiveness. Organizational Behaviour and Human Performance, 19 (2), 180–206. William, Burnham. (2006). Introduction to the Law and Legal System of the United States. St. Paul: Thomson West.