Factors of production Land Labor Capital and Entrepreneur

The knowledge of business activity says that there are four major factors of production: Land, Labor, Capital and Business owner. The businessperson is ultimately accountable for managing and allocating all other factors of production. When a business activity is set up, the resources are usually allocated matching to efficient departments namely Production, Marketing, Accounting and Funding, and Human Resource. The larger a firm, the more practical departments chances are to get. What needs to be noted here's that the target behind dividing the whole company into departments is to ensure the efficient utilization of resources. Inside the older times, there was little idea of having a Individual Resource department in organizations. However, as the field of management sciences progressed, the function of Human Resource started out to attract attention and importance. It is because, a human reference, or employees in simple words, are as a lot of an important asset to a business, as any other set resource. It is these human resources that come mutually to work and contribute towards the useful management and utilization of all the resources and so the efficiency of overall organization.

While larger companies have began to identify the importance from it recruiting, smaller businesses still have a tendency to ignore the proven fact that the efficiency if their human being resource can be an ultimate contributor to the efficiency of the organization. They tend to ignore the undeniable fact that the efficiency of human resource is immediately related to real human mind, which must be motivated to be able to give the mandatory results.

As the field of recruiting began to gain importance, the subject commenced an important academics discipline and therefore fascinated attention from academic researchers. This led to the emergence of a complete new discipline of organizational habit. As simple as it seems, the field of organizational action consists of many complexities and shows how people, individual and groups take action within an business. It takes into account several factors that might have an impact on that efficiency of the labor force, such as inspiration, authority, communication, managerial skills, issue management, & most importantly, the entire organizational structure. When it comes to workforce management, out of all elements of organizational behavior, command has surfaced as the main one. This does not mean that all other elements have little importance. The reason why control is given more importance is that it's the first choice who supervises, manages and deals with all the behavioral elements pertaining to his labor force.

While in bigger organizations, the role of leadership can be taken up by departmental minds, supervisors and project minds, however, in smaller businesses, the entrepreneur himself can take the role of the leader. It is his management skill that directly contributes to how motivated and reliable his workforce is going to be. Generally, despite of a much smaller workforce, the employees in smaller businesses are located to become more mismanaged, inefficient and demotivated than those in much larger firms. This is because the businessperson ignores the need of supplying his workers, a feeling of importance, and he tends to maintain a far more autocratic control style. This often brings about demotivation and therefore, inefficiency of work force. Precisely the same problem was encountered by JayDee Consultancy, an accounting company positioned in Nashville, TN.

The Problem

JayDee Consultancy is a little accounting firm located in Nashville, TN. The firm deals in providing accounting and consultancy services to other businesses. JayDee Consultancy contains mainly 3 associates. Two of the associates, Mr. John and Mr. David are companions in the firm with both having an investment of fifty percent each and for that reason have an equally important role in decision making. The third associate, Mr. Robert is a Chartered Financial Analyst, and works in the company as an advisor and consultant regarding legal matters regarding investment consultancy, risk advisory, corporate legislation, accounting and taxation. Besides, Mr. Robert is the main one who mainly deals with the customers and it is working on the floor. The fact that Mr. Robert does not have any investment available and it is working as an employee, makes him second to both Mr. John and Mr. David. Although he's not a spouse in the organization in terms of investment, however, he's of enormous importance scheduled to his skills in the field and his expertise in dealing with complicated legal things. Mr. John is a Chartered Accountant while Mr. David is a Cost and Management Accountant; therefore both concentrate in different domains of Accountancy.

The biggest problem with JayDee Associates is usually that the firm fails to have a specific organization structure that may clarify job information, job features, and responsibilities and authorities of the three affiliate. Both Mr. John and Mr. David feel, that given their financial investments in the business, they have the best decision making expert in the company. As a result, they both always wrap up in a turmoil as it pertains to decision making. Not only this, nevertheless they also have a tendency to ignore the competence, specialization and importance of Mr. Robert in their firm. The problem and its implication with respect to the overall organizational habit of JayDee Associates is discussed the following


It is very important for just about any and every business, be it large or small, to truly have a clear and well identified organizational structure. It is this organizational structure of the firm that defines the responsibilities, tasks, and authorities of every person within that firm (Robbins, 2003). An obvious organizational framework also helps determining the corporate culture of the organization. An unclear organizational structure would mean a total mismanagement of the human being resource.

The problem with JayDee Consultancy is the fact that it fails to have a organizational structure. Both Mr. John and Mr. Robert neglect to respect and discover the knowledge and thoughts and opinions of other affiliates, especially their employee. Mr. Robert confirms it very hard as it pertains to convincing both companions that their decisions are in contradiction to what the accounting regulations and standard say or what the clients require.


The role of unity supports a great importance in organizational action. Unity is grouped into Unity of Command and Unity of Way. Unity of Command line says that an staff must be taking requests, and should report to only 1 specialist (Robbins, 2003). According to the idea of Unity of Course, each goal must be synchronized with one single plan only (Robbins, 2003). If unity of command word does not is present, this means that the subordinates will be remaining in distress about whom they should take orders from, whose decisions they ought to abide by, and whom as long as they are accountable to. This also ends up with communication gaps and misunderstanding of communicated information. Alternatively, if unity of direction is not existent, it could mean that the business fails to adhere to a unitary plan. This will result in delayed, and in some cases, inaccurate or wrong decision making. Coordination related problems will also be common in such organizations.

Unfortunately, both these ideas of unity are nearly nonexistent in JayDee Consultancy. Both Mr. John and Mr. David want to keep carefully the total control and expert to themselves. This leaves Mr. Robert in express of misunderstanding about whom he should be listening to. Due to insufficient unity of path, the firm does not make quick and accurate decisions as both partners have their own strategies to the goals. Furthermore, they often tend to disregard the suggestions and tips given by Mr. Robert.

Unity is also of value in an business because unity between top degrees of management acts as a role model for employees working down the span of control showing unity which actually helps bring about team working. In this case, if Mr. David and Mr. John face issues with each other frequently


The theory of organizational patterns says that anybody in the business must not give concern to his personal interest in the interest of business. Giving concern to personal benefits means that organizational interest has been compromised. This problem is encountered by JayDee Associates at a severe level. Both Mr. John and Mr. David want to keep the control in their own hands plus they both ignore the fact that it is their specific skills integrated mutually that will assist the firm to attain its organizational. If all of them will work unbiased of each other, the demand of these services will experience a razor-sharp demand


It is very important for a standard successful performance of an organization that its labor force, from top level to the low level, is focused on the goals, objectives, and focuses on it wants to achieve. The very first thing which is to be noted here's that this concentrate on focuses on means that the organization must be clear about what exactly would it want to achieve and in what span of time. With out a clear sense of course, the workforce, no matter how skilled it is, will be left in distress. Once clear and practical targets are arranged, it must be made certain that each specific works in the best interest to accomplish those targets without the deviance. The roadmap to achieve those goals must clear and coordination and adherence compared to that plan must be made certain at all times by every individual. Coordination is where JayDee Affiliates fails. Having less coordination among Mr. John, Mr. David and Mr. Robert contributes to mismanagement and inability to achieve goals. This also results the efficiency of Mr. Robert, who on a person level, will try his better to keep the business on the path to success, but cannot do much because of the fact that the each of the two lovers consider themselves too important to value anybody else's recommendations and knowledge.

Literature Review

As mentioned previously, the field of human resource management has captivated immense educational and corporate and business attention over a period. This asked a lot of analysts to explore the topic. Considering the fact that the organizational habit also handles human psychology and sociology along with classic commercial techniques, it seduced psychologists and sociologists to analyze about various methodologies involved with workforce management. Therefore resulted in a creation of totally new discipline of organizational habit.

Leadership and Motivation

Pertaining to the management problems faced by JayDee Affiliates, there are two institutions of thoughts which exist generally. The first school of thought suggests that leaders, especially in smaller organization, need to be more autocratic and a centralized form of commercial culture must be maintained. They claim that since there are less promotional chances in smaller companies, only those individuals work in small businesses, whose ultimate goal is to earn money. Such workforce is merely motivated by economic benefits and for that reason it isn't of matter to them even if they're not involved in decision making process.

Lepper, Greene and Nisebett (as cited at ChangingMinds. org) dispute that workers are encouraged through tangible rewards. They show willingness to perform well if tangible. Especially monetary rewards are associated with the tasks they are delegated. This implies, leaders need not use intrinsic solutions in order to encourage these workers. This further means that such workers need not be engaged in any type of decision making process as their performance is directly related to the economic incentives they earn.

Peter Ducker (1974) will take the previously talked about argument to some other level, by arguing that monetary rewards are the ultimate role player in motivating any kind of workforce. They are really so essential that no individual relations, sense of success, degree of importance, and decision making expert can compensate for economic benefits. He argues that no matter how progressive the corporate world develops, trade unions and workforce are always known to pressurize employers for higher earnings and income. He also promises that although self-motivation and other intrinsic elements are essential in workforce motivation, however, they can only be brought about through monetary rewards that are which the employees help.

The Monetary crowding out theory suggests that monetary rewards and punishments play a great role in strengthening or weakening a workers desire to execute efficiently. It implies that workers tend to be inclined towards jobs that have greater scope of economic or financial benefits. Likewise, they may consent to certain organizational decision because they dread that heading against them may bring about a monetary punishment for them for example, approaching overdue to office may cause deduction in monthly salary.

Various other research workers have arranged that since employees work to earn high incomes and all other desires and would like can be fulfilled by money only, leaders do not need to take their input in any kind of decision making. They have to simply transmit the instructions and associate economic rewards and punishments to the completion of task in order to get required results.

Taylor also laid stress on the idea that workers only be employed by financial benefits because almost all their wants are dependent on money. Therefore, they must be kept under frequent guidance. He argues that if financial benefits are subtracted from the incentive equation, and all the incentives are offered, then workers will never be inclined to work.

There is another set of theorists who are completely against the first approach. These theorists argue that although money can be an important motivational tool, however extrinsic rewards only cannot match the responsibility of motivating an individual to an level that he provides desired results. These theorists also claim that such workers desire a sense worth focusing on and achievement to execute well. Once their financial need is fulfilled they aspire for do it yourself actualization.

Lewin shows that autocratic and dictatorial authority style should only be utilized where there is short amount of time for decision making. Matching to Lewin, being constant with autocratic management style, eliminates the sense of imagination and development in the labor force and makes work monotonous and monotonous to them. This ends in severe demotivation as employees work with regard to getting the job done alternatively than gibing it their full energy to get the required results.

Elton Mayo argued that gratifying intrinsic wants of workforce is more important in order to activate their performance. Effective communication and strong marriage between company and employees is vital to ensure full usage of human source of information. He promises that professionals should ensure effective responses once they have communicated their instructions and information, to be able to achieve the desired results. Mayo's theory suggests that work force should get more opportunities in your choice making process so that they get a feeling of importance and owned by the organization. A lot more the own their work, the better they'll perform.

Maslow and Herzberg, both concur that it is more important to meet the internal needs of labor force than financial needs. They both claim that financial needs are only one time wants and once they are simply satisfied they aspire to fulfill their mental needs which rise to the magnitude of do it yourself actualization. In addition they claim that workers are more concerned of these job security and if indeed they fear losing jobs, their efficiency will be sacrificed even if they will be paid lucrative salaries. They claim that leaders and professionals must respect the self-confidence of their labor force.

Herzberg's theory suggests that apart from gratifying physiological and psychological needs, personnel look for doing more varied and challenging responsibilities. They also get determined when they are delegated jobs and are given more opportunities for decision making.

There is an added theory that creates balance in both these institutions of thought. Douglas McGregor classifies workers into theory X and Theory Y. He claims that theory X worker's avoid working and are not intelligent enough to use initiatives. They are not ambitious. In order to get the required results out of these, leaders and managers should appeal to them with financial bonuses and keep maintaining an autocratic style of control with them. On the other hand, Theory Y personnel are self encouraged. They look for challenging tasks that provide them sense of achievement. They don't prefer to be aimed and prefer to work on their own. Such personnel are creative and original and should be dealt with a more democratic design of leadership. They must be given tasks where decision making is included in order that they feel like they may be contributing to the corporation within an important way.

Conflict Management

Conflict management is another essential requirement of organizational habit that has seduced a lot of attention from researchers. It must be known that team determination and control and managerial turmoil are not really the only organizational crisis faced by JayDee Affiliates. Lack of discord management is another important issue for the business. In theory, there are five major ways of dealing with issues.

The collaborative approach states that a decision should be come to where the passions of both conflicting parties is considered. Although this process is ideal where connections are to be strengthened, however, when applying this approach to organizational procedures, it must be taken care of that the organization's interest must not be compromised to be able to satisfy the non-public interest of the individual conflicting gatherings. If a solution is exercised where the hobbies of both conflicting get-togethers are met however the interests and goals of the business are at stake, then such a solution should not be chosen.

Another way is the diminishing approach, which suggests that both conflicting parties reach a neutral and an unbiased solution where specific concerns of both the conflicting get-togethers is satisfied to some extent but not entirely. In an organizational perspective, this approach is more feasible when compared with its past counterpart as both conflicting parties compromise on some of their personal concerns in order to attain common organizational objectives to that they both agree. Both the conflicting parties must let go their personal interest with an extent such that the organization's goals are not compromised on.

The theory of accommodating shows that one of the conflicting gatherings offers up to the other in a way that the conflict is fixed in harmony. This is merely workable when one of the conflicting get-togethers realizes that he is on the incorrect side. This process is rarely appropriate within an organizational setting. Additionally it is important that the get together that is giving up on his part of the discussion must be taken up to speed with your choice of the earning party. The being successful party must be sure that there is no trust deficit among the conflicting gatherings.

Competing theory of conflict management can be used where obtaining goals tend to be important than personal interest and where quick decision making is necessary. This theory is based on the idea that a person may use everything in his / her power to be able to achieve the desired results. This process is only advisable to be used when a person is confident about the actual fact that he is on the right aspect of the discussion. However, the utilization of power mean that electricity should be exercised in that manner that other target like workforce inspiration should not be damaged.

Avoiding theory suggest that a turmoil may be prevented by postponing the issue to be reviewed at a later time or by side moving from the conflict. The challenge with this process is that it only gives a temporary means to fix the problem. Apart from this, postponing of important issues will not only delay the decision making process, but can also bring about making things worse.

The five ideas discussed earlier are generally used when solution is to be reached minus the involvement of any third party. However if both conflicting parties neglect to reach a solution using any of the five strategies, then mediators and arbitrators may be used to reach a conclusion. These mediators and arbitrators are a third party that listen to the quarrels and requirements of both the conflicting gatherings and then make them reach an decision that not only is neutral but also fulfills the necessity of common good. However, a drawback of this strategy is that it can very time consuming and may postpone the decision making process.


Amalgamating the authority, motivation and turmoil management theories discussed above two kinds of conclusions can be come to. One theory says that market leaders should be autocratic and really should not bother about taking inputs from their workers. Their employees are only worried about financial gains that is certainly what they benefit. Therefore, their thoughts and recommendations do not subject to the business. Furthermore, when it comes to discord a innovator must make sure that his passions are secured at best and he should do everything in his power to enforce his views.

On the flip area, a far more liberal and broad set of theorists shows that market leaders should maintain a democratic style. Individuals should be allowed to participate in the decision making process. Their viewpoints and suggestions must be respected plus they should get both intrinsic and extrinsic benefits to work. These theories suggest that it's important for managers to allow workforce have a sense of way and their self-confidence must be respected. When it comes to reaching a remedy to a discord, vitality must only be utilized where a director is self-assured that he's on the right side of the discussion. He must step away or at least show overall flexibility if that is in the best interest of the business as protecting the interest of the business is more important than quest for one's personal benefits.


It should be known that none of both set of theories have conclusively been proven completely accurate or completely inaccurate. Both have been pretty much applied in a variety of organizational settings and have produced which were sometimes extremely successful, while a total failing in another instances. The success and/ or failure of any theory will depend on how effectively it is applied combined with the nature of the business, its corporate culture and the mindset and personality of its employees.

In case of JayDee Associates, it is detected that Mr. Robert can be an expert and professional employee who is ambitious and seeking his better to produce good results for the betterment of the organization. His efficiency is only suffering as a result of the stubbornness of his bosses. A perfect solution to this problem would be that both Mr. John and Mr. David should value the actual fact that Mr. Robert is an expert in his own field and his views and recommendations must be well known. Even if the partner's feel that they cannot agree with Mr. Robert's recommendations as it will go against their targets, they should lend an ear to what he says and then take a decision that best suits their organizational interest.

As significantly as the discord between the lovers themselves can be involved, the associates should keep carefully the interests and goals of the organization to begin with. If either of the lovers realizes that he is at the wrong part, he should step aside. In other circumstances both partner's should have a dialogue in a peaceful setting so that the commercial environment of the organization is not disturbed.


JayDee Associates should ensure that their group has a specific and well defined organizational structure. Regulators, responsibilities, and tasks of each person must be well defined. It must be produced sure that Mr. Robert will not get confused with whose requests he should follow and whom he should report to. It will be more sensible if both associates divide the decision making roles matching with their own areas of expertise. Given that JayDee Associates is a tiny organization which not only comes with an advantage of a brief chain of control but also has a narrow period of control, if the firm fixes up its problems related to worker motivation, communication spaces, management styles and issue management, jayDee Affiliates will be on its highway to success.

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