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Module Assignment – Leadership & Management Theories

Evaluation of the application of leadership and


management theories in Don Caribe B.V.

Mavy Lena Aguilera Sánchez

R1805D5213906

Leadership and Management Theories BS4S16

Tutor: Cornelia Nicolaou

December 30th, 2018


Index

Introduction .................................................................................................................. 3
Main Body .................................................................................................................... 4
I- Brief characterization of Don Caribe ..................................................................... 4
II- Management Theories .......................................................................................... 5
II.1- Classical management .......................................................................................... 5
II.2- Neoclassical management .................................................................................... 7
II.3- Modern management ............................................................................................ 7
III- Application of management theory in Don Caribe ............................................. 8
IV- Leadership Theories ........................................................................................ 11
IV.1- The Skills and the Style Theories of Leadership ................................................ 12
III.2- The Situational and the Contingency Theories of Leadership ............................ 13
IV.3- Contemporary Theories of Leadership .............................................................. 14
V- Application of Leadership Theory in Don Caribe: Donald Bakhuis .................. 14
Conclusions ................................................................................................................ 16
References ................................................................................................................. 17

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Introduction

“Is a manager a leader or is a leader a manager?” is the very first question our tutor made to us
two months ago. Since then I have been trying to find the best answer for it and I believe that
the best way to find the answer is with a practical example using the company where I work:
Don Caribe B.V. Don Caribe is a young growing business in the Caribbean directed by creative
entrepreneurs in the tourism sector.

This essay aims to critically evaluate the development of management and leadership theories.
Furthermore, we will analyse which management approach fits with the management strategies
used in Don Caribe B.V. Moreover we will explore which one of the leadership theories is related
with the leadership style of one of the directors in Don Caribe.

In order to accomplish that, we are going to start by contextualizing Don Caribe B.V. We are
going to make a brief description of the organization and its directors. In the second part, we
will conceptualize management, and then we will analyse critically the evolution of management
theories. At that point, we are going to see which one of those theories can be applied in the
company Don Caribe and how it fits. After that we are going to analyse leadership and how a
leader should be according to the different leadership approaches. Finally we will examine
which philosophy can be associated to a leader in Don Caribe, and how the applies.

In order to make a proper practical analysis, minutes from the official meetings at Don Caribe
where used, as well as interviews to member of the staff.

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Main Body

Whenever you think in the Caribbean, you picture in your mind beautiful beaches, with a brilliant
blue water. You picture yourself swimming, snorkelling, diving, and discovering the rich
environment in the ocean. All of that it can be found on Curacao which is a very small island in
the Caribbean that belongs to the Dutch Kingdom. The tourism sector, according to the Curacao
Tourist Board (2017, 2018), contributes to the island economy in approximately 20% of the total
economy; and it impacts every economic sector on the island. In fact the 2017 report declares
that in 2016 the direct economic impact was quoted at 508.14 million USD and the indirect was
at 323.6 million USD. Moreover the tourism sector is a substantial source of employment on the
island, sustaining in the last few years around 23% of the jobs in a direct or indirect way (Croes
et al., 2015).

I- Brief characterization of Don Caribe

Between the most popular touristic centers in Curacao there is Mambo Beach Boulevard which
is located in the south of the island. There it can be found shops, restaurants, coffee shops,
and the beach. Between the different shops, there is Don Caribe B.V., a souvenirs store that
combines unique handcrafted souvenirs, artisanal coffee, healthy food, cocktails and cigars.
Don Caribe is a young growing company that started operating in the last few months of 2016.
One of its owners and managers is Kendrick Bakhuis, a young bold man and his partner is his
father, Donald Bakhuis, who at the time was the director of D&J Corporation.

Don Caribe, started as a small souvenir and coffee shop in Mambo Beach, but after a year they
added to their products Cuban Cigars and six months later they were able to absorb D&J.
Thanks to that, nowadays the company has two shops: the one in Mambo, and another one in
the Mega Pier, strictly for the cruise visitors; in addition, it provides historical walking tours
around the town. As a young company its policies are being created slowly. In fact at the very
beginning the business worked only with the owners and an intern, and now we are a team of
eleven people.

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II- Management Theories

According to Cole & Kelly (2017), there are many definitions of management, however are
based on the classic concept given by Henri Fayol, who stated that “to manage is to forecast
and plan, to organize, to command, to coordinate and to control” (Fayol, 1916, cited in Cole &
Kelly, 2017). This definition is simple, but still covers almost all aspects of management. In fact,
Cole & Kelly (2017) summarize all the concepts by explaining that management is the process
of shaping and arranging, tangible and intangibles resources, in order to reach the goals
established for an entity.

McGraw and Hill (greatvideosources, 2013) considered the management thought can be
divided in four approaches: Classical, Behavioural, System and Contingency. However there
are other classification, for example the one form Hitt, Michael A, Middle Mist, R Dennis and
Mathis, Robert L. (1979) cited by Kitana (2016) is a worldwide accepted and groups the theories
according to their ideologies and contribution to the management studies. The three major
groups are: Classical management, Neoclassical management, and Modern Management.
This two analysis, agree that the Classical approach, is the beginning of management studies.
However, despite McGraw and Hill (greatvideosources, 2013) do not consider in their analysis
the Bureaucracy approach, the classification that Kitana (2016) cites, does consider it as
Classical Management Theories, along with the Scientific management and Administration
management approaches. Both approaches consider the Behavioural theory. Although Kitana
(2016) in the Neoclassical Management approach, includes as well other similar theories like
the Human Relation and the Social Psychological Theories. Finally in the Modern Management
Approach it can be found both, the System and Contingency Theories. In this essay, I am going
to use the classification Hitt, Michael A, Middle Mist, R Dennis and Mathis, Robert L. (1979),
since I found it is more complete.

II.1- Classical management

This approach emerged in the late 1800, when the Industrial Revolution boosted the economies
of Europe and America, presenting new challenges for manage a larger amount of resources
in a larger organization. The need to organize materials, tools, people and schedules arises,
and managers started to study the best way to solve them. In fact, the classical thinking was
developed by active managers, trying to find a better solution in order to increase productivity

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(VLE Topic 1 - Overview, p.2). The most relevant figures were Frederick Taylor, Henry Fayol
and Max Weber.

With his book “The Principles of Scientific Management” (1911), Taylor coined the concept of
scientific management. He puts his efforts on finding approaches that would increase workers
performance, resulting in more efficiency (Kitana, 2016). He basically wanted to discover the
best way to finish a productive process and he based his theory on the job segmentation,
training and specialization of workers, and concrete incentives.

Taylor´s principles constitued the base for next theoricist such as Frank and Lillian Gilbreth and
Henry L. Gantt (Cole & Kelly, 2017; Kitana, 2016). Abdelkarim Kitana (2016) summarizes
Taylor´s approach in four principles, that essentially are as follow:

 Scientific method to standardize the best technique for performing a task


 Enrol the employees and assigning them to do the task that they can make the best and
they will be responsible for it
 Train the worker in order to execute the task in the most efficient way
 A system of incentives, so the employee will work harder to reach a better outcome, which
would be translated into higher profits for him and for the manager as well.

On the other hand, around the same time, Henry Fayol developed his administrative
management theory. He focused in managing the organization as a whole, instead of just the
workers, like Taylor did. Fayol established 14 principles, and like Taylor´s approach, he took
into consideration the division of work as a way to impulse efficiency. However, his vision was
more general, so he was able to see the need to keep that efficiency in the long term, and his
principles were more explicit. For instance, his approach enhance not only incentives, but also
stability, team work, and initiative in order to maintain the employees loyal to the organization.
Fayol focused as well in the directive area, and set the importance of Unity between the
managers, so the entity will have all its function working to the same direction. His approach
was later enriched by authors like Brech, Lyndall Urwick, Mary Parker Follet and Chester I.
Bernard.

Bureaucracy theory was formulated by Max Weber during the late 1970´s. As Cole, Kelly and
Kitana (2017; 2016) explained, bureaucracy is about dehumanize the organization, making it
easier to function without the emotional component. The theory was based on a series of rules
and policies and a clear hierarchy of authority. This way Weber was able to guarantee that each

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job has its own responsibility and each task is assigned to the responsible for it, so there were
neither overlaps nor confusion about the job, which increases the productivity, by being able to
predict the organizational behaviour. In other words, there is no dependence between the
company and the employee, if the worker decides to leave, the entity will continue growing,
regarding who is the replacement. However, the extra policies and rules, lead to excessive
paper work which slow down the whole process, making it inefficient. Moreover, employee´s
performance suffers due to the lack of importance given to their creativity, their own
development, which affects their initiatives and their interest about the organization.

II.2- Neoclassical management

The Neoclassical management approach is more human oriented and it focus in the behaviour
and social psychological theories. Authors like McGregor, Hertzberg, Maslow, Hawthorne,
McClelland, Locke, among others made their contribution to the behaviour approach (VLE Topic
2 - Overview). They all agreed with the importance of the motivational factor as the determinant
to make the personnel work harder. They used different scientific techniques, for instance, they
made social experiments and developed different theories to explain motivation. However
motivation is different for each individual, there is no standardized theory that will suit every
circumstance.

II.3- Modern management

The modern approach realizes this limitation, and was able to view the organization as a whole,
instead of basing its theory just on the rational-economic view or just the social-person view like
the classics and neoclassic did. Modern studies agree that each organization has its
particularities, and relies in their workers, with their very own desires, capacities and goals. That
means that the managerial strategies will have customized principles according to the
characteristics of the company and its employees (Kitana, 2016). Into the Modern Management
theory, two approaches were developed: the Systems Approach and the Contingency
Approach.

The system approach, sees the organization as a whole unit that belongs to an external
environment. The president of Marshal Industries, Robert Rodin (greatvideosources, 2013)
said: “…this requires everybody to work together like an orchestra or football team, where each
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person has a job to do, but no one job is more important than the other”. This implies that the
entity is a system where each department is crucial to the business´s success, and because of
that, the importance of communication between departments, workers, managers, and other
companies, is raised.

The contingency approach, considered as “an outgrowth of system´s approach”


(greatvideosources, 2013), is very similar to this last one, but it adds the circumstantial element
with the phrase “it depends”. That expression requires that the theory identifies the causes and
consequences of managerial decisions (greatvideosources, 2013). This approach concentrate
in the dependence of several variables in the managerial strategy, assimilating concepts from
other management thought in order to solve real life situations.

III- Application of management theory in Don Caribe

The managing techniques in Don Caribe B.V. have changed with time, according with the
circumstances. For instance, during the end of 2016, beside the directors, the only worker was
a Dutch student during his internship. The goal back then was to set up the shop. According to
an interview made to Ricky, the intern student, for the first months of his internship he helped
setting the shop up: organizing the products, arranging the furniture, painting the shop. The
store opened its door on November, and for those last two months of the year, the behaviour
of the sales made possible for the manager to start drawing a strategy in order to improve the
business.

Kendrick, after seeing that the sales were really low, decided to diversify products. He made a
deep study in order to find new suppliers and increase the variety of souvenirs offered. During
the year 2017, his managerial strategies can be classified into the neoclassical approach of
Human Relation, Behavioural and Social Psychological Theories.

Since the very beginning the manager reinforced the team spirit: every week there were a team
meeting, when there were discussed the relevant issues and the upcoming plans, as well as
the team ideas; this way each worker felt as an important part of Don Caribe. This strategy fits
with the theory of Howthorne, who made social experiments during 1920´s and the beginning
of 1930´s. As a result of his experiments he concluded that people, like animals feel the need
to belong to a group, and that is a motivation that can be as significant as financial incentives
(VLE Topic 2 – Overview, p-9). Moreover, the managerial strategies that were used, mostly

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during the second semester of 2017, are a good fit with the few Content Theories. Following
we are going to analyse them in order to see how they fit.

The Maslow´s theory of motivation bases in a series of personal needs that he ranked according
its significance. The most important ones are the basic physiological needs, then the need for
safety, the belonging, the self-esteem of others and respect, and finally the self-realization. The
following figure represent his theory in a more visual approach.

Self fulfilment

Esteem

Belonging

Safety, Security

Phisiological

Figure 1: Maslow (1954) Hierarchy of Needs. Source: based on Figure 2.3, VLE Topic 2 –
Overview, p-10

Kendrick´s management strategy fit with this theory because he allows his workers to serve
themselves anything they want from the menu at cost price (Procedures Manual, 2017).
Moreover, even if it was not stablished, the directors always committed with the staff by helping
the employees who do not have how to commute. In addition, every week is the Happy Hour at
the shop, which is a friendly reunion among the employees, strengthening the team spirit.
Finally during last year, we had in our team four more interns, whose assignments from school
were related to the company. The most of them made significant contribution to the business:
thanks to them, the marketing strategy improved, the menu was perfected as well as the
presentation of the store.

Moreover if we apply the McGregor´s Theory X and Theory Y in Don Caribe management, we
will see that the company always tries to have among its employees positive people that enjoy
to work and accept responsibilities according to their capacities, which is characteristic of the
Theory Y. However, the Theory X (about passive employees) doesn´t fit with the company
policies. In fact if a worker doesn’t show ethic, good attitude and is lazy, will be eventually
separated from the team. This is related as well with the Argyris´ Immaturity-Maturity Theory.
In fact the manager always tries to line up each worker interest with the one from the

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organization. For example, every week he update an official schedule, where he arranges the
workers shifts according to their personal needs. If for any reason an employee cannot comply,
according to the Procedures Manual (2017) has to inform with enough time, and helps if
possible the manager to find a replacement. Proving that company goals and employees goals
can be together, and as a result there is a sense of cooperation and loyalty among the team.

All the previous strategies, which started to being used during last year, are still working, but
they are all focused to the sales department, due to back then was the only department in the
company. This year, however, the administration control started and a back office was created,
managed by Donald Bakhuis. Now, with two managers, Kendrick and Donald Bakhuis, new
strategies were applied. Those strategies I would fit them into the contingency approach,
because the strategies now are more dynamic, according to the situation and they doesn´t focus
anymore just in one department, but they are being applied in the company as a whole, giving
its relevance to every department.

For example starting on January 2018, the company opened a small shop in the Mega Pier of
Curacao, which means that the resources needed to be allocated in a different way. On the
other hand, during the first semester, the administration department, was in charge of recording
all the financial operation from both years 2017 and 2018. In order to register properly 2017,
the manager facilitated the information needed. But with the recording of 2018 a new issue
arises: the majority of the cash payment transactions are conducted in the shop, the products
are delivered to the shop, with the invoices, so the administration department received those
document after a month, and sometime, some of them were lost. The management came up
with a simple clever idea: a folder. An orange folder was put in the shop and every document
had to go in there, every week the manager picks up the folder and delivers at the back office.

Every two weeks it is scheduled an administration meeting, where the specialists give a
feedback to the managers, and keep them updated with the process. In those meetings,
employees make suggestions to improve different areas of business, like controlling cash and
inventory. The different decisions are made during those meeting and recorded in the meeting
minutes. If the issue has to do with the shops, the managers will gather the administration
department with a designate specialist from each shop and together as a team, the solution will
be found and as well recorded, in order to translate it into a new procedure.

In the second semester of 2018, the main focus was directed to inventory control: a whole new
system was created. The small shop in Mega Pier, became a larger one, and the need of control
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increased. The managers trust in their team, and now their strategy is to coordinate the
necessary actions in order to facilitate the team work. They finally have found themselves in the
position of being able to delegate more, and by doing so, they can concentrate in what is next
for the company.

An interest fact is that Don Caribe is also a multicultural organization, since it has people with
different nationalities and cultures, being this characteristic one of its greatest strengths. Its
managers are from Curacao, but they have studied and lived in other countries like United
States and Holland. Its employees are from Holland, Dominican Republic, Venezuela, Cuba
and locals as well. Due to this diversity, in the company can be heard people speaking in Dutch,
Spanish, English and Papiamentu (the native language from the island), however, the official
language set in Don Caribe is English. Having in the organization such a cultural diversity, there
is the need of a strong, understanding leader that will keep us working together taking
advantage of our cultural and personal differences.

IV- Leadership Theories

But is a leader a manager? Is very popular the idea that those two words are synonyms, but is
not like that. Many academics have theorized about the distinction between leaders and
managers. For instance a famous quote by Tom Peters is: “Management is about arranging
and telling. Leadership is about nurturing and enhancing” (Schedlitzki & Edwards, 2014). But in
my opinion, a good leader is more than what he said. I agree with the UCLA professor Murray
Johannsen when said: “Managers have subordinates; leaders have followers” (Schedlitzki &
Edwards, 2014). With this quote, Johannsen takes into consideration, not only the leader´s
ability to influence on people, but also the followers perception of the leader. That means that
the worker stops being a subordinates and starts being a follower when he feels happy about
doing what the leader what him to do, and he feels like he is collaborating with the leader in
order to make the business grow. The worker feels as an essential part of the company and no
longer as a replaceable resource.

According to Peter Northouse (2012, cited in VLE Topic 6 – Overview, p.10) leadership studies
began around early 1900s with the Great Man Theory. This philosophy believes that leaders
are people who have born to be leaders; they have a set of natural characteristics that cannot
be reproduced by everyone. This idea set a base to the Trait Theory of Leadership, which

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selected five attributes that a leader must have that were summarized by Northouse (2007,
cited by Schedlitzki & Edwards, 2014) as: intelligence, self-confidence, determination, integrity
and sociability. Moreover, Professor Michael Zigarelli (Christianity 9 to 5, 2013) considered that
other philosophies followed the Great Man and the Trait theories, which can be summarized as
follow:

1. The Skills Theory of Leadership


2. The Style Theory of Leadership
3. The Situational Leadership Theory
4. The Contingency Theory
5. Contemporary Theories in Leadership

IV.1- The Skills and the Style Theories of Leadership

While the Trait approach of leadership focused in attributes that a person should have in order
to be a leader, the Skills Theory was dedicated to his practical abilities. Those capacities were
learnable, so more people have the potential to be a good leader, they just needed to learn the
three sets of skills: technical, human and conceptual skills. Technical skills are about knowledge
and understanding of the process and procedures in order to take decisions and solve problems
(Schedlitzki & Edwards, 2014, p.27). Human skill is the ability to socialize properly with people
in order to achieve the company´s objectives; finally the conceptual skill is the one that will allow
the leader to see the organization as a whole and make strategic decisions (Schedlitzki &
Edwards, 2014, p.27 ).

However, in order to teach people leadership, is not enough by explaining what skills they need
to master, but they also need to know what leaders do (VLE Topic 6 – Overview, p.13). The
Behavioural approach focus in the different leadership styles by studying the specific actions of
leaders. Three theories have been developed with this philosophy: Lewin´s Theory (1939),
Tannerbaum and Schmidt´s Continuum Theory (1958) and the Managerial Grid by Blake and
Mouton (1978).

The three models agreed that there could be an autocratic style, where the leader just make de
decision and gives orders, expecting people to obey. They also agree that the more effective
leadership style is the more democratic one, where the leader consults with the followers and
the final decision takes into consideration their advices functioning as a management team.
Furthermore I believe that into that category, the persuasive style from the Continuum Theory
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fits as well, because even when the decision is taken by the leader, he is able to sell his ideas
to their followers as good ones. However, Lewin´s theory also considered the Laissez-faire style
that is evidenced when the leader gives no instructions and takes no management initiative.
On the other hand, Blake and Mounton beside this, also criticize when the leader attend more
his followers´ needs than the organization ones.

III.2- The Situational and the Contingency Theories of Leadership

The previous approaches, in spite of being more comprehensive, doesn’t find a style that will
suit for every situation. Hersey and Blanchard tried to overcome this issue with their Situational
Theory. They set four leadership styles that should be used according the follower´s disposition
and capability (Schedlitzki & Edwards, 2014). According to this model, a leader should have an
autocratic style if the subordinate´s competence is low, so the directions should be specifics. If
the follower is moderately competent and with a moderate commitment, the leader should train
him to increase his confidence and motivation and the selling style will be the one that fits the
best. On the other hand, a participating style is going to be better in case of the employee is
highly prepared, but isn’t committed enough. Finally, when the employee is highly capable and
very committed with the company, the leader can delegate responsibilities (Schedlitzki &
Edwards, 2014).

While the situational theory implies that a leader should change his styles according to the
circumstantial changes, the Contingency approach, assumes that the leader´s personality and
style is fixed (Fiedler, cited in Schedlitzki & Edwards, 2014). Consequently the solution is to find
the adequate leader to manage the situation (Zigarelli, 2013). According to Schedlitzki &
Edwards (2014) this model identified the following variables that characterized the situation:

 Social Relation: regarding the group environment and the feelings of loyalty and trust
between the leader and the follower.
 Task structure: deals with the clear definition of the tasks.
 Position power: related with the control and evaluation the leader has over the followers
and the designated rewards and punishment.

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IV.3- Contemporary Theories of Leadership

Among the Contemporary Theories of Leadership, there are the Transactional and
Transformational Leadership approaches. The transactional emphasizes that the relationship
between leader and subordinate, is based on rewards and punishments and embraces the
Laissez-faire leadership style (VLE Topic 7 – Overview, p.2), which could lead to negative
reactions due to this theory doesn’t take into consideration circumstantial elements. On the
other hand, the Transformational approach is about encourage followership by focusing in lining
up subordinate’s interests with the organization ones through the following four components:
charisma, inspirational motivation, intellectual stimulation, and individual consideration.
According to Ronald Riggio (Hodos Institute 1, 2013), this theory is the most popular and
studied.

However, the transformational theory could be used to manipulate followers, which is why the
Ethical Leadership theory arises. This model bases its principles in the transformational
approach, but gives greater importance to the ethical behaviour of the leader and the
organization (VLE Topic 7 – Overview). Derived from this moral theory we can find the Authentic
Leadership approach which sees a leader as optimistic person, who is always guided by a
positive behaviour (Schedlitzki & Edwards, 2014). Finally the Servant Leadership theory takes
the moral behaviour to an extreme level, where the leadership style concentrate on the leader
serving the follower.

V- Application of Leadership Theory in Don Caribe: Donald Bakhuis

As we saw earlier, Don Caribe has two directors: Kendrick and Donald Bakhuis. Despite both
of them being managers and leaders, I choose to analyse Donald style, because I find it more
complete.

Don is the classic entrepreneur that is always searching for new business opportunities. His
experiences as a business man have led him to be a great leader, and his unique style fit really
well with the Transformational Leadership. In the next paragraphs we are going to analyse
the components of the theory in order to see if they can be applicable to Donald´s leadership
style and how.

As we mentioned before, one of the components of transformational leadership is Charisma


that is his ability to be a positive role model for his followers. He leads through example: when
he demands something, he is the first to comply, creating an environment of respect and trust.

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This is connected as well with the other aspect of the approach: Inspirational Motivation. Don,
as we call him, motivates the team by making us part of the bigger picture. He always reminds
his followers the importance of their job to the company, and he keeps giving positive personals
and public feedbacks in order to create an optimistic clime. Furthermore he incentives follower
to grow inside the company.

Moreover, he likes to challenge his employees´ capacities by always setting new higher goals
or by defy them to find the solution to a particular problematic situation. And he doesn´t just
gives the order and waits for the result, he supports his subordinates by asking about the solving
process and providing ideas that could help them finding the solution. This aspect is the so
called Intellectual Stimulation. Finally, the last element of the theory is the Individual
Consideration that applies when the leader is understanding and compassionate and creates a
comfortable and trustworthy environment. Don is cares a lot about his followers needs: he is
the kind of person that says “Hello! How are you?” and really wants to know about yourself, if
something is wrong, even if is personal, he will try to help you somehow, before start talking
about anything else.

Donald is the closest example of a good leader I have. In just two years he has created in me
the feeling of belonging to the company, and vice versa, the company to me. I developed a
sense of trust and loyalty for the organization and for him.

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Conclusions
With this essay we were able to analyse how management theories evolved from being focused
just in producing more and at a least cost, with a complete disregard of the people, to a more
comprehensive approaches that take into consideration a series of variables that will help to
draw better management strategies.

Furthermore we went through the evolution of leadership theories as well. Beginning with the
basic one, which assumed that a leader is born and cannot be made, until the contemporaries
that proved that leadership is an ability that not only can be thought, but also can be improved.
We studied different leadership styles and saw how and when to implement them.

In order to finally answer the first question of the module “Is a manager a leader or is a leader
a manager?” we applied those theories into a practical example. Now I can say that in my
opinion, a leader is a manager, but not always a manager is a leader. In the example we used,
Don Caribe B.V., we have two great managers: Kendrick and Donald, but the one that
highlighted as a leader since the begging is Donald, thanks to his experiences. However
Kendrick has grown in the last two years developing traits and skills of a manager and I firmly
believe that he can become a leader as good as his associate.

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VLE Topic 6 - Overview. (Accessed: 06/12/2018)

VLE Topic 7 - Overview. (Accessed: 10/12/2018)

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