“Public” means the citizens of a given area – the people of a town, county, state, or country.

The word “public” also referes to activities administered by the state in the name of the entire community or for public interest.

State is a set of institutions that possess the authority to make the rules that govern the people in society, having internal and external sovereignty over a definite territory.

Sovereignty is the exclusive right to exercise supreme political (legislative, judicial, and executive) authority over a geographic region, group of people, or oneself.

State of Nature is a term in political philosophy used in social contract theories to describe the hypothetical condition that preceded governments.

“State of Nature”

• is a term used in political phylosophy

• was first posited by the 17th century English philosopher Thomas Hobbes in Leviathan

• describes the hypothetical condition of humanity before the foundation of state,

• is the condition before the rule of law,

• is a synonym of anarchy,

• leads to a "war of every man against every man“,

• makes life "solitary, poor, nasty, brutish, and short."

“Social Contract”is an intellectual device intended to explain the appropriate relationship between individuals and their governments.

• is a concept used in philosophy, political science, and sociology,

• denotes an implicit agreement within a state regarding the rights and responsibilities of the state and its citizens,

• more generally denotes a similar concord between individuals,

• all members within a society are assumed to agree to the terms of the social contract by their choice to stay within the society.

Market Failures

• public goods

• externalities

• transaction costs

• imperfect information

• imperfect competition

1. Public Goods are goods whose benefits are held in common (non-rivalness) and exclusion is not feasible.

It is difficult to exclude people (free-riders) who do not pay for the goods from enjoying the benefits they provide. Markets tend to under-supply public goods.

Public goods are both non-excludable and non-rival.

2. Negative Externalities - costs for another without one other’s permission or costs resulted from actions or exchanges between individuals or firms to people not involved in a given transaction.

3. Transaction Costs are incidental costs to buyers and sellers of making a transaction.

They include the costs of gathering information about markets, making decisions, negotiating a deal, writing contracts, etc.

Example: Anti-pollution agreement

4. Asymmetric Information exists in the situation when buyers or sellers are better informed about product characteristics then those with whom they trade.

Example: Drugs and Food products

5. Imperfect Competition or the situation in any market where the conditions necessary for perfect competition are not satisfied may result in monopoly.

What is Charismatic Leadership?

The sociologist Max Weber defined charismatic authority as "resting on devotion to the exceptional sanctity, heroism or exemplary character of an individual person, and of the normative patterns or order revealed or ordained by him.

The word charisma means “an inspired and divine gift”. Those who have the gift are divinely endowed with grace and talent to influence people.

Charismatic leaders capture the imagination and inspire their followers’ devotion.

Charismatic leaders

use personal charm to get things done; this article discusses the pros and cons of this approach, as well as leaders that used this style.

• have a profound emotional effect on their followers.

• inspire followers and their followers are loyal to them.

• are often perceived as heroes and role models by their followers

This type of relationship is NOT typical of all leadership situations.

Three main elements in charismatic leadership:

1. Charismatic leader characteristics

2. Follower characteristics

3. Charismatic leadership situation

The difference between Ethical and Unethical leadership:

Unethical Leaders

• use their power to advance their personal vision

• exploit followers

• censure opposing views and criticism

• engage in one-way communication

• megalomania

Ethical Leaders

• use their power to achieve the common vision

• serve others

• develop and empower followers

• accept criticism

• open to communication with followers

• heroic self-sacrifice

What is Management?

Management is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively.

 Management involves power or formal authority given by a higher organizational authority.

With power comes responsibility for the use of organizational resources.

Managers are people who are responsible for planning, organizing, decision making, and controlling the work of other employees to achieve organization goals.

What is Leadership?

Leadership is an ability to persuade others to achieve defined objectives enthusiastically.

Leadership cannot be given by higher authority.

Leadership is based on the compelling personality of the leader rather than on formal position.

Leaders motivate, inspire people, mobilize people, get people to do things they have never done before (things that are not routine and involve risks).

Leaders provide people the vision of goals and guide them toward achievement of those goals.

Functions of Managers

• Has a formal position

• Does things by book and company policies

• Implements policies and procedures

• Must be obeyed

• Focuses on the present

• Maintains status quo

• Is more rational

• Remains aloof to maintain objectivity

• Uses position power

Functions of Leaders

• May not have a formal position

• Does things by intuition

• Creates a culture based on shared values

• Is followed by people

• Focuses on the future

• Creates change

• Is more emotional

• Establishes an emotional link with followers

• Uses personal power

Characteristics of Leaders
1.	They have a clearly articulated vision of what the knowledge agenda and knowledge management is about.
2.	They have enthusiastic knowledge champions who are supported by top management.
3.	They have a holistic perspective that embraces strategic, technological and organisational perspectives.
4.	They use systematic processes and frameworks (the power of visualisation).
5.	They "bet on knowledge", even when the cost-benefits cannot easily be measured.
6.	They use effective communications, using all the tricks of marketing and PR.
7.	There is effective interaction at all levels with their customers and external experts. Human networking takes place internally and externally on a broad front.
8.	They demonstrate good teamwork, with team members drawn from many disciplines.
9.	They have a culture of openness and inquisitiveness that stimulatesinnovation and learning.
10.	They develop incentives, sanctions and personal development programmes to change behaviours.

Two sources of power

There are two sources of power: position power and personal power.

Position Power is derived from top management, and it is delegated down the chain of command.

Personal Power is derived from the follower based on the leader's behavior. Charismatic leaders have personal power. Friendship also gives personal power.

Seven types of power

The power possessed by leader implies a hierarchy of control of stronger over weaker. There are seven major bases of power:

1. Legitimate power is based on the follower’s perception that the leader has the legitimate right to exercise influence; (position power)

2. Reward power is based on the leader’s ability to mediate rewards for the follower;(position power)

3. Coercive power is based on the follower's fear that noncompliance with the leader will lead to punishment. (position power)

4. Information power is based on the user’s data desired by others. It involves access to vital information and control over its distribution to others. (position power)

5. Expert power is based on the perception that the leader possesses some special knowledge or expertise; (personality power)

6. Referent power is based on the follower’s liking, admiring, or identifying with the leader; (personality power)

7. Connection power is based on the user’s relationships with influential people. You rely on the use of contacts or friends who can influence the person you are dealing with. (personality & position power)

Position:

• Legitimate Power

• Reward Power

• Coercion Power

• Information Power

Personality:

• Expert Power

• Referent Power

Position and Personality:

• Connection Power

Legitimacy is a characteristic of a social institution (government, organization, family, person) whereby it has both a legal and a perceived right to make binding decisions (to rule).