3.4 Flashcards
What is Short-termism, give positive and negative.
Where firms make decisions to increase financial performance over a short time periods, often at the expense of long term performance.
Positive - Good cash flow
Negative - Lowers businesses quality, unhappy employees and customers.
What is Long-termism, give positive and negative.
Where a firms concentrates on the overall performance of the business, rather than just its short term financial state.
Positive - Happy stakeholders
Negative - May not make any profit initially
What does a long-termism business do with there capital compared to a short-termism business
- They commit to investing in the businesses future
- So more training for staff and investment into research and development.
- Short-termism only looks to improving there profit margin in the short term.
- They pursue the interests of there stakeholders.
What is evidence based decision-making, give advantage and disadvantage.
An approach to decision making that gathers information and using a systematic and rational approach to reach a conclusion.
Advantage - Reduces risk of mistake and helps identify outcomes.
Disadvantage - Data is expensive, may be out of date.
What is subjective decision-making, give positive and negative.
An approach to decision making where the personal opinions of the key decision maker strongly influence the course of action chosen.
Positive - Allows for quick decision making
Negative - Can be difficult to justify the decision
What is a corporate culture
It sums up the spirit, attitudes, behaviours and the ethos of an organisation.
What is strong culture, give some implications to this.
A culture where the values, beliefs and ways of working are deeply embedded within the business and its employees.
Positive - Loyal staff, less labour turnover.
Negative - Takes time, every employee needs to be involved for it to work.
What is a weak culture, give some implications to this.
When the core values are not clearly defined, communicated or widely accepted by those working for the organisation.
Implications:
- More qualified staff will leave
- Staff are not trusted so are given set things to say and do.
- Staff doubt decisions being made by management.
What is a Stakeholder
Groups that influence and are influenced by the operations of a business.
What is an internal stakeholder
Groups inside a business with an interest in its activities.
What is an external stakeholder
Groups outside a business with an interest in its activities.
What is an external stakeholder
Groups outside a business with an interest in its activities.
What are the most common objectives for stakeholders of a business.
- Business growth
- Good income
- Green production
- Ethical business practices
- Compliance with legislation and rules
- Opportunities for promotion
A stakeholders influence would lead to
A business considering all of its stakeholders in its business decisions/objectives.
A Shareholders influence would lead to
Business focusing on shareholders return (increasing share price and dividends) in its business decisions/objectives.
