3.4

Question 1

Advantages of short-termism?

Answer 1

:) - easier to monitor goals and objectives
- could increase chances of investment from shareholders as focus is financial
- reduces risk as focuses are short/quick rather than long term
- could help to meet long term goals
- for newer businesses it can help keep the business running past the first year as it focuses on current needs

Question 2

Disadvantages of short-termism?

Answer 2

:( - employees could become demotivated if they are treated as a cost
- could make decisions too quickly without thinking about the longer term impact it could have
- too profit/financially orientated therefore ignoring other needs of the business
- could make them less market orientated

Question 3

Advantages of long-termism?

Answer 3

• Decisions more though out/carefully planned so not as reactive - less risky
• More sustainable for the future, may lead to longevity/more established brand if business has wider idea of what needs to be achieved
• Develop stronger company culture linking to mission statement - could make it easier to recruit employees/give business good reputation.

Question 4

Disadvantages of long-termism?

Answer 4

• Could be more complicated to achieve as it may look too far into the future which is difficult and may not be useful in dynamic markets
• More expensive - requires investment in staff so could be opportunity cost
• Might make business less flexible meaning it is harder to react to external factors such as new legislation

Question 5

What is involved in the formation of a business culture?

Answer 5

• physical environment
• key personalities
• rituals - significant events/ways of doing things
• rewards
• stories

Question 6

Benefits of ethical behaviour?

Answer 6

• Differentiation (creates added value)
• Lower costs - cutting waste/packaging or reducing use of non-renewable energy
• Motivated workforce - better working conditions/pay and thus enhance retention, service and attendance
• Increased sales - appeal to ethical consumer
• Positive brand image - avoid negative publicity and pressure groups

Question 7

Drawbacks of ethical behaviour?

Answer 7

• Higher supply costs
• Not being price competitive - losing market share
• Shareholders may not be satisfied if they don’t make a quick return on their investment (reduces profitability)
• Maintenance of an ethical position can be difficult, especially if areas of production become politically unstable