3.4 Flashcards
Short-termism
Quick financial reward
- monthly profit
- weekly sales
Caused of short-termism
- PLCs often under pressure to produce dividends for shareholders
- Many benefits are based on meeting short term goals
- Changes in structure of business (mergers/takeovers)
Effects of short-termism on business
Management likely to focus on;
- Pursuing growth in sales
- Increasing profit
- Driving unit costs down
- Improving ROCE
-/ - Doesn’t focus on building a sustainable comp adv
- Reluctancy to invest
- May not be best in long-term
How short-termism affects competitiveness
- Pressure for short term profits for shareholders
- Focus on marketing & sales
- Not focusing on R&D
- Becomes hard to be a market leader
- Hard to keep up with competitors long term
Long-termism
Corporate timescales refer to strategy and expectation of when a return on investment will be achieved
- Incorporates social responsibility
- Considers ethical behaviour of business in decision making
- R&D have long term goals
- Lots of staff development, retention and training
- Tech investment
Evidence-based decision making
Decisions relating to the business based on evidence & data, scientific approach, time-consuming
Subjective decision making
Decisions relating to a business based on personal perspectives, feelings & opinions, quick to implement
Corporate culture
A business’ culture and their beliefs can guide their practices. Corporate culture could even inform the mission statements or vision statement.
Features of strong culture
- Good communication with employees
- Have focus on core values
- Recruitment & training tries to find individuals who best fit the culture of the business
- Based around history , tradition & founders (usually)
Features of weak culture
- Often leads to failure
- Exhibit demotivated workforce
- Inconsistent customer service
- May be poorly managed
- Very bureaucratic & lack flexibility to respond to dynamic markets
Power culture
- Central figures that will make all decisions
- few rules and procedures
- Competitive attitudes amongst employees to gain power
Role culture
- Decisions made through well-established rules & procedures
- Power to make decisions comes from job title e.g. marketing director
- Very bureaucratic culture & may involve lots of paperwork
E.g. civil service
Task culture
- Focus on a project that needs to be completed
- Power comes from those who can accomplish the task & have the expertise
- Involves teamwork, team of experts working together
E.g. car design, scientific projects
Person culture
- Grouping of skilled (similarly) people to share expertise & knowledge
- All work on a client by client basis rather than a project by project basis like task culture
E.g. lawyers, doctors
How is culture formed in a business
- Decisions based on ethos or influences
- Nature of business and what it sells
- Degree to which products changed over time
- Business environment when it started (e.g. war)
- Recruitment & process of key staff
- Working hours
- Attitude to customer service
