3.4

Question 1

What is short termism?

Answer 1

Where a business prioritises short term rather than long term performance

Question 2

Short terms: performance measures

Answer 2

• share price and market capitalisation
• revenue growth
• gross and operating profit
• unit costs and productivity
• ROCE

Question 3

Symptoms of short termism management

Answer 3

• low investment in R&D
• high dividend payments rather than reinvesting profits
• overuse of takeovers rather than internal growth

Question 4

Biggest criticism of short termism

Answer 4

Does not focus on what the business needs to do in order to build a sustainable competitive advantage

Question 5

What id=s long termism?

Answer 5

Where a business priorities long term rather than short term performance

Question 6

Influences on decision making

Answer 6

• business objectives/ budgets
• organisational structure
• external environment
• availability and reliability of data

Question 7

Subjective decision making

Answer 7

Based on intuition and experience
Key benefit- quick
Criticism- hard to justify for business decisions involving significant risk

Question 8

Evidence based decision making

Answer 8

Based on data and analysis
Key benefit- increasingly common and automated, supported by big data and data analytics
Criticism- time consuming and costly; no guarantee of the right decision

Question 9

Reasons why evidence based decision making is becoming more popular

Answer 9

• more widespread availability of data

- greater sophistication of data analytics and skills/ experience of data analysts

Question 10

What is business culture?

Answer 10

Culture illustrates the accepted norms and values and traditional behaviour of a group.

Question 11

Culture. consists of factors such as:

Answer 11

• shared values of a business
• beliefs and norms that affects every aspect of work life
• behaviours typical of day to day behaviour

Question 12

Signs of a strong culture

Answer 12

• staff understand and respond to culture
• little need for policies and procedures
• consistent behaviour
• culture ids embedded

Question 13

Signs of weak culture

Answer 13

• conflict between staff
• little alignment with business values
• inconsistent behaviour
• a need for extensive bureaucracy and procedures

Question 14

Types of culture

Answer 14

Power
Role
Task
Person

Question 15

Power culture

Answer 15

Power is held by one whose influence spreads throughout the organisation
Few rules and regulations
Employees are generally judged by what’s they achieve rather than how they do things/ act
+ quick decision making

Question 16

Role culture

Answer 16

Based on rules
Highly controlled, with everyone in the organisation knowing what their roles and responsibilities are
Power is determined by a person’s position in the organisational structure
- decision making can be painfully slow and less likely to take risks
- very bureaucratic

Question 17

Task culture

Answer 17

When teams in an organisation are formed to address specific problems or progress projects
Power within the team will often shift depending on mix of the team members and the status of the problem or project
Largely determined by the team dynamic
+ with the right mix of skills, personalities and leadership can be incredibly productive and effective

Question 18

Person culture

Answer 18

Individuals very much see themselves as unique and superior to the organisation
Simply exists in order for people to work
A collection of individuals who happen to be working for the same organisation

Question 19

Key influences on organisational structure

Answer 19

• influence of the founder
• size and development stage of business
• leadership and management style
• organisational structure, policies and practices
• market/ industries it operates in

Question 20

Signs that organisational structure might need change

Answer 20

• declining profit and sales
• inadequate returns on investment
• low quality or standards of customer service
• loss of market share
• failure to innovate

Question 21

Culture related signs that show culture change needs to be addressed

Answer 21

• internal fighting
• high levels of voluntary staff turnover
• greater absenteeism
• innovation is no longer valued
• declining customer service

Question 22

What is a stakeholder?

Answer 22

Any individual or organisation who has a vested interest in the activities and decision making of a business

Question 23

Stakeholders in a business

Answer 23

• managers and employees
• shareholders and owners
• customers
• suppliers
• creditors
• government
• competitors
• society

Question 24

What are ethics?

Answer 24

Moral guidelines which govern acceptable behaviour

Doing what is morally right

Question 25

How ethics is linked with decision making

Answer 25

• make choices about how to behave

- define acceptable conduct in business

Question 26

Benefits of ethical behaviour

Answer 26

• higher revenues- demand from positive customer support
• improved brand and business awareness and recognition
• better employee motivation and recruitment

Question 27

Drawbacks of ethical behaviour

Answer 27

• higher costs (e.g sourcing from Fairtrade suppliers rather than lowers price)
• higher overheads (training and communication of ethical policy)
• danger of building up false expectations

Question 28

What is CSR?

Answer 28

Concerned with:

• extent to which a business addresses the concerns and obligations to its wider stakeholders
• the actions a business takes over and above the minimum required by law in addressing societal needs and wants

Question 29

Benefits of CSR

Answer 29

• improves a business’ image and reputation
• avoid excessive regulation
• improved social environment benefits business
• helps attracts investors