(3.4) Influences on Business Decision Flashcards
What is short - termism in business and the implications of this?
Business & management focus is on quick financial rewards
- Maximise short term profits
- Invest less in R&D and training
- Return profits to shareholders
- Pursue external growth strategies
What is long - termism in business and examples?
When a business focuses on the sustainability of the business long term
- Invest in R&D and training
- Focus om profit quality
- Take an ethical stance on decision making
- Pursue the interests of stakeholders
Why might a business choose to change its culture?
- A new leader
- Poor performance
- Corporate objectives
- Customers needs
What is Subjective based decision making and there + and -?
Decisions based on experience without supporting evidence
+May come from experienced managers (help with recruitment)
+Marketing
-Risky as there’s no data to support it
What is Evidence based decision making and there + and - ?
Decisions are based on evidence (data) i.e financial forecasts
+Can help reduce risk in decision making
+Help compare alternative outcomes
-Can be hard or expensive to collect
What is a Corporate Culture?
Refers to having shared values, attitudes, standards, and beliefs that make up the way the business in run
What is a Shareholder?
Groups or individuals who have an interest and share in a business
What is Corporate Social Responsibility?
Businesses should act responsibly and protect the interests of all stakeholders
or
Being aware and responsible of how the business impacts its surroundings
What are the 4 elements that may effect a corporates decision making?
- Time scales (short/ long termism)
- Corporate culture
- Ethics
- Stakeholder Perspective
What makes a strong/weak culture?
- Shared values
- Employees know the history of the organisation
- Employees identify with the culture
Weak culture is just the opposite
Why is changing organisational culture difficult?
- May require significant education and training
- Large organisations have more than one culture across different functions and regions
- Culture is deep set and extends from peoples attitudes and beliefs
What are Handys 4 models of culture?
- Power (Few or one person drive the organisation and decisions)
- Role Culture (People associate with a team or function)
- Task Culture ()
- Person Culture (Employees are independent)
What is power culture?
Few people, or one person drive the organisation and decisions. Culture is determined by a few individuals. (Common in small businesses)
What is role culture?
When roles are delegated in a hierarchy structure
What is task culture?
An organisational culture which places emphasis on individual projects and small teams.
The culture is formed in the groups that is made
What is person culture?
An organisational culture in which all individuals believe themselves superior to the organisation.
What is a stakeholder?
Groups or individuals who have an interest in a business
What are some examples of internal stakeholders?
Employees, Managers, Owners
What are some examples of external stakeholders?
Suppliers, Customers, Local Community, Government Agencies
What are stakeholders objectives?
Most stakeholder will have the same goals however some may not
Shareholder - Maximise profits
Managers/Employee - Maximise profits for bonuses
Customers - Good quality products
Supplier - treated fairly - long-term contracts - On time payments
Government - Max profits/ comply with legislation and not exploit vulnerable groups
Environmental - Avoid having a negative effect on the environment
Local Community - Help the community
What may form a corporate culture?
Stories
Rewards
Key personalities - leaders and employees who influence others
Rituals
What are the advantages and disadvantages of role culture?
+ Clear job role for employees to follow
+Clear chain of command
- Employees may feel an increase in stress
- High level of control over employees
- Less innovation
What are the advantages and disadvantages of task culture?
+Employees have more freedom
+High levels of productivity
What are the advantages and disadvantages of person culture?
+Reduced pressure from managers or people of higher power
+Increased flexibility
+Increased creativity
What are the advantages and disadvantages of power culture?
+Can lead to quick decision making
+
- Hard to expand the company without breaking the culture
- Employees may feel intimidated
