3.4 influences on business decisions

Question 1

what are the two types of corporate timescales

Answer 1

short-termism

long-termism

Question 2

define short-termism

Answer 2

where firms make decisions to increase financial performance over a short time periods, often at the expense of long term performance

Question 3

define long-termism

Answer 3

when a firm concentrates on the overall performance of the business, rather than just its short term financial state.

Question 4

short-termism methods

Answer 4

• reduce prices to entice costumers
• seek cheaper materials to widen profit margins
• freeze employees pay
• paying extra dividends to shareholders

Question 5

long-termism methods

Answer 5

• differentiate their product
• build and develop a distinctive brand
• investment in technology and market research
• reinvest profit to expand capacity

Question 6

define evidence based decision making

Answer 6

an approach to decision making that involves collecting information and using a systematic approach to reach a conclusion

Question 7

define subjective decision making

Answer 7

an approach to decision making where the personal options of the key decision maker influences the course of action chosen.

Question 8

factors that effect the type of decision making used

Answer 8

• costs
• time
• risk
• experience

Question 9

define corporate culture

Answer 9

is the spirts, attitudes, behaviors and the other ethos of an organisation

Question 10

define a strong corporate culture

Answer 10

a culture where the values, beliefs and ways of working are deeply embedded within the business and its employees

Question 11

define a weak corporate culture

Answer 11

when the core values are not clearly defined, communicated or widely excepted by those working for the organisation

Question 12

characteristics of a strong corporate culture

Answer 12

• staff stick together and work together during times of crisis
• productively
• staff retention / low labour turnover

Question 13

characteristics of a weak corporate culture

Answer 13

• staff doubting the company’s ethos and principles
• rigid procedures resented by staff
• high chances of conflict and clashes occurring
• high labour turnover

Question 14

what are the four types of company culture

Answer 14

1. power
2. role
3. task
4. person

Question 15

define and state characteristic of power culture

Answer 15

where a central source of power is districted between a few individuals.

+has an autocratic leadership and a political atmosphere, works well with an effective leader

• some employees may lack confidence in the manger as they have loss touch with the day to day of the business.

Question 16

define and state characteristics of role culture

Answer 16

is a business that is dominated by rules and procedures that they expected the employees to follow.

+ allow the employee to have clarity on what is expect of them.

• employees don’t have the change to be involved in decision making.
• issues with communication as there is a long chain of command

Question 17

define and state characteristics of task culture

Answer 17

a focuses on using a teamwork and individual strengths to adapt quickly and problem solve.

+ work together so are able to understand the preceptive of all functioning areas
+ adapt to change well
- supervision is need as employees may get sidetracked.
-conflict between employees.

Question 18

define and state characteristics of person culture

Answer 18

is an organisation where the employees are highly skilled and share their expertise to help other individuals.
+ highly motivated staff
- difficult to change - staff may be resistant

Question 19

define stakeholders

Answer 19

a group that influence and are influenced by the operations of a business

Question 20

define internal stakeholders

Answer 20

groups inside a business with an interest in its activities.
e.g. owner, employees, managers

Question 21

define external stakeholders

Answer 21

groups outside a business with an interest in its activities.
e.g. customers, environment, society, suppliers, goverment, creditors

Question 22

what are the influences stakeholders and shareholders have on a business

Answer 22

customer loyalty

high productivity and staff retention

lower prices + high quality + avoid losing suppliers

long-termists with be more focused on pleasing the stakeholders

short-termists will be focused on pleasing the shareholders

Question 23

define business ethics

Answer 23

the moral principles that underpin decision making

there is usually a trade off between ethics and profit

Question 24

define corporate social responsibility

Answer 24

the desire to run a business in a morally correct way, attempting to balance the needs of all the stakeholders.

Question 25

what are the outcomes of being a business with a corporate social responsibility.

Answer 25

``` +higher prices +employee satisfaction +good reputation - unhappy shareholders - want a profit - depends on the product - demand elasticity ```