3.4 influences on business decisions Flashcards
Why do businesses use a short termism approach ?
- Maxism short term profits
- Minimise r&d
- Maximise returns to shareholders
- Pursue rapid external rather than organic growth
- Invest less in HR
- prioritise short term supply contracts
What is the evidence based approach to decision making ?
Involves taking a systematic and facts-based approach when determining objectives, strategy and tactics
What steps are in the evidence based decision making ?
- identify and set objectives
- Gather data and ideas
- Analyse data and ideas
- Make an evidence based decision
- Implement the decision
- Monitor and review
What is subjective decision making ?
guided principally by the personal opinions and experience of key decision-makers
When is subjective decisions making the best ?
Where quick decisions need to be made
Where the nature of the industry means subjective decisions are normal
Lack of data to support evidence based
What is a company culture ?
Values, beliefs and assumptions of a business
What are visual features and norms visible in businesses with strong culture ?
Visual
Business specific artefacts
Award evening
Training
Norms
Values that are core
Business specific language
Decision making
What are the 4 types of organisational culture - Handy?
Power
Task
Person
Role
What is power culture ?
Decision-making is carried out by one or a small number of powerful individuals usually at the top of the business hierarchy
What is a role culture ?
- Key decisions are made by those with specific job roles
- Power lies with those with particular job titles rather than those with desirable skills
- There is usually a very clear hierarchical structure
- Employees are expected to adhere to rules and understand their place in the hierarchy
What is task culture ?
- Decisions are made by teams made up of employees with specific skills
- Power lies with those with task-related skills (e.g. a finance specialist may make decisions related to funding within the group)
What is a person culture ?
These individuals have significant levels of power to determine their own decision-making procedures and often work autonomously
What factors contribute to a corporate culture ?
lEADERSHIP
HR
OWNERSHIP
What Factors Cause Difficulties in Changing Established Organisational Cultures?
- Identifying the various elements of an organisation’s culture can take time and significant insight to fully understand
- The impact of unofficial subcultures such as always undermining management decisions can be harder to change
- This requires careful communication in order for commitment to that change to be achieved
What are stakeholders?
Individuals or groups that affect or are affected by the actions of a business
What are some examples of internal stakeholders ??
Employees
Managers and Directors
Business owners
Who are some external stakeholders ??
Customers
Shareholders
Creditors
Suppliers
The local community
Local and national government
Pressure groups
What are the stakeholder objectives of Owners ?
They will want all, or a share of the profit and will want the business to be succeed
What are the stakeholder objectives of employees
Their primary objective is to earn a living, have job security and be compensated fairly for their work and have a safe working environment
What are the stakeholder objectives of management ?
Their primary objective is to meet the company’s goals and objectives
They want to maximise profits and minimise costs
What are the stakeholder objectives of customers ?
Their primary objective is to receive high-quality products or services at a fair price
What are the stakeholder objectives of shareholders ?
Shareholders’ primary objective is to maximise their returns on investment
They want the company to be profitable and generate a high return on their investment
What are the stakeholder objectives of Suppliers ?
Their primary objective is for the business to pay what it owes promptly and in full
Suppliers often want to be able to establish long-term arrangements with customers to improve business stability
What are the stakeholder objectives of the local community ?
This may include the business being environmentally responsible, providing jobs, and contributing to local causes
What are the stakeholder objectives of the gov ?
Their primary objective is to promote the public good and protect the interests of citizens
What is the difference between the stakeholder and shareholder approach ?
A stakeholder approach focuses on interdependencies between stakeholder groups and take steps to ensure that the benefits and drawbacks of its operations are shared equally amongst them
The shareholder approach has often been used by large corporations and it is focused on meeting the needs of shareholders
What are ethics ?
relates to the rights or wrongs of making a strategic decision that are beyond legal requirements and in accordance with a businesses corporate responsibility principles
What are some ethical codes ?
- behave responsibly with regards to the environment
- avoids negative impacts on animals
- adopts fair working practices (e.g. paying a real living wage)
- implements robust and equitable supply chains (e.g. - using sustainably-sourced raw materials in production)
- takes steps to eliminate corruption (e.g. ensuring appropriate tax is paid in the countries in which the business operates)
- avoids controversial products or take steps to minimise their impact or access to them ceases trading with questionable -
- suppliers or customers (e.g. cancelling a supply contract with a supplier that uses child labour)
What is CSR ?
corporate social responsibility
an audit of the steps being taken to meet their commitments to a range of stakeholders alongside annual financial reports
What are benefits of csr
CSR can enhance the business image and reputation
CSR is attractive to many stakeholders
CSR can be very profitable as it adds value for many stakeholders
CSR may improve employee motivation and productivity
CSR can help to recruit strong candidates for jobs advertised
CSR may help to solve social problems e.g. resource depletion
