3.4 influences on business decisions

Question 1

Why do businesses use a short termism approach ?

Answer 1

• 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

Question 2

What is the evidence based approach to decision making ?

Answer 2

Involves taking a systematic and facts-based approach when determining objectives, strategy and tactics

Question 3

What steps are in the evidence based decision making ?

Answer 3

1. identify and set objectives
2. Gather data and ideas
3. Analyse data and ideas
4. Make an evidence based decision
5. Implement the decision
6. Monitor and review

Question 4

What is subjective decision making ?

Answer 4

guided principally by the personal opinions and experience of key decision-makers

Question 5

When is subjective decisions making the best ?

Answer 5

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

Question 6

What is a company culture ?

Answer 6

Values, beliefs and assumptions of a business

Question 7

What are visual features and norms visible in businesses with strong culture ?

Answer 7

Visual
Business specific artefacts
Award evening
Training

Norms
Values that are core
Business specific language
Decision making

Question 8

What are the 4 types of organisational culture - Handy?

Answer 8

Power
Task
Person
Role

Question 9

What is power culture ?

Answer 9

Decision-making is carried out by one or a small number of powerful individuals usually at the top of the business hierarchy

Question 10

What is a role culture ?

Answer 10

• 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

Question 11

What is task culture ?

Answer 11

• 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)

Question 12

What is a person culture ?

Answer 12

These individuals have significant levels of power to determine their own decision-making procedures and often work autonomously

Question 13

What factors contribute to a corporate culture ?

Answer 13

lEADERSHIP
HR
OWNERSHIP

Question 14

What Factors Cause Difficulties in Changing Established Organisational Cultures?

Answer 14

• 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

Question 15

What are stakeholders?

Answer 15

Individuals or groups that affect or are affected by the actions of a business

Question 16

What are some examples of internal stakeholders ??

Answer 16

Employees
Managers and Directors
Business owners

Question 17

Who are some external stakeholders ??

Answer 17

Customers
Shareholders
Creditors
Suppliers
The local community
Local and national government
Pressure groups

Question 18

What are the stakeholder objectives of Owners ?

Answer 18

They will want all, or a share of the profit and will want the business to be succeed

Question 19

What are the stakeholder objectives of employees

Answer 19

Their primary objective is to earn a living, have job security and be compensated fairly for their work and have a safe working environment

Question 20

What are the stakeholder objectives of management ?

Answer 20

Their primary objective is to meet the company’s goals and objectives
They want to maximise profits and minimise costs

Question 21

What are the stakeholder objectives of customers ?

Answer 21

Their primary objective is to receive high-quality products or services at a fair price

Question 22

What are the stakeholder objectives of shareholders ?

Answer 22

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

Question 23

What are the stakeholder objectives of Suppliers ?

Answer 23

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

Question 24

What are the stakeholder objectives of the local community ?

Answer 24

This may include the business being environmentally responsible, providing jobs, and contributing to local causes

Question 25

What are the stakeholder objectives of the gov ?

Answer 25

Their primary objective is to promote the public good and protect the interests of citizens

Question 26

What is the difference between the stakeholder and shareholder approach ?

Answer 26

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

Question 27

What are ethics ?

Answer 27

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

Question 28

What are some ethical codes ?

Answer 28

- 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)

Question 29

What is CSR ?

Answer 29

***corporate social responsibility*** an audit of the steps being taken to meet their commitments to a range of stakeholders alongside annual financial reports

Question 30

What are benefits of csr

Answer 30

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