3.4 Influences on Business Decisions

Question 1

reason for Short termism

Answer 1

attract managers
keep shareholders happy
for new business who don’t have long term goals yet

Question 2

long termism approaches

Answer 2

investment in research and development

Question 3

evidence based decision making

Answer 3

decisions based off data and facts

Question 4

pros and cons of evidence based decision making

Answer 4

P- easy to justify as its based off facts
-uses validated tools like CPA

C-focusing on stats mean firm may overlook ethics etc
-can take a while to gather stats

Question 5

subjective decision making

Answer 5

decisions based off opinions and experiences

Question 6

Pros and cons of subjective decision making

Answer 6

P- quicker decision making
-used when there’s a lack of data

C-opinions can lead to irrational decisions
-difficult to justify decisions

Question 7

strong culture features (4)

Answer 7

less supervision
loyal staff
low staff turnover
high motivation

Question 8

What are the 4 types of corperate culture

Answer 8

power culture
role culture
person culture
task culture

Question 9

what is power culture

Answer 9

when a firm has a centralised structure and decisions are made from a small amount of people

Question 10

what is role culture

Answer 10

decisions are made by specific job titles

Question 11

what is task culture

Answer 11

decisions made by a team of employees with specific skills
emphasis on team working and adaptability

Question 12

what is person culture

Answer 12

own decision making
individuals with experience and skill

Question 13

Internal stakeholder meaning and examples

Answer 13

people interested or affected by the firm internally (3)

employees
managers
owners

Question 14

external stakeholders definition and examples (5)

Answer 14

people affected or interested outside of the firm

Customers
shareholders
local community
suppliers
government

Question 15

conflict between shareholders and employees

Answer 15

shareholders want to maximise dividends and employees want high wages which reduces profits and increases costs

Question 16

conflict between shareholders and customers

Answer 16

shareholders want high profits but customers want low fair prices

Question 17

conflict between shareholders and government

Answer 17

government want job creation but shareholders want to profit maximisation

Question 18

What is CSR

Answer 18

Corporate Social Responsibility- firms trying to act in the most ethical way they can

Question 19

Pros of CSR (3)

Answer 19

Better business image and reputation
attracts stakeholders
can improve motivation and productivity

Question 20

Cons of CSR

Answer 20

increased costs
ethics may be stopped to increase profits-> ruin image