3.4 - Influences on business decisions

Question 1

Describe strong and weak corporate culture

Answer 1

• Strong culture - one that is deeply embedded into that way the organisation operates
• Weak culture - core values are not clearly defined, communicated or widely accepted by employees. May be subcultures

Question 2

Define corporate culture

Answer 2

The values, beliefs, and behaviors that guide how employees in an organisation act.
Charles Handy classified four main types of corporate culture (power, person, task & role)

Question 3

Explain how corporate culture is formed

Question 4

Describe power culture

Answer 4

• Usually a strong culture - power and influence radiates from a small number of individuals from center (Centralised decision making and Autocratic leadership).
• There are few rules as those with power decide the rules.
• Employees are judged by what they achieve rather than how they do their jobs.
• Decision can be taken quickly through leadership can become very toxic.
• A competitive atmosphere between workers vying for power
• Most communication is by personal contact

Question 5

Describe person culture

Answer 5

• A business which is only there to support and help individual employees who perceive themselves as unique or superior (decentralised decision making) and have power over it (democratic leadership); often consists of independent professionals such as doctors or lawyers with similar levels of training and expertise.
• Risk taking and innovation are actively encouraged and rewarded, whilst failure is not criticised.

Question 6

Describe role culture

Answer 6

• Power depends on the person’s status or role in within the business.
• Clear rules and procedures result in a clear hierarchy (Bureaucratic relationship) - clearly defined structure - slow communication
• The organisation has a tall structure with long chains of command. Personal power is frowned upon, with allocation of work and responsibility (job description) more important than individuals personalities.
• e.g. Large public sector organisations like NHS

Question 7

Describe task culture

Answer 7

• When a business creates teams (delegation) to resolve specific issues or projects and power then shifts to team members (Matrix structure).
• Power lies with those with task-related skills (e.g. a finance specialist may make decisions related to funding within the group)
• Emphasis on achieving set outcomes through cooperation and teamwork. The success of this culture depends on the team dynamics, including the mix of skills, personalities and leadership qualities. There will be no single power source, with teams developing their own objectives.
• Teams are created and dissolved as projects are started and completed
• Exam board definition - ‘Task culture is an organisational culture which places the emphasis on individual projects and small teams.’

Question 8

Describe difficulties in changing an established culture

Question 9

Describe informal and formal cultures

Answer 9

• Formal culture refers to the established, documented rules, policies, and hierarchies that define expected behavior and decision-making processes.
• Informal (or satilite) culture encompasses the unwritten norms, social interactions, and personal relationships that influence employee behavior beyond the official structure; essentially, the “behind-the-scenes” dynamics within a company.