3.4 Influences On Business Decisions Flashcards
What is short termism?
Business prioritises short term rather than long term performance
What is long termism?
Business prioritises long term rather than short term performance
What are the short termism measures?
- share price
- revenue growth
- gross and operating profit
- unit costs and productivity
- return on capital employed
What are the long termism measures?
- market share
- quality
- innovation
- brand reputation
- employee skills and experience
- social responsibility and sustainability
Why might businesses be concerned with short term performance?
- stock market (investor) focus on latest financial performance
- reliance on bonuses based on short term performance
- frequent changes in leadership and strategy (e.g through takeover)
What are the possible indicators of short termism?
- bonuses based on short term objectives
- low investment into R&D
- high dividend payments rather then reinvesting profits
- overuse of takeovers rather than internal growth
What are the subjective based approaches to decision making?
- Based on intuition
- quick
- hard to justify for decisions involving significant risk
What are the evidence based approaches to decision making?
- based on data and analysis
- time consuming and costly no guarantee of correct decision
- increasingly common and automated supported by big data and data analysis
What is evidence based decision making?
Decisions based on analysis and evaluation of evidence and adopting a systematic approach rather than intuition
What is big data?
Process of collecting and analysing large data sets from the traditional and digital sources to identify trends and patterns that can be used in decision making
What are the key business applications of big data?
- generating market insights
- security of business systems is improved
- more efficient management of capacity
- better decision making
Reasons for exponential growth for big data?
- logistics → transportation systems etc
- retail e-commerce data bases
- user interaction with websites and mobile apps
- social media apps
What is data mining?
Process of analysing data from different perspectives and summarising it into useful information
Benefits of effective data mining?
- identify previously unseen relationships between data sets
- better predict future trends and behaviours
- extract value from big data sets
- generate business actions built on data insights
How does data mining improve competitiveness?
- sales forecasting
- database marketing
- market segmentation
- e commerce basket analysis
