3.4 influences on business decisions

Question 1

what does corporate decision making involve?

Answer 1

• timescale
• ethics
• corporate culture
• stakeholder perspectives

Question 2

what are short term perspectives likely to focus on?

Answer 2

• maximise short term profits
• invest less in R&D and training
• return profits to shareholders
• pursue external growth strategies

Question 3

what are long term perspectives likely to do?

Answer 3

• invest in R&D and training
• focus on profit quality
• take an ethical stance on decision making
• pursue the interest of stakeholders

Question 4

what is corporate culture?`

Answer 4

• includes the traditions, rituals, attitudes and values that make up the way a business is run

Question 5

what are benefits of a strong culture?

Answer 5

• a sense of identity
• a sense of togetherness
• improved commitment from employees
• motivation
• reinforces the values and beliefs

Question 6

what 4 distinct organisational cultures does Charles Handy identify?

Answer 6

• power culture
• role culture
• task culture
• person culture

Question 7

what is power culture?

Answer 7

• a few people drive the organisation and decisions

Question 8

what is role culture?

Answer 8

• people associate with a team or function

Question 9

what is task culture?

Answer 9

• employees associate with a task or project

Question 10

what is person culture?

Answer 10

• employees have a great deal of independence

Question 11

reasons for changing organisational culture?

Answer 11

• a new leader
• poor performance
• corporate objectives
• customer needs

Question 12

what are the problems changing culture?

Answer 12

• long process
• large organisations may have more than one culture
• culture is deep set

Question 13

who are stakeholders?

Answer 13

• groups or individuals who have an interest in a business

Question 14

who are internal stakeholders?

Answer 14

• employees
• shareholder
• managers

Question 15

who are external stakeholders?

Answer 15

• suppliers
• customers
• local communities

Question 16

what is the shareholder concept?

Answer 16

• the belief that the prime function of a business is to satisfy its shareholders

Question 17

what is the stakeholder concept?

Answer 17

• where businesses cater for the needs of all stakeholders, not just shareholders

Question 18

what is ethics?

Answer 18

• the moral principles that guide the behaviours of individuals and behaviours

Question 19

what should ethical decision making consider?

Answer 19

• environment
• workers
• technology
• corruption
• pressure groups

Question 20

what is corporate social responsibility (CSR)?

Answer 20

• the belief a business should act responsibly and protect the interests of all the stakeholders
• going beyond following rules and regulations

Question 21

why is there pressure for effective CSR?

Answer 21

• bad publicity can easily be shared
• ethically orientated customers may choose a business based on its CSR
• good CSR will attract the best employees
• supports long term sustainability