3.4 Influences on business descisions

Question 1

what are corporative objectives?

Answer 1

specific targets set for the whole firm to reach in a given time period to achieve the corporate aims, they are SMART

corporate to functional to team to individual objectives

Question 2

what are corporate aims?

Answer 2

a generalised statement of where a business is heading, it is a long term plan from which business objectives are derived.

Question 3

What is short-termism

Answer 3

when actions of managers over-prioritise immediate issues, ignoring long-term ones

Question 4

Name 4 main causes of short-termism

Answer 4

-relationship between plcs & financial markets; city investors have more shares in plcs than private investors

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Question 5

Name 5 effects of short-termism

Answer 5

-inadequate expenditure on research & development

-accounting adjustments that inflate current earnings

-willingness to cut workforce quickly -> high labour turnover

-focus on takeovers to grow rather than organic growth

-minimal training budgets

Question 6

Name 3 effects of long-term thinking

Answer 6

-companies willing to show more patience will often find themselves in a better position competitively in the long term

-however, to do this requires the removal of many of the pressures that lead to short-termism

-a great example of long-term thinking can be found in Germany. Major plcs play a far smaller role in the German economy, which is dominated,

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Question 7

Name 3 effects of long-term thinking

Answer 7

-companies willing to show more patience will often find themselves in a better position competitively in the long term

-however, to do this requires the removal of many of the pressures that lead to short-termism

-a great example of long-term thinking can be found in Germany. Major plcs play a far smaller role in the German economy, which is dominated,

-

Question 8

Name 3 effects of long-term thinking

Answer 8

-companies willing to show more patience will often find themselves in a better position competitively in the long term

-however, to do this requires the removal of many of the pressures that lead to short-termism

-a great example of long-term thinking can be found in Germany. Major plcs play a far smaller role in the German economy, which is dominated,

-

Question 9

What is product differentiation

Answer 9

a businesses attempts to make its product stand out from those of rivals -> through marketing, design or quality

Question 10

Explain Ansoff’s Matrix

Answer 10

Products
Existing New

   Existing     Market                            Product
                      Penetration                  development

Mrket

New Market Diversification
development

Question 11

What is market penetration

Answer 11

the commonest and lowest risk strategy -> involves boosting market share through selling more of the same product to the same target market

-methods for this:
+finding new customers within the target market
+taking new customers
+increasing usage of the product among existing customers

risks

Question 12

What is market development

Answer 12

-selling existing products in a new market

Question 13

What is a major risk of market development

Answer 13

-company may not understand consumer behaviours in the new market

Question 14

What is product development

Answer 14

-selling a new product to an existing market

-likely to have a good understanding of customer wants and needs

Question 15

What is a risk of product development

Answer 15

-new product in an existing market -> must ensure the new product meets customers exact wants and needs

Question 16

What is diversification

Answer 16

selling new products to new markets

-selling new products to customers whose tastes you have no experience -> tough

-can bring very high rewards

Question 17

Why is diversification risky

Answer 17

-selling new products to customers whose tastes you have no experience -> tough

Question 18

Name 2 risks and rewards of market penetration

Answer 18

risks
-potential declines in product life cycle
-lack of ambition from staff

rewards
-know the customers & competitors
-returns on extra investment will be predictable

Question 19

Name 2 risks and rewards of market development

Answer 19

risks
-subtle cultural differences add hugely to risk
-practical differences matter

rewards
-huge potential economies of scale
-potential for glocalisation

Question 20

Name 2 risks and rewards of product development

Answer 20

risks
-most new products fail -> risk level is high

Question 21

Name 2 risks and rewards of diversification

Answer 21

rewards
-can transform size and opportunities for the business
-exciting for workforce -> motivates

Question 22

What is a SWOT analysis

Answer 22

-identifies businesses:

strengths, weaknesses, opportunities, threats,

Question 23

What is a top-down approach in terms of SWOT analysis

Answer 23

uses external management consultants working directly with the boss of the business

Question 24

Benefits and drawbacks of a top-down approach

Answer 24

+detachment from company culture may allow aspects of the business to be seen in new lights

-managers may fail to share all info with those conducting SWOT analysis to present business in a more favourable light

Question 25

What is a consultative approach in terms of SWOT analysis

Answer 25

when a boss travels around the business -allows for more thorough analysis about what works well and what doesnt -can do this by engaging with workforce, diff employees

Question 26

Benefits and drawbacks of a consultative approach

Answer 26

+greater insight from wider range of contributors +chance for boss to gain first hand understanding -staff may feel less willing to point out issues

Question 27

What are key performance indicators

Answer 27

quantifiable measures of aspects of a business's performance that the business considers to be the main determinants of its commercial

Question 28

Name 6 examples of commonly used KPIs

Answer 28

-staff turnover -brand recognition -unit

Question 29

What is evidence-based decision making

Answer 29

-

Question 30

What is subjective decision making

Question 31

What is corporate culture

Answer 31

sums up the spirit, attitudes, behaviours and the ethos of an organisation

Question 32

What is a strong culture

Question 33

What is a weak culture

Question 34

Name 4 signs of a strong culture

Answer 34

-focusing on customers real needs -> allowing staff to make decisions -staff show a real feeling for the organisation as 'us' as a long-term commitment -a united view among staff that the organisation is force for good -sticking together and working together at a time of crisis

Question 35

Name 4 signs of a weak culture

Answer 35

-staff follow a script when dealing with customers (untrusted) -'us' tends to be a department, not the business -cynical view among many staff -> doubting company's supposed principles and ethos -when things look bad -> better qualified staff look to find another job

Question 36

Name Handy's 4 classifications of cultures

Answer 36

-power culture -role culture -task culture -person culture

Question 37

What is a power culture

Answer 37

occurs when there is one/ a small group of extremely powerful ppl leading an organisation

Question 38

Name 3 characteristics within a power culture

Answer 38

-everything goes through boss -communication is through personal contact -autocratic leadership style

Question 39

What is role culture

Answer 39

is when power is based on position in hierarchy -dominated by rules and procedures

Question 40

Name 4 characteristics of role culture

Answer 40

-power depends on position within organisational structure -culture is bureaucratic -organisation will struggle to cope with rapid change -leadership style is likely to be autocratic

Question 41

What is a bureaucratic organisation

Answer 41

initiation stifled by paperwork and checking and re-checking of actions

Question 42

What is task culture

Answer 42

when the project is the central focus -senior managers allocate projects to teams of employees

Question 43

Name 3 characteristics of task culture

Answer 43

-each project team is formed for a single project -individuals power depends on their expertise rather than status within the organisation -employees become used to working with staff from other departments -> understand diff perspectives

Question 44

What is person culture

Answer 44

-indivudals have become more important than organisation -individuals form groups where they share knowledge and expertise -operating outside restrictions of hierarchy -empowered -autonomous -

Question 45

Name 3 characteristics of person culture

Answer 45

-staff are well paid -leadership style is democratic -staff feel sense of personal development

Question 46

Name 3 factors affecting corporate culture

Answer 46

-leadership style -> organisations formed by an entrepreneur with a strong character who is still in charge may reflect that leaders personality -type of ownership -> plcs are likely to place the need to satisfy stock markets above all else -> can create a culture where short-term returns are encouraged, unlike privately owne family firms -recruitment policies ->

Question 47

Name 4 reasons why people will resist attempts to changed culture

Answer 47

-self-interest -low tolerance to change -misunderstanding of the proposed change -different assessments of theneed to change

Question 48

Name 4 factors needed for successful cultural change

Answer 48

-clear purpose -education and training -consistency of communication methods and messages -effective communication that change is going to happen

Question 49

What are stakeholders

Answer 49

groups influenced by and influence operations of a business

Question 50

What are shareholders

Answer 50

owners of a limited company