3.4 - Influences On Businesses Decisons Flashcards
What is a shareholder?
Anyone who has an interest in the business or is affected by the business activity.
E.g. customers, suppliers, employees, shareholders
What is a stakeholder?
A person who holds shares in a business and can also be stakeholders.
What is meant by power culture?
Power is held by just a few individuals whose influence spreads throughout the organisation.
What are some features of a power culture?
- control radiates from the centre
- concentrates power among a few
- few roles and a little bureaucracy
- swift decisions as possible
- quick decision making
What is meant by role culture?
Culture based on rules:
- people have clearly delegated authorities within a highly defined structure
- Hierarchical bureaucracy
- power derives from a persons positions
Results in slower decision making
What is meant by task culture?
Forms when teams in an organisation are formed to address specific problems or progress projects.
What are some features of task culture?
- teams are formed to solve particular problems
- power derives from expertise as long as a team requires
What is meant by person culture?
Individuals very much see themselves as unique and superior to the organisation
What are some features of personal culture?
- people believe themselves to be superior to the business
- business full of people with similar training, background and expertise
- common in firms of professionals e.g. lawyers
- power lies in each group of individuals
What is gearing ratio?
Gearing ratio examines the extent to which a business is dependent upon borrowed money
What is the formula for gearing ratio?
Non-current liabilities / capital employed (x100)
What is Return on capital employed (ROCE)?
- Financial ratio that measures a company’s profitability and the efficiency with which is capital employed.
- higher percentage = GOOD
What is the formula for ROCE?
Operating profit/ capital employed (x100)
