3.4.1 - CORPORATE INFLUENCES Flashcards
State 4 Influences on Business Decisions
- Corporate Influences
- Corporate Culture
- Stakeholder Persepctives
- Business Ethics
Explain Influence on Business Decision - Corporate Influences
most have Set Stratergy which has Long Term and Short Term Goals -> might Attempt to Make Short Term Decisons e.g. Boost Profit that Don’t fit Long Term Strategy
- Corporate Culture - If Culture is More Resistant to Change, Decisions are More Like to be More Cautious and Involve Less Risk -> might Result in Less Innovation and Loss of Competitive Edge
Explain Influence on Business Decision - Corporate Culture
If Culture is More Resistant to Change, Decisions are More Like to be More Cautious and Involve Less Risk -> might Result in Less Innovation and Loss of Competitive Edge
Explain Influence on Business Decision - Stakeholder Perspective
some take ‘Sharholder Approach - view of Shareholders Influencing Decision Making, while Those of Other Stakeholders and Marginalised - some Take ‘Stakeholder Apppraoch –> means Views and Wider Needs of Wider Range of Stakeholders are considered
Explain Influence on Business Decision - Business Ethics
firms with Strong Ethical Stance Likely to make Different Decisions from Those that have Little Regard for Ethics
State actions that Short-Termism Approaches are likely to Take
- Maximise Short-Term Profits
- Invest Less Money in Research and Development
- Invest Less in Training
Explain Short-Terminism Approach - Maximise Short-Term Profits
- Most Pursue ST Profits - most Companies that Pursue ST Objectives Aim to Increase Shareholder Value
- Likely to Do this by Trying to Maximise ST Profits
- might Try to Maximise Revenue by Charging Higher Prices or Investing Heavily in Persuasive Advertising
Explain Short-Terminism Approach - Invest Less Money in R&D
- is Because R&D can be a Big Drain on Cash Reserves -
- Company will Prefer to Use This to Help Fund Short-Term Objecitves
- Investment in R&D is Risky -> Returns could be Negative If Projects are Fruitless
Explain Short-Terminism Approach - Invest Less in Training
- Training Staff is Expensive and Returns are Not Immediate
- Returns From Training Likely to be Positive Because Workers will be Better Motivated, Better Equipped to Do their Job and Staff Turnover will be Lower
State are 2 Drawbacks of Short-Terminism
- Threatens Long Term Profitability
- Companies May Lose their Competitive Edge in Overseas Markets
Explain Drawback of Short-Terminism - Threatens Long Term Profitability
- Threatened by Focusing Too Much on Short Term
- Possible that Some Very Lucrative Long-Term Opportunities Might Be Overlooked
- e.g. Failure to Invest in R&D -> chance to lucrative innovation is lost
Explain Drawback of Short-Terminism -Lose their Competitive Edge in Overseas Markets
- If Businesses Fail to Invest in Future by Developing New Products, and New Technology to Reduce Costs, they will Eventually Lose their Market Shares
- Result in Less Job and Wealth Creation
Explain Long-Terminism Appraoch
- Incorporates CSR
- Considers Ethical Behaviour of Business in Decision Making
- R&D have L-T Goals
- Staff Development is Seen a L-T Objective of Business, to Retain and Develop Staff
- L-T Technology Investments Secure Data for Future
Explain Evidence-based Decison-Decision Making
- requires a Systematic and Rational Approach to Researching and Analysing All the Available Information before a Conclusion is Reached
- For Complex and Strategic Decisions -> Likely to be More Data Available
- Involves : Identifying Objectives , Collecting Information and Ideas, Analysising Information and Ideas, Making a Decision, Communication, Outcome, Evaluating Resulting
Explain Subjective Decision Making
- where the Personal Opinions of the Key Decision Maker Strongly Influence the Course of Action Taken
- Appropriate if Corporations are Dominated by a Powerful and Persuasive Leader -> May be Occaassion where Leader Makes Strategic Decisions Singled Handedly, Without Consultation and With Only a Limited Range of Infomation
