3.4.1 Corporate Influences

Question 1

Define ‘short-termism’.

Answer 1

• Focuses on achieving quick results within a short period
• Emphasis is usually on maximising profits, share prices etc
• The focus is on quick financial rewards, such as quaterly profits or sales.

Question 2

What characterisitcs are there of short-termism?

Answer 2

• Cost cutting measures to boost short-term profits
• Prioritise short-term supply contracts
• Reduced spending on research & development
• Maximising shareholder returns quickly
• Invest less in human resource training etc.

Question 3

What problems do businesses with a short-termist approach face?

Answer 3

• Loss of profitability & competitive edge as lucrative long term opportunities are ignored in favour of short term priorities
• Reliance on short-term contracts with suppliers & workers is likely to lead to higher than necessary costs as benefits such as bulk buying discounts cannot be achieved

Question 4

Define ‘long termism’.

Answer 4

• A focus on sustainable growth over a longer period, often prioritizing investments that may not pay off immediately but are expected to yield the benefits in the future

Question 5

What may a long term-approach bring to a business? (ADV)

Answer 5

• Adopting a long-term outlook with less emphasis on frequent financial reporting
• Valuing & investing significant resources into the recruitment, training and retention of staff
• Establishing & nurturing meaningful & lasting relationships with suppliers

Approach is often more ethical but takes more time

Question 6

What is ‘evidence based decision making’?

Answer 6

• Involves taking a systematic & facts based approach when determining objectives, strategy & tactics to improve accuracy & reduce risks.

Question 7

How is evidence based decision making carried out?

Answer 7

• Gather & analyze internal data & external data (e.g., market trends, economic forecasts).
• Use evidence to make informed strategic decisions.
• Share decision with those responsible for implementation.
• Execute decision & monitor progress.
• Assess outcome to inform future decisions.

Question 8

Define ‘subjective decision making’.

Answer 8

• Decisions based on intuition, experience or personal judgement rather than quantifiable data.
• This approach can sometimes lead to innovative outcomes but may also carry higher risks

Question 9

What situations may subjective decision making be appropriate?

Answer 9

• Where quick decisions need to be made
• Where the nature of the industry means that subjective decisions are normal
• Where there is a lack of data to support evidence-based decision-making or where data conflicts

Question 10

Evaluate evidence based & subjective decision making.

Answer 10

• Evidence-based decision making provides a saftey net with lower risk, though it may stifle creativity in rapdily changing markets
• Subjective decision-making allows for creative flexability & innovation though it might fail if based on incorrect assumptions - more risky