3.4.1. Corporate Influences

Question 1

Short termism

Answer 1

Short termism- when actions of managers over prioritise immediate issues, ignoring long term ones. Focus of decision making on short term priorities and objectives at expense of long term opportunities and goals.

Causes:
-Relationship between olds and financial markets
-Use of short term measures
-Threat of takeover
-Functional background of many uk bosses

Effects:
-Inadequate expenditure on R&D
-Accounting adjustments that inflate current earnings
-Bias towards using profit for high dividend payments
-Willingness to cut workforce quickly leading to labour turnover
-Focus on takeovers to grow rather than using organic growth

Question 2

Long termism

Answer 2

Approach of making decisions with focus on long term goals and opportunities even if it may involve sacrificing short term gains.

Question 3

Subjective decision making

Answer 3

Guided principally by personal opinions and experiences of key decision makers.
Allows human judgement to take precedence over data.

Question 4

Evidence based decision making

Answer 4

Process of taking systematic and fact based approach when determining objectives, strategies and tactics.
Can be less effective when facing strategic decisions which limited data may be available