3.4.1 Corporate influences

Question 1

what is short termism?

Answer 1

where a business prioritises short term rather than long term performance

Question 2

some short termism performance measures are…?

Answer 2

-share price
-revenue growth
-gross & operating profit
-unit costs & productivity
-return on capital employed

Question 3

some long termism performance measures are…?

Answer 3

-market share
-quality
-brand reputation
-innovation
-employee skills & experience
-social responsibility & sustainability

Question 4

short termism may possibly be at the expense of…?

Answer 4

long termism
(investment also required for long termism)

Question 5

why might a business be concerned with short term performance?

Answer 5

-stock market (investor) focuses on the latest financial performance
-reliance on bonuses based on short term performance
-frequent changes in leadership &
strategy
(takeovers -> however takeovers are expensive)

Question 6

possible indicators of short termism are…?

Answer 6

-bonuses based on short term objectives
-low investment in R&D
-high dividend payments rather than reinvesting profits
-overuse of takeovers rather than internal growth

Question 7

what is evidence based decision making?

Answer 7

-based on data & analysis
-time consuming & costly
-increasingly common & automated, supported by Big Data and data analytics