3.4.1 Corporate influences

Question 1

What are Corporate influences?

Answer 1

Internal factors that affect a businesses decision making and have an impact on how it is run.

Question 2

What is short-termism?

Answer 2

When the managers priorities immediate issues and ignore long term ones.

Question 3

What are 3 causes of short-termism?

Answer 3

• To make short term performance measures give better results. If the managers of a company are awarded based on short term performance measures then they get tempted to only take action to fix short term issues.
• They are scared of a “takeover”. Boosting short term profit tends to raise share price therefore deterring anyone who may be planning a takeover.
• Many bosses are used to managing finance companies and don’t have a good understanding of long term decision making compared to engineering or marketing companies.

Question 4

Effects -> What is there not enough time or money spent doing during short-termism?

Answer 4

Research and development.

Question 5

Effects -> What pay schemes may be adopted during short-termism and for who?

Answer 5

Pay schemes for directors that focus on achieving short term financial objectives.

Question 6

Effects -> What is cut during short-termism and what does it lead to?

Answer 6

Workforce is cut which leads to a high labour turnover and loss of skills that may be needed in the future.

Question 7

Effects -> What is there low budgets for during short-termism?

Answer 7

Low training budgets.