Corporate Influences (3.4.1) Flashcards
What are KPI’s?
KPIs, or Key Performance Indicators, are measurable values that determine how effectively an individual, team or organization is achieving a business objective.
What are the bits of data that you might track to assess whether your business is performing well? (5)
-Sales
-Profit
-Market Share
-Reviews
-Waste
What is Short-termism?
Concentration on short-term projects or objectives for immediate profit at the expense of long-term security. Short-Term decisions are more likely to impact on objectives and tactics over the next few years at most.
What are objectives and tactics?
Objectives-Specific, measurable outcomes that businesses hope to achieve in a given time period
Tactics- The individual steps and actions taken to achieve an objective
What is Long-termism?
Long-Term decisions are likely to affect the long-term mission and vision of the business over a period of anything up to 10 years.
What are some examples of short-term decision making decisions?
-Cutting R+D, workers, equipment
-Give profit to shareholders
-Sell assets and lease them back
-Reduce size of the workforce
-Move workers to zero-hours/temporary contracts
What are the Advantages of Short-Term Decision making?
-Costs are reduced
-Profit will improve quickly
-Shareholders are happy
-Performance will look good on paper
What are the Disadvantages of Short-Term Decision Making?
-Lack of innovative technology
-Lack of growth (economies of scale)
-Unmotivated workers
-Changed wants/needs of consumer
What can the problems of a businesses adopting a short-termist approach be?
-Loss of profitability and competitive edge as LT opportunities ignored
-Need to analyse regular financial reports means managers lack time to consider Longer-term corporate strategic direction
-Reliance on ST contracts with suppliers and workers is likely to lead to higher than necessary costs as benefits such as bulk-buying discounts can’t be achieved
By prioritizing immediate profits over long-term growth and investment, CEOs may inadvertently hinder a company’s progress, impede innovation opportunities, and strain stakeholder relationships.
What does taking a Long-term strategy include a business to do?
-Conduct ongoing investment in research and development and new product development
-Adopting a long-term outlook with emphasis on frequent financial reporting
-Investing significant resources into the recruitment, training and retention of staff
-Establishing and nurturing meaningful and lasting relationships with suppliers
What are considered examples of Long-Term strategies?
-Expansion to new geographical areas
-Adding Green technology/vehicles
-Investing in staff training/wellbeing
-Improving product quality/features
-Building new infrastructure
What do the long-term strategies do?
Improve long-term profitability and sacrifice short-term profit
What do long-term strategies depend on?
-How much influence shareholders have
-Attitude of management (Corporate Culture)
-Requires timescale for success
What is Evidence-Based Decision Making?
Systematic and facts-based approach using data and analysis to justify decision-making and determine objectives, strategy and tactics
What are the steps in the evidence-based approach to business decision making?
1.Identify and set objectives- identifies measurable objective wants to achieve and determines criteria against which success will be measured
2. Gather data and ideas
3. Analyse data and ideas
4. Make an evidence-based decision- strategic and tactical decision made
5. Implement the decision
6. Monitor and review- outcome of decision can be used to inform future decision-making
What is subjective Decision-Making?
Using intuition and ‘hunches’ of influential staff to make a decision. When data is uncertain or incomplete. When markets are unpredictable. In crisis situations where it isn’t possible to gather data.
Out of evidence based and subjective decision making which one is more risky?
Subjective decision making is more risky
What are some situations where Subjective decision making may be approprioate?
-Where quick decisions need to be made
-Where there is a lack of data to support evidence-based decision-making or where data conflicts
-Where persuasive and single-minded leader runs the business
