Corporate influences and culture Flashcards
Define CORPORATE INFLUENCES
Corporate influences are the internal factors affecting business decisions.
What are the three types of business decision?
- Strategic decisions - these are very risky, long term, complex decisions that are made by senior management. They affect the entire direction of the business and therefore require substantial capital investment. Once such a decision has been made, it is very difficult to reverse.
- Tactical decisions - these are medium term, less complex decisions made by middle managers. They follow on from and affected by strategic decisions.
- Operational decisions - these are low risk, day-today decisions made by more junior managers that are simple and routine.
Define CORPORATE TIMESCALES
Corporate timescales refers to strategy and the expectation of when a return will be achieved. There are two types: short termism and long termism.
Define SHORT TERMISM
Short termism is a strategy where businesses and their managers are focused on a quick financial return. This is often at the expense of investment in important areas such as R&D, training and staff development or investment in technology.
Define LONG TERMISM
Long termism is a more holistic approach to business strategy, incorporating aspects such as ethical behavior and CSR. It is often associated with being a more sustainable business approach.
What are the main approaches to decision making?
- Evidence based - means arriving at a decision in a rational and logical manner, having analysed and evaluated relevant evidence.
- Subjective - means relying more on instinct, experience and ‘gut-feeling’ without developing a logical argument for the decision made.
What are the advantages of evidence based decision making?
- Decision making is more disciplined.
- Data can provide useful guidance when looking at a range of options.
- Options can be simulated and tested.
- Can help influence others to support the decision.
What are the disadvantages of evidence based decision making?
- Analysis of the data can be bias
- Does not take ethical or social issues into account.
- Time consuming and costly.
- Lacks creativity which may lead to failure to come up with different innovative approaches.
What are the advantages of subjective decision making?
- Draws upon experience and skills of senior management
- takes the social and ethical impacts into account.
- Relatively quick, taking advantage of opportunities as they arrive.
What are the disadvantages of subjective decision making?
- Management experience may not be relevant in fast changing, dynamic markets.
- Emotions can cloud judgements.
- Hard to justify for business decisions involving significant risks.
Define CORPORATE CULTURE
Corporate culture is the values, norms and attitudes of employees that affects their decision making and behaviours towards each other and stakeholders.
Why is corporate culture important?
- Can affect staff attitudes to change
- Can help a business improve competitiveness
- Can have an impact on staff motivation and performance
- Determines objectives set and strategies chosen by the business
- Can cause problems (if it is too weak or too strong)
- Significant for takeovers and mergers, which can cause clashes between cultures.
What are the features of strong corporate culture?
- Employees believe in the corporate culture and strongly support it
- Not easily copied, which can be a source of competitive advantage
- Staff tend to be more loyal and motivated, leading to higher productivity.
- Customer needs are key to all staff members
- Encourages suitable risk taking, with mistakes being seen as learning points
- Strong internal communication between departments and divisions.
What are the features of weak corporate culture?
- Employees do not support the corporate culture
- Greater management control and supervision is needed to ensure staff comply with rules and policies, leading to low motivation and productivity
- Labour turnover is likely to be high
- Needs of the business is put above the needs of the customers
- Mistakes are seen as problems and not a chance to learn and improve
- There will be inconsistent behaviour within the business
What are the 4 different types of corporate culture?
Power, task, role, person
What factors influence corporate culture?
- Belief and personality of leader and key staff
- Role of founders and owners
- Nature of the business
- Type of product/service
- Recruitment and promotion process
- Market that the business operates in
- Attitude to customer service
Why is corporate culture changed?
- To improve business performance
- Due to a change in ownership or size
- Due to a change in leadership
- Due to a chance in market conditions
- Due to changes in external factors
What are the difficulties faced when replacing established corporate culture?
- Resistance to change - fear of the unknown, loss of power/skills/income, disruption to routine, breaking up of work groups or friends
- Lack of trust - misunderstanding of the reason for change, loyalty to existing relationships
- Period of adjustment - changing the attitudes and behaviour of staff is complicated and takes time
- Alienation of suppliers, customers and other stakeholders.
Outline the features of the power corporate culture.
There is a centralised organisational structure in which few key people have power to make decisions. The leadership style is autocratic and staff are judged on what they achieve, not how they do their job.
There is minimal bureaucracy and quick decision making.
However, it can become a hostile place to work.
Outline the features of the role corporate culture.
The organisation is run based on rules and procedures with a tall hierarchy system and long chains of command. Everyone has a clearly defined role which determines their power. Paternalistic or autocratic leadership style.
However, decisions are made slowly
Outline the features of the person corporate culture.
The organisation is full of people with similar training and abilities and influence is shared based on expertise
Corporate objectives are set through mutual consent and reflect personal ambitions through democratic or laissez-faire leadership. It is highly creative with highly creative with quick decision making.
However, conflicts can arise if common goals are not shared.
Outline the feature of the task corporate culture.
A matrix structure. Teams are formed to deal with specific projects and are then disbanded, so the focus is on the ability to get the job done. Power lies with the team for the project duration and leadership style is democratic. It is flexible and influence is based on expertise, not position.
However, too many teams can cause confusion and other problems.
Define the PERSON CULTURE
Person culture is a type of organisational culture where a high level of autonomy is given to employees who have high skills.
Define the ROLE CULTURE
Role culture is a type of organisational culture where clear rules and procedures result in a clear hierarchy where the organisation functions based on each individual’s role.
