Internal and external influences on corporate objectives and decisions Flashcards
Define short termism
Pressure on a business to perform in the short term e.g. maximise profits and shareholder returns (dividends)
What is a disadvantage of short termism?
May be at the cost of long term growth (e.g. if profits are used to issue dividends rather than reinvested in the business to fund growth)
How does business ownership influence corporate objectives?
Objectives of shareholders can impact corporate objectives - however, this may vary depending on whether business is Ltd or Plc
Sole trader’s objectives will be predominantly influenced by the individual’s objectives
Most Ltds take a long term view as shareholders don’t need to be impressed w high profit as they are friends and family usually, prioritise the future
List internal influences on corporate objectives
Ethical stance
Business culture
Business ownership
Resource constraints
Mission
Internal stakeholders
Performance
Personal values of owners/leaders
List external influences on corporate objectives
Change in economic policy
Pressure for short termism
Demographic trends
Competitors
Change in legislation
Any PESTLE factors
Global markets
Investors’ objectives
Define functional decision making
Decisions made within a business by managers of a specific functional area i.e. a department responsible for one aspect of the running of the business
State examples of functional decision making for marketing
Research into new markets
Product development
State examples of functional decision making for finance
Raising finance to support growth
Proportion of long term funding that is debt
State examples of functional decision making for operations
Relocating product abroad
Outsourcing
Examples of functional decision making for HR
Delayering of rationalisation
Core or peripheral workers
