3.4.1 Corporate Influences

Question 1

what are corporate timescales

Answer 1

refers to when a business expects to get a return on investment

Question 2

what is short-termism

Answer 2

• this is when a business makes decisions for short term results

Question 3

what do businesses that use short termism likely to do

Answer 3

• maximise short-term profits
• invest less in training
• return cash to stakeholders

Question 4

what are the advantages of short-termism

Answer 4

+ keeps shareholders happy in limited companies
+ increases share price of the company
+ useful for new businesses aiming to become financially stable

Question 5

what are the disadvantages of short-termism

Answer 5

• makes a business fail to innovate
• no investment into projects to give the business a competitive advantage

Question 6

what is long-termism

Answer 6

• focuses on a business reaching long-term goals and improving overall performance
• businesses are willing to have large corporate timescales

Question 7

what are the advantages of long-termism

Answer 7

• less risky, strategies and objectives can be adapted over time
• increases profitability
• increases competitive advantage

Question 8

what are the disadvantages of long-termism

Answer 8

• can’t be used solely, short-termism may be used in dynamic changing markets
• not possible in small businesses that need to maximise short-term profits to survive and businesses that don’t have the money to invest in long-term projects
• may take several years to see returns on investment

Question 9

what is evidence-based decision making

Answer 9

• a structured approach that uses data thats been gathered and analysed
• e.g. 3.3, quantitative sales forecasting, decision trees, critical path analysis etc.

Question 10

what factors affect whether a business would use evidence-based decision-making or subjective approach to decision making ?

Answer 10

• a new start-up is more likely to make subjective decisions because they don’t have the data to do evidence-based decision making
• can depend on the nature of the decision, expensive and potentially irreversible decisions can be made with evidence-based decision making techniques

Question 11

what is subjective decision making

Answer 11

• less structured, based on opinions, experience and ‘gut’ instincts

Question 12

what are the advantages of evidence-based decision making

Answer 12

+ based on facts, making it easier to justify to others
+ well structured and shows a record of how the decision was reached

Question 13

what are the disadvantages of using evidence-based decision making

Answer 13

• long time to reach decisions
• data can be interpreted differently
• focusing too heavily on data can lead to firms ignoring other aspects like ethics

Question 14

what are the advantages of subjective decision making

Answer 14

• decisions can be made quickly to take advantage of opportunities
• can be used when there is a lack of data or opinion is needed

Question 15

what are the disadvantages of subjective decision making

Answer 15

• instincts may be wrong
• difficult to justify decisions to stakeholders
• leads to snap decisions without considering long term consequences