3.4

Question 1

What is short-termism?

Answer 1

An excessive focus on short-term results at the expense of long-term interests.

Question 2

Why do businesses pursue short-termism?

Answer 2

Managers often given large bonuses for achieving short-term targets
The need to generate profit in the short run may reduce emphasis on corporate social responsibility
Good for fast & dynamic markets > keeps competitiveness

Question 3

What is subjective decision making?

Answer 3

Means replying more on instinct and ‘gut feeling’ without developing a logical argument.

Question 4

Evidence based decision making advantages?

Answer 4

Data can provide guidance
Decision making is disciplined and organised
Can help distinguish between alternatives and choose the most promising
Can also help influence others to support a decision
Prevents rash decisions based on hunches

Question 5

Disadvantages of evidence based decision making?

Answer 5

Analysis is not always neutral or without bias
Not always possible to agree on what counts as credible
Sufficient evidence may not be available
Different managers can reach different conclusions from the same set of data
Does not take ethical issues into account

Question 6

Advantages or subjective decision making?

Answer 6

Senior managers have a great deal of experience and skill
Managers may better understand long term aims than short term evidence suggests
Managers are more likely to consider the ethical & social impact of decisions

Question 7

Disadvantages of subjective decision making?

Answer 7

Past experience may not be relevant in fast changing, dynamic markets
Old assumptions change rapidly e.g. old people don’t use technology
Emotions can cloud judgement

Question 8

What is corporate culture?

Answer 8

The set of important assumptions that are shared by people working in a particular business and influence the ways in which decisions are taken there

Question 9

What happens in a strong corporate culture?

Answer 9

Employees believe in corporate culture and strongly support it
Staff tend to be more loyal
Staff turnover is reduced
Mutual respect between management and employees grows
Motivation is higher
Productivity is higher
Good communications exist
May encourage superior performance

Question 10

What happens in a weak corporate culture?

Answer 10

Employees do not support corporate culture
Productivity and motivation low
Danger of developing ‘them&us’ mentality
Capable staff may move on, leaving incompetent staff behind
Staff need to be forced to comply with company policy and rules
Poor performance

Question 11

How to tell if a business has a power culture?

Answer 11

Power and decision making is centred on an individual or small group
Little in the way of rules & procedures
Employees driven by a need to ‘please the boss’
Autocratic leadership style

Question 12

How to tell if a business has a role culture?

Answer 12

Bureaucratic
Well established rules and procedures
Structure will be hierarchical
Tend to avoid risk, cautious in aims and approach
Can struggle in dynamic markets
Leadership style will likely be paternalistic

Question 13

How to tell if a business is a task culture?

Answer 13

Driven by the need to get things done
Teams are created for specific tasks then disbanded
Power and authority lie within both the main departments
Works well in dynamic markets > flexible as teams can be changed as necessary
Democratic leadership style

Question 14

How to tell if a business is a person culture?

Answer 14

Loose organisations of individuals, they get together to share common abilities and skills
Often professional partnerships such as lawyers
Business objectives will reflect the personal ambitions of individuals concerned
Can cause short term conflict if common goals are not shared
Liassez-faire leadership style

Question 15

Factors for why a corporate culture may be formed?

Answer 15

The wishes and aspirations of the business founders
Personalities of key personnel
Expectations of customers
Cultural & social factors where the business operates
Scrutiny by the public and media
Nature of the product or service

Question 16

What are stakeholders?

Answer 16

All those people who have an interest of ‘stake’ in a business. Includes customers, employees, suppliers, shareholders, government, pressure groups and local communities.

Question 17

What are internal stakeholders?

Answer 17

Those directly affected by the business e.g. owners, employees & managers

Question 18

What are external stakeholders?

Answer 18

Those indirectly affected by the business e.g. customers, suppliers, competitors etc

Question 19

The shareholder model?

Answer 19

Rests on the idea that the shareholders interests are the most important.
Profit maximisation is main priority of managers
Everything managers do should be directed towards the best interest of shareholders

Question 20

The stakeholder model?

Answer 20

Managers have responsibility to take account of the interest of all stakeholders groups that are affected.

Benefits:
Improve image perception by consumers
Improved retention& motivation of staff
Close relationships with suppliers > more reliable service
Reduction in commercial activities by pressure groups
Improve public relations

Question 21

Conflict between profit-based (shareholder) and wider objectives (stakeholder)?

Answer 21

What to manufacture
Where to manufacture
Capital and labour
Pay and working conditions
The environment

Question 22

What are business ethics?

What is social responsibility?

Answer 22

The principles and standards that determine socially acceptable conduct in business

The obligation a business has to maximise its positive impact and minimise its negative impact on employees, customers, society and the environment.

Question 23

What is ethical decision making?

Answer 23

It’s following codes of practice that embody moral values. The objective is to do the right thing, acting with honest and integrity.

Question 24

Trade offs between profit and ethics?

Answer 24

Adopting an ethical stance can increase costs, therefore reducing profitability
Implementing and monitoring this behaviour can be time consuming and expensive
Often cheaper to behave unethically
Unsustainable resources are cheaper
But…
Ethical companies have shown to be highly profitable
Consumer opinions and buying choices matter
Behaving ethically can avoid the need for outside regulation which may be more costly in long run
Ethical behaviour can increase motivation and enhance leadership

Question 25

Disadvantages of behaving ethically?

Answer 25

Labour costs are increase bc of fair wages and working conditions
Supplies and materials which are ethically sourced may be more expensive
Minimising damage to the environment can mean increased costs
Changing existing method of production & corporate culture can be expensive
Competitors may be less ethical and have lower costs/prices

Question 26

Advantages of behaving ethically?

Answer 26

Favourable media attention
Improve public image > higher sales and brand loyalty
Can carry a premium price without damaging sales
More motivated workforce & ^ productivity
Improved relationships with suppliers - better quality service
Can be profitable

Question 27

What is corporate social responsibility?

Answer 27

Means taking decisions in a way that takes into account all stakeholders interests. Treating employees customer and supplies fairly, avoiding polluting activities and contributing positively to lives in the local community.

Not the same as being ethical.

Question 28

Reasons for implementing corporate social responsibility?

Answer 28

Desire to behave responsibly 
Wish to show a positive public imagine
Positive marketing ploy
Smokescreen to hide behind
Wanting to fit in with everyone else

Question 29

Rewards for implementing corporate social responsibility?

Answer 29

Can help with a good public image and reputation
Increased sales
Improved stakeholder relationships & reduces potential conflict