3.4 Influences on business decsions Flashcards
(27 cards)
What are businesses likely to do in the short term
- maximise short-term profits
- invest less in R&D and training
- return profits to shareholders
- pursue external growth strategies
What are businesses likely to do in the long term
- Invest in R&D and training
- focus on profit quality
- take an ethical stance on decision-making
- pursue the interests of stakeholders
Define corporate culture
An organisation that includes traditions, rituals, attitudes and values that make up the way a business is run
What are the ads of a strong culture
A sense of belonging
Motivation
Improved commitment from employees
A sense of togetherness
People understanding their purpose within the organisation
How can businesses form a culture
Key personalities, leaders and employees who influence others
Rewards, what the business recognises as success
Stories, things that have happened, good or bad in the past
Rituals, significant events or way of doing things
What is power culture
One person that drives the organisation and decisions
Within this there are few rules and little bureaucracy
What is role culture
People have clear delegated authorities within a highly defined structure
Decision making tends to be slow
What is task culture
Teams are formed to solve particular problems
There is no one power source
What is person culture
People believe themselves to be superior to the business
Common in firms of professionals e.g lawyers
What does each of handy’s culture link to in leadership styles
Power culture- autocratic
Role culture- autocratic or paternalistic
Task culture- paternalistic/democratic
Person culture- Democratic
What are the 4 layers of organisational culture
Paradigm
Behaviours
Beliefs
Value
Why change culture
To improve business performance- low quality standards
To respond to significant change- market changes, political and legal environment
What are signs for a change of culture
When their may be internal fighting
High levels of voluntary staff turnover and hard to retain staff
Increased absenteeism
What are some features of a strong culture
A source of competitive advantage
Clear set of values, mission and goals
Engaged employees, higher motivation and loyalty
What are features of a weak culture
Little alignment with business values
Inconsistent behaviour
What is the problems with changing culture
Culture is deep set, extends from people’s attitudes and beliefs so may be hard to change
Takes a long time, can require education and training
Define ethics
Moral principles that guide the behaviours of individuals and businesses
How can ethics determine decisions
Environment- ethical operations will ensure that a business is sustainable and not damaging to the environment
Workers- ethical businesses will ensure good working conditions, fair pay and care for their overall wellbeing
Corruption- ethical businesses will be fair, honest and open
What are examples of ethical practices
Treating workers and suppliers fairly
Being honest with customers
Ethical sourcing of materials
Caring for the community
Caring for the environment
What is corporate social responsibility
The belief that a business should act responsibly and protect the interests of all its stakeholders
How to calculate capital employed
total equity + non-current liabilities
How to calculate ROCE
Operating profit / capital employed x 100
What is gearing
Analyses how a business has raised its long-term finance and represents how good a business is at paying back debts
How to calculate gearing
Non-current liabilities / total equity + non-current liabilities (capital employed) x 100
