3.4 - Influences On Businesses Decisons

Question 1

What is meant by power culture?

Answer 1

Power is held by just a few individuals whose influence spreads throughout the organisation.

Question 2

What are some features of a power culture?

Answer 2

• control radiates from the centre
• concentrates power among a few
• few roles and a little bureaucracy
• swift decisions as possible
• quick decision making

Question 3

What is meant by role culture?

Answer 3

Culture based on rules:
- people have clearly delegated authorities within a highly defined structure
- Hierarchical bureaucracy
- power derives from a persons positions
Results in slower decision making

Question 4

What is meant by task culture?

Answer 4

Forms when teams in an organisation are formed to address specific problems or progress projects.

Question 5

What are some features of task culture?

Answer 5

• teams are formed to solve particular problems
• power derives from expertise as long as a team requires

Question 6

What is meant by person culture?

Answer 6

Individuals very much see themselves as unique and superior to the organisation

Question 7

What are some features of person culture?

Answer 7

• people believe themselves to be superior to the business
• business full of people with similar training, background and expertise
• common in firms of professionals e.g. lawyers
• power lies in each group of individuals

Question 8

What is short-termism in business?

Answer 8

A focus on quick financial results, such as quarterly profits or share price, often at the expense of long-term success.
E.g. Cutting R&D budgets to boost profit, delaying investment in training or technology.

Question 9

What is long-termism in business?

Answer 9

A focus on long-term goals like innovation, sustainability, and market share growth.
E.g. Investing in staff development, adopting environmentally sustainable practices.

Question 10

Give two potential drawbacks of short-termism.

Answer 10

• Damages long-term competitiveness
• reduces employee motivation and innovation.

Question 11

Give two potential benefits of long-termism.

Answer 11

• Builds strong brand reputation
• encourages innovation and sustainable growth.

Question 12

What is evidence-based decision making?

Answer 12

Making business decisions based on data, facts, and analysis (e.g. market research or financial forecasts).

Question 13

What are the benefits of evidence-based decision making?

Answer 13

More rational, reduces risk of bias, and is usually more reliable.

Question 14

What is subjective decision making?

Answer 14

Decisions based on intuition, personal experience, or opinions rather than hard data.

Question 15

What are the risks of subjective decision making?

Answer 15

Can be biased or inconsistent, may ignore data or overlook important factors.

Question 16

When might subjective decision making be useful?

Answer 16

In fast-moving or uncertain environments where data is limited or time is short.

Question 17

Name three internal stakeholders.

Answer 17

Employees, managers, and owners/shareholders

Question 18

Name three external stakeholders.

Answer 18

Customers, local community, pressure groups

Question 19

What may be the different stakeholder objectives?

Answer 19

• employees: Job security, fair pay, good working conditions.
• customers: High quality, low prices, good service.
• shareholders: Maximise profit and increase share value.
• local community: Employment opportunities, minimal environmental disruption.
• pressure groups: promote ethical behaviour, ensure worker rights, change laws
• managers: Achieve performance targets, Lead and motivate staff effectively

Question 20

How can shareholders influence business decisions?

Answer 20

By voting at AGMs, influencing dividend policy, or putting pressure on short-term profitability.

Question 21

How can stakeholders influence business decisions?

Answer 21

Through media pressure, lobbying, buying behaviour, industrial action, or partnerships.

Question 22

Give an example of stakeholder vs shareholder conflict

Answer 22

Raising wages (employee benefit) might reduce profits (shareholder concern).

Question 23

What are business ethics?

Answer 23

Moral principles that guide business decisions and actions, focusing on doing what is right for people, society, and the environment.

Question 24

What is the trade-off between profit and ethics?

Answer 24

Ethical decisions may increase costs and reduce short-term profit, but can improve brand reputation and long-term success.
E.g. Using cheaper overseas labour may boost profits but raises ethical concerns about working conditions and exploitation.

Question 25

What are ethical issues around pay and rewards?

Answer 25

High executive pay vs low employee wages can create inequality and damage morale; ethical businesses aim for fair pay.

Question 26

What is Corporate Social Responsibility (CSR)?

Answer 26

When a business voluntarily considers its social, environmental, and economic impacts, beyond what the law requires.

Question 27

Give two examples of CSR activities.

Answer 27

Reducing carbon emissions and supporting local community projects.

Question 28

Give two benefits of acting ethically.

Answer 28

Builds customer loyalty and enhances brand image.

Question 29

Give two drawbacks of acting ethically.

Answer 29

Higher costs and possible lower short-term profits.