7.3c Assessing Short and Long Term Performance Flashcards
1
Q
Short-termism definition
A
When businesses focus on the creation of short-term profits at the probable expense of the long-term interests.
2
Q
Why might a business take a short-term approach?
A
Pressure from shareholders
3
Q
How does short-termism affect the business positively?
A
- Happy shareholders
- Motivated workforce
- Can adapt to changes in market
4
Q
How does short-termism affect the business negatively?
A
- Shortened tenure of leaders
- Businesses are less likely to invest
- Less investment in human capital
5
Q
Long-termism definition
A
Making decisions with a view of meeting long-term objectives
6
Q
How does long-termism affect the business positively?
A
- More open and flexible to change
- Can adapt to key factors in the external environment
7
Q
How does long-termism affect the business negatively?
A
- Can’t neglect the needs of shareholders
- Looking too far into future may mean fine tuning of business is ignored
