3.4 influences on business decisions

• corporate influences


  factors that affect what managers should take into account when making strategic decision
• short-termism


  pressure on a business to perform in the short term

  - maximise profits

  - minimise R&D investment

  - maximise dividends
• long-termism


  decision making is focused on achieving the long term vision and objectives of the business

  - ongoing investment into R&D

  - investing in recruitment and training

  - establishing good rapport with suppler
• evidence-based decision making


  taking a systematic and fact-based approach when determining objectives, strategy and tactics
• subjective decision making


  guided by personal opinions and experiences of key decision makers
• corporate culture


  the values and standards shared by people and groups within an organisation
• effects of corporate culture

  - decision making

  - organisational structure

  - communication

  - leadership style

  - attitudes towards work

  - workforce performance
• features of a strong corporate culture

  - staff respond positively to organisational values

  - shared sense of responsibility towards mission objectives

  - motivated and loyal workforce

  - abide by policies
• features of a weak corporate culture

  - little alignment with organisational values

  - employees have to be forced to perform duties

  - greater management control and supervision
• task culture


  emphasis on achieving set outcomes through cooperation and team work
• role culture


  clear rules and procedures result in hierarchy with a clearly defined structure
• power culture


  a few people control to the organisation have control (autocratic)
• entrepreneurial culture


  risk taking and innovation are actively encouraged and rewarded, whilst failure is not criticised
• stakeholder


  any individual or group with an interest in the actions of the business
• internal stakeholders


  employees, managers, owners
• external stakeholders


  customers, suppliers, shareholders, government
• shareholders


  the owners of a company who have taken a risk by investing their capital into the business
• stakeholder concept


  a business' responsibilities are towards all of its stakeholders
• business ethics


  relates to the rights and wrongs of making a strategic decision that are beyond legal requirement
• trade-offs


  when one decision results in the loss of an alternate outcome
• corporate social responsibility (CSR)


  continuous commitment by a business to behave ethically and contribute to economic development
• benefits of CSR


  - financial incentives (attract investment, avoid taxes)

  - HR (higher staff retention)

  - marketing (customer loyalty)

  - operations (lower production costs)
• drawbacks of CSR


  - costs (training, working conditions)

  - can be subject to damaging criticism if not met

  - opportunity costs
• socially responsible business


  one that considers business ethics as a key influence on its strategic decisions