Theme 3.4 Influences on business decisions📗

What is evidence based decision making?

An approach to decision making that involves gathering information and using a systematic and rational approach to reach a conclusion.

What is long-terminism?

The time period were decisions have an impact on the vision, mission and objectives of a business, typically longer than five years.

What is short-terminism?

Where business and managers are focused on quick financial rewards, such as quarterly profit or sales figures, often at the expense of investment in important areas.

What is subjective decision making?

A more holistic approach to business strategy, incorporating aspects such as CSR and ethical behaviour.

What is corporate culture?

An unwritten code of conduct within a business organisation that reflects its values and embodies the shared beliefs and assumptions that underpin the decision-making processes.

What is culture?

Shared attitudes, values, customers and expectations.

What is person culture?

Where there are a number of individuals in the business who have expertise, but they don’t necessarily work together.

What is power culture?

Where there is a central source of power responsible for decision making.

What is role culture?

Decisions are made through well established rules and procedures.

What is a strong culture?

A culture where the values, beliefs and ways of working are deeply embedded within the business and its employees.

What is task culture?

When a business allows teams to focus on a particular task within the broad remit of the overall aim of the business.

What is a weak culture?

When the needs of the business are put before the needs of the customer, communication is weak, staff turnover is high and mistakes are about blame and not learning.

What are external stakeholders?

Groups outside a business with an interest in its activities.

What are internal stake holders?

Includes employees, managers, board of directors and the owners of the business. ( people involved within the business).

What is a shareholder approach?

When a business should focus purely on shareholder returns in its business decisions/objectives.

What are shareholders?

The owners of a company who have taken a risk by investing their capital into the business.

What is a stakeholder approach?

When a business should consider all of its stakeholders in its business decisions/objectives.

What are stakeholders?

People or groups who have an interest in the actions of a business. They include owners, employees, customers, suppliers, the local community, pressure groups, local and central government.

What is capital employed?

All the long term finance of the business including the share capital, retained profits and non current liabilities. Calculated as non-current liabilities + Total equity.

What is corporate social responsibility? (CSR)

When a business pays attention to the impact the company’s actions have on social and environmental issues and the impacts on a range of stakeholders, not just shareholders.

What is ethics?

Moral principles that determine how business decisions are made and may include providing good working conditions, fair pay and assessment of environmental impacts. They are considered to be the right thing to do.

What is a socially responsible business?

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