3.4 - Influences on Business Decisions

Vocabulary practice flashcards covering corporate influences, decision-making approaches, organizational cultures, stakeholder relationships, and business ethics based on Edexcel A Level Business material.

Long-term decisions

Decisions likely to affect the long-term mission and vision of a business over a period of anything up to ten years.

Short-term decisions

Decisions more likely to impact objectives and tactics over the next few years at most.

Short-termist approach

A decision-making approach focused on short-term priorities, often influenced by executive pay structures linked to short-term success such as share price increases.

Evidence-based decision-making

A systematic and fact-based approach to determining objectives, strategy, and tactics by gathering and analyzing data.

Subjective decision-making

Decision-making guided principally by the personal opinions, instincts, and experiences of key decision-makers.

Strong company culture

An organizational environment where factors such as attitudes, values, and beliefs are easily recognized and deeply embedded into business operations.

Weak culture

An organizational environment where shared values are hard to identify, often characterized by high staff turnover and a "them and us" attitude between workers and management.

Power culture

An organizational culture identified by Charles Handy where decision-making is carried out by one or a small number of powerful individuals at the top of the hierarchy.

Amstrad

A company cited as adopting a power culture with Alan Sugar as its powerful primary decision-maker.

Role culture

An organizational culture where power lies with specific job titles and clear hierarchical structures, expecting employees to adhere to established rules.

Task culture

An organizational culture where decision-making power lies with teams formed of employees with specific skills to complete specific projects.

PepsiCo

A business cited as an example of having a task culture where teams are created and dissolved as projects start and finish.

Person culture

An organizational culture where individuals with extensive skills work autonomously and loosely together, holding power over their own decision-making procedures.

SuperJam

A business whose founder developed his idea with his grandmother and built a culture focused on contributing to the wellbeing of senior citizens.

Timpson

A company that fosters a culture of loyalty by actively recruiting prisoners approaching the end of their custodial sentences and providing extensive training and support.

Subcultures

Unofficial group norms or attitudes within an organization, such as undermining management decisions, that can be difficult to identify and change.

Stakeholders

Individuals or groups that affect or are affected by the actions of a business.

Internal stakeholders

Individuals or groups inside a business, such as employees, managers, directors, and business owners.

External stakeholders

Individuals or groups outside a business, including customers, shareholders, creditors, suppliers, the local community, government, and pressure groups.

Owners

Internal stakeholders who may be sole traders, partners, or shareholders in private limited companies, relying on the business to provide income and profit.

Employees

Internal stakeholders whose primary objectives are earning a living, job security, fair compensation, and a safe working environment.

Managers

Internal stakeholders responsible for day-to-day operations whose primary objective is to meet company goals, maximize profits, and minimize costs.

Shareholders

Individuals or entities who own stock in a company and invest with the primary goal of maximizing their returns on investment.

Suppliers and creditors

External stakeholders whose primary objective is for the business to pay what it owes promptly and in full, often seeking long-term supply arrangements.

Pressure groups

External organizations that seek to influence business or government policies and actions to promote a specific cause or agenda.

Stakeholder approach

A corporate strategy that focuses on interdependencies between stakeholder groups and ensures operational benefits and drawbacks are shared equally.

Shareholder approach

A corporate strategy focused primarily on meeting the needs of shareholders by maximizing profits to increase dividends and improve share price.

Business ethics

Strategic decision-making principles regarding rights and wrongs that extend beyond legal requirements and align with corporate responsibility.

Ethical code of practice

A set of explicit rules adopted by a business to inform decision-making regarding environmental responsibility, fair working practices, supply chains, and eliminating corruption.

Gender pay gap

The difference in average hourly earnings between women and men, which stands at around 10% in the UK.

Corporate Social Responsibility (CSR)

Conducting business activity in an ethical way while balancing shareholder interests against the interests of the wider community.

H&M

A high street retailer with a goal of using only recycled or sustainably sourced materials by 2030 while publishing updated supplier information.

Marks & Spencer

A retailer that practices responsible marketing by never directing marketing to children under 12 and avoiding high fat, sugar, or salt product ads to children under 18.

Prêt à Manger

A café chain that protects the environment by offering discounts to customers who bring their own reusable coffee cups.

John Lewis

A retailer known for its "Never Knowingly Undersold" slogan, committing to regularly checking competitor prices to ensure the lowest local price.