Revision Resource

3.4 – Influences on Decision Making

3.4.1 – Corporate Influences


  1. a) Corporate timescales: short-termism versus long-termism

Explanation: Short-termism focuses on immediate results, often at the expense of long-term goals, while long-termism emphasizes sustainable growth and development over a more extended period.

  1. b) Evidence-based versus subjective decision making

Explanation: Evidence-based decision-making relies on data and factual information, whereas subjective decision-making is based on personal opinions, intuition, or beliefs.

3.4.2 – Corporate Culture


  1. a) Strong and weak cultures

Explanation: A strong culture is characterized by shared values and beliefs that are well ingrained in the organization, while a weak culture lacks a well-defined set of shared values and beliefs.

  1. b) Classification of company cultures:


Explanation: A culture where power is concentrated in the hands of a few individuals.


Explanation: A culture where roles and responsibilities are clearly defined, and individuals adhere to their job descriptions.


Explanation: A culture focused on task completion and performance.


Explanation: A culture that prioritizes individual employee needs and development.

  1. c) How corporate culture is formed

Explanation: Corporate culture is formed through various factors including leadership style, organizational structure, policies, and the shared values and beliefs of the workforce.

  1. d) Difficulties in changing an established culture

Explanation: Changing an established culture can be challenging due to resistance from employees, deeply ingrained habits, and the potential for creating uncertainty and confusion.

3.4.3 – Shareholders Versus Stakeholders


  1. a) Internal and external stakeholders

Explanation: Internal stakeholders are individuals or groups within the organization, such as employees and managers, while external stakeholders are entities outside the organization, such as customers, suppliers, and the community.

  1. b) Stakeholder objectives

Explanation: Different stakeholders have different objectives, ranging from profit maximization (shareholders) to job security (employees) and community development (society).

  1. c) Stakeholder and shareholder influences:


Explanation: Advocates for a business approach that considers the interests and impacts on all stakeholders in its decisions and objectives.


Explanation: Focuses on maximizing shareholder returns through increased share prices and dividends in its business decisions and objectives.

  1. d) The potential for conflict between profit-based (shareholder) and wider objectives (stakeholder)

Explanation: There can be conflicts between the profit-driven objectives of shareholders and the broader objectives of stakeholders, which might encompass environmental, social, and governance concerns.

3.4.4 – Business Ethics


  1. a) Ethics of strategic decisions:

Trade-offs between profit and ethics:

Explanation: Businesses may face dilemmas where pursuing profit conflicts with ethical considerations, requiring a balance between the two.

  1. b) Pay and rewards

Explanation: Ethical considerations in pay and rewards involve ensuring fairness, transparency, and equity in the compensation of employees.

  1. c) Corporate Social Responsibility (CSR)

Explanation: CSR involves businesses taking responsibility for their impact on society and the environment, going beyond profit maximization to contribute positively to societal and environmental well-being.
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