3.4 Influences on Decision Making

3.4 Influences on Decision Making

1. 3.4.1 Corporate Influences

   • Time Scales
     • Short termism
       • Concerned only for next 6 months
       • short term contracts, profit driven
       • Less investment in R&D and training courses
       • Engage in asset stripping
     • Long Termism
       • The opposite of shorterism. A company is much more focused on big strategic decisions that will help them in the long term
       • German Mittlestand
         • Long term investment in companies, no quick returns
         • Medium sized family businesses

2. Decision making

   • Evidence based
     • Lots of Formal processes using data to make decisions
     • Information is assessed and analysed and an informed decision is made
     • attempts to use data driven decisions
     • Data may be bias
     • Very useful for every day short term decisions
   • Subjective decision making
     • can be used when there is a lack of information
     • Can work if the leader of a company is very experienced and knows the market well
     • Might be normal, as in in the fashion industry everything is subjective
     • There are times when decisions are needed to be made very quickly

3. 3.4.2 Corporate Culture

   • Power Culture
     • central source of power making decisions
     • Competitive and political atmosphere
     • Often the founder holds power
   • Role Culture
     • Decisions are made and it gets push down the Hierarchy
     • Long chain of command, tall structure
     • Beurocratic and old fashioned. Uppingham king - Mathews - RJOD - Cooper etc
   • Task Culture
     • Power is given to the best achievers
     • Often project based
     • Matrix structure, modern
     • Efficient
   • Person Culture
     • People with similar backgrounds and skills work together in clusters
     • Decision making occurs in groups
     • Knowledge flows freely within a group
     • Doctors, Lawyers etc

4. 3.4.3 Shareholder v SteakHolder

   • Stake holders
     • Anyone with an interest in the business
     • Internal Steak holders
       • Employees, Management, Owners (chairmen etc)
         • High wages, Maximise own wages through growth of sales etc,
     • External Stakeholders
       • Customers
         • They want cheap prices and good quality
       • Suppliers
         • High prices for raw materials, paid on time
       • Government
         • Tax etc they benefit from a successful business
       • Shareholders
         • High and regular dividend
       • Society and Local community
         • Clean, Lawful, considerate, generous
       • Pressure groups
   • Shareholders
     • Anyone with a slice of the business %
     • Significant if a company is a PLC in the FTSY100
     • Can cause short termism particularly in the UK
     • Richard Branston (Virgin) but couldn't stand the pressure from shareholders so he with drew from the stock exchange

5. 3.4.4 Business Ethics

   • Rights and Wrongs of decision making
   • Different businesses prioritise different things. They have their own code
   • Honesty with customers
   • Protecting the Environment
   • Not using sweat shops etc
   • Acurate financial resources
   • Staff and animals fairly
   • Whistle blowing. Snitching on a manager if they do something they shouldn't be
   • Corporate Social Responsibility
     • USP
     • Internal code of conduct
     • Responsibility to shareholders
     • Profits v Ethnics
     • Ben and Jerrys ice cream are very conscious of external factors