3.4

Question 1

Handy’s organisation of culture

Answer 1

Power culture: Autocratic leadership
- Control radiates from centre
- Concentrates power among few people
- Few rules
- Swift decisions

Role culture: Autocratic/Paternalistic leadership
- People in the business have clear delegation
- Highly defined structure
- Power derived from person’s decision
- Little scope exists for persons position

Task culture: Paternalistic/Democratic leadership
- Team formed to solve particular problems
- Power within business derives from expertise
- No single power force
- Teams may develop their own objectives

Person culture: Democratic leadership
- Person believes they are superior to the business
- Full of people with similar training/background
- Common culture in firms of professionals
- Power lies in each group of individuals

Question 2

Shortermism/Longtermism

Answer 2

Where a business prioritises shot term rather than long term performance

(opposite = longtermism)

Emphasises certain measures:
- Share price
- Revenue growth
- Gross/operating profit
- Unit costs/productivity
- Return on capital employed

Question 3

Effects of shortermism

Answer 3

• Inadequate money/time spent on research and development
• Staff aren’t performing meaning high staff turnover
• Ignoring one term risks
• Shortage of investment for advertising in the future
• Lack of experience/skills that may be needed in the future

Question 4

Stakeholder vs shareholder

Answer 4

Stakeholder:
- Interact with but don’t own the business
- May work for/transact with the business in a way

Shareholder:
- An owner of shares in a company

Question 5

Stakeholder and shareholder influences

Answer 5

Stakeholder: That the business considers all of its stakeholders in its business decisions/objectives

Shareholder: That the business should focus purely on shareholder returns (increasing share price and dividends) in its business decisions/objectives

Question 6

Factors influencing business culture

Answer 6

• Organisation’s structure
• System and processes by which work is carried out
• Behaviour and attitudes of employees
• Organisation’s values and traditions
• Management and leadership styles adopted

Question 7

Business culture

Answer 7

Shared values of a business. The beliefs and norms that affect every aspect of work life

Question 8

Ethics

Answer 8

Moral guidelines which govern good behaviou

Question 9

Corporate social responsibility (CRS)

Answer 9

Extent to which businesses address concerns to wider stakeholders

Society needs business:
- Employment/wages
- Investment/innovation
- Profits/taxes
Business needs society:
- Public assets/infrastructure
- Create demand
- Legal protection

Question 10

Free market and CRS view

Answer 10

Free market:
Job of a business to create wealth for it’s shareholders

CSR view:
Businesses should be concerned with social issues

Question 11

Corporate strategy

Answer 11

Choices business make about how to achieve objectives
- Strategic analysis
- Strategic implementation
- Strategic choice

Question 12

Strong culture

Answer 12

• Responds positively to org values
• Shared sense of responsibility
• Motivated and loyal workforce
• Higher efficiency
• Roles and responsibility

Question 13

Weak culture

Answer 13

• Little alignment with org values
• Employees are forced to perform certain duties
• High management control and supervision
• Source of income

Question 14

Aspects of CSR

Answer 14

• Economic responsibility - bus have obligations to survive
• Legal responsibility - acts that the business is law-abiding
• Ethical responsibility - seen as morally correct
• Philanthropic responsibility - to do good via charitable acts

Question 15

Internal stakeholders

Answer 15

Within the business
- Employees
- Managers
- Owner

Question 16

External stakeholders

Answer 16

Out of the business
- Customer
- Suppliers
- Shareholders
- Government
- Local community
- Society
- Creditors

Question 17

Stakeholders objectives

Answer 17

Employees - fair pay
Managers - financial incentive
Owners - profit

Customers - quality products
Suppliers - prompt payments
Shareholders - accurate information
Government - abide legislations
Local community - jobs
Society - less pollution
Creditors - prompt payments