Advantages of short-termism?
:) - easier to monitor goals and objectives
- could increase chances of investment from shareholders as focus is financial
- reduces risk as focuses are short/quick rather than long term
- could help to meet long term goals
- for newer businesses it can help keep the business running past the first year as it focuses on current needs
Disadvantages of short-termism?
:( - employees could become demotivated if they are treated as a cost
- could make decisions too quickly without thinking about the longer term impact it could have
- too profit/financially orientated therefore ignoring other needs of the business
- could make them less market orientated
Advantages of long-termism?
- Decisions more though out/carefully planned so not as reactive - less risky
- More sustainable for the future, may lead to longevity/more established brand if business has wider idea of what needs to be achieved
- Develop stronger company culture linking to mission statement - could make it easier to recruit employees/give business good reputation.
Disadvantages of long-termism?
- Could be more complicated to achieve as it may look too far into the future which is difficult and may not be useful in dynamic markets
- More expensive - requires investment in staff so could be opportunity cost
- Might make business less flexible meaning it is harder to react to external factors such as new legislation
What is involved in the formation of a business culture?
- physical environment
- key personalities
- rituals - significant events/ways of doing things
- rewards
- stories
Benefits of ethical behaviour?
- Differentiation (creates added value)
- Lower costs - cutting waste/packaging or reducing use of non-renewable energy
- Motivated workforce - better working conditions/pay and thus enhance retention, service and attendance
- Increased sales - appeal to ethical consumer
- Positive brand image - avoid negative publicity and pressure groups
Drawbacks of ethical behaviour?
- Higher supply costs
- Not being price competitive - losing market share
- Shareholders may not be satisfied if they don’t make a quick return on their investment (reduces profitability)
- Maintenance of an ethical position can be difficult, especially if areas of production become politically unstable
