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Stakeholders and Their Relative Importance

Q: What is a potential conflict between stakeholders regarding cost reduction?

Business Decision: Cut jobs to reduce costs Supporters: Shareholders, Banks Opposers: Employees, Local community

Q: How can adding shifts lead to stakeholder conflict?

Business Decision: Add extra shifts to increase factory capacity Supporters: Management, Customers & Suppliers Opposers: Local community

Q: How does a stakeholder differ from a shareholder?

Stakeholder: Has interest in business; does not own. May work for or transact with business. Shareholder: Owns part of the business. Benefits from business value increases.

Q: What conflict arises from new machinery for manual work?

Business Decision: Introduce new machinery to replace manual work Supporters: Customers, Shareholders Opposers: Employees

Q: How does raising selling prices impact stakeholders?

Business Decision: Increase selling prices significantly to improve profit margins Supporters: Shareholders, Management Opposers: Customers

79 important questions on Stakeholders and Their Relative Importance

What is a potential conflict between stakeholders regarding cost reduction?

Business Decision: Cut jobs to reduce costs
Supporters: Shareholders, Banks
Opposers: Employees, Local community

What is the main argument of the stakeholder concept?

Businesses should consider responsibilities to stakeholders, not just shareholders.
Stakeholders can be employees, communities, or any vested parties.
Focus on creating value for all stakeholders.

How can adding shifts lead to stakeholder conflict?

Business Decision: Add extra shifts to increase factory capacity
Supporters: Management, Customers & Suppliers
Opposers: Local community

What is stakeholder power and how does it vary among stakeholders?

Stakeholder power signifies the influence stakeholders have.
Some stakeholders possess more power than others.
Importance in managing stakeholder influence and power effectively.

How does a stakeholder differ from a shareholder?

Stakeholder:
- Has interest in business; does not own.
- May work for or transact with business.
Shareholder:
- Owns part of the business.
- Benefits from business value increases.

What conflict arises from new machinery for manual work?

Business Decision: Introduce new machinery to replace manual work
Supporters: Customers, Shareholders
Opposers: Employees

How should businesses respond to stakeholders with a high level of interest and power?

Engage with key players directly.
High interest and power indicate they are top priorities.
Must involve them in decision-making processes.

What does the stakeholder concept emphasize?

Business purpose is to create value for stakeholders.
Align interests of customers, suppliers, employees, communities, and shareholders.
Ensure sustainability over time.

How does raising selling prices impact stakeholders?

Business Decision: Increase selling prices significantly to improve profit margins
Supporters: Shareholders, Management
Opposers: Customers

What do suppliers expect from businesses?

Continued, profitable trade
Financial stability
Timely payments

What approach should businesses take with stakeholders having high interest but low power?

Communicate regularly.
Although low power, their interest necessitates engagement.
Keep them informed and acknowledged.

What is the primary focus of the shareholder concept?

Prioritizes interests of business owners or shareholders.
Decisions should consider shareholder effects.
Less focus on broader stakeholder groups.

How do stakeholders differ from shareholders?

Stakeholders have an interest in the business but do not own it.
Shareholders own the business, may work in it, and benefit directly from its success and value increase.

What are banks and other finance providers mainly interested in?

Loan repayment capability
Profitability and cash flows
Business growth
Profit and value of the business

What strategy should be used for stakeholders with low interest but high power?

Keep them satisfied.
They may not be interested, but their power is significant.
Maintain their contentment to avoid potential issues.

What are governments mainly interested in regarding businesses?

Tax collection and payment (e.g., VAT)
Business growth
Compliance with legislation

What responsibilities do businesses have towards different stakeholders?

Shareholders: Good return on investment
Employees: Fair pay and working conditions
Suppliers: Regular business and prompt payment
Customers: Fair price and safe product
Local Community: Jobs and minimum disruption
Government: Employment
Environment: Less pollution

How are shareholders related to stakeholders?

Shareholders own part of the business.
Are a type of stakeholder.
Have a specific interest in business activities and decisions.
Shareholders directly benefit from increases in business value.

How should businesses handle stakeholders with both low interest and low power?

Communicate only when necessary.
Limited resources should not be overused.
Prioritizing is key in stakeholder management.

What is social responsibility, and how can it conflict with other groups?

Refers to the tension between different groups.
Often arises between shareholders and stakeholders due to competing interests.

What are key differences between stakeholders and shareholders?

Stakeholders:
- Interest in the business but do not own it.
- May work for or transact with the business.
Shareholders:
- Own part of the business.
- May also work in the business.
- Directly benefit from business value increases.

What are different interests stakeholders have in a business?

Shareholders/owners focus on return on investment, profits, dividends, success, and growth.
Managers and employees focus on rewards, including pay, incentives, and job conditions.

What is society mainly concerned with in terms of business success?

Business success
Job creation
Compliance with laws and regulations (e.g., pollution)

What are examples of conflicts between stakeholders due to extended business hours?

Conflicts can arise over extended hours from 7am to 10pm.
Employees may oppose due to longer shifts.
Residents may dislike increased noise.
Customers may favor longer hours.
Pressure groups may resist due to family impact.

What potential conflict can arise from cutting jobs or closing business units?

Likely supported by shareholders, buyers
Likely opposed by employees, local community

What is a potential conflict when adding extra shifts to increase capacity?

Likely supported by management, customers, suppliers
Likely opposed by local community

What is the difference between stakeholders and shareholders?

Stakeholders: Have an interest in a business but do not own it.
Shareholders: Own shares in a business and have ownership.
All shareholders are stakeholders, but not all stakeholders are shareholders.

How do "pay and benefits" differ from "profitability" in business and employee conflicts?

Shareholders aim for maximizing profits.
Employees seek higher wages and benefits.
Conflict arises between profit goals and employee compensation desires.

How do stakeholders differ from shareholders?

Shareholders own shares in a company; stakeholders do not necessarily own parts.
Stakeholders may include shareholders but are not limited to them.

Name two businesses known for strong ethical policies and give examples of such policies.

Businesses: The Body Shop, Co-Op
Policies:
- Reduce pollution using non-fossil fuels
- Dispose of waste safely and environmentally friendly
- Sponsor local charity events
- Trade fairly with developing countries

What conflict may arise with the introduction of greater automation?

Likely supported by customers, shareholders
Likely opposed by employees

What are examples of business and customer conflicts related to pricing?

Price vs. value: Shareholders want higher prices for profit.
Consumers want lower prices for the same quality.
Product quality vs. cost-cutting: Management may use cheaper materials against customer desires.

What often causes conflicts between stakeholders and shareholders?

Stakeholders' desires may cost money and reduce profits.
Shareholders seek short-term profits.
Conflicts may arise due to differing objectives.

What potential conflict arises from increasing selling prices?

Likely supported by shareholders, management
Likely opposed by customers

What are the positive and negative impacts of building a new factory on owners and shareholders?

Positive:
- Increased scale of production
- Reduced unit costs
- Increased output and profit
Negative:
- Capital investment
- Increasing gearing and interest payments
- Production disruption short term

How can stakeholders and shareholders potentially be in conflict?

Task 2.3 suggests listing examples where stakeholder interests conflict.
Conflicts arise when actions beneficial to shareholders harm other stakeholders.
Example: Profit-focused policies may negatively impact employees or the environment.

Describe some conflicts between business profitability and environmental concerns.

Profit vs. environment: New complexes create jobs but increase noise.
Economic activity vs. local impact: Relocating reduces taxes but may harm local economy.
Unethical practices: Using child labor reduces costs but faces community backlash.

What is the social responsibility of a business?

A business's duty and obligation to other stakeholders.
It involves balancing the owners' interests with stakeholders like workers and customers.

What are the impacts of changing business objectives?

Changing business objectives affects stakeholders and their interests.
Managers may need to alter corporate objectives.
Volkswagen shifting focus due to emission scandals demonstrates impact.
Stakeholder groups like employees and customers experience varying effects.

How does building a new factory affect suppliers positively and negatively?

Positive:
- Increased demand for components
- Higher sales
- Higher profit
Negative:
- Need to expand production
- Require investment to increase capacity

What role do banks play as stakeholders?

Banks are interested in providing services like loans, overdrafts, and insurance to the business. Their interest lies in ensuring financial transactions and services continue.

Explain supplier and management conflicts related to contracts.

Preferred supplier contracts vs. supplier negotiation: Management wants steady supply.
Suppliers may prefer renegotiating terms for better pricing or benefits.

What is the importance of balancing different stakeholder objectives according to the text?

Balancing objectives prevents conflicts among stakeholders.
Business has a duty to address stakeholder needs.
Compromise is necessary to resolve conflicts.
Effective management ensures stakeholder satisfaction.
Failing to balance can lead to negative outcomes for all parties.

How can stakeholder interests be safeguarded during changes?

Interests can be protected through measures like transparent decision-making.
Employees’ futures require careful attention.
Leadership should ensure a quick and fair adaptation.
Clear communication is essential to maintain trust.

What are the effects of horizontal integration on owners, shareholders, and suppliers?

Owners/Shareholders:
- Positive: Increased market share, higher profits
- Negative: Takeover cost, diverted profit, integration failure risk
Suppliers:
- Positive: Increased sales for favored ones
- Negative: Lost contracts, lower price expectation

How does the government function as a stakeholder in a business?

The government is interested in business continuity for employment and tax revenue.
Focuses on business success for economic growth.
Can charge taxes and duties.

What are key responsibilities businesses should meet according to the governance framework?

Meet legal responsibilities as defined by government.
Obtain permissions for future expansion.
Develop good relations with the government for valuable benefits.
Seek subsidies and set up new operations.
Meet expectations of government stakeholders.

How does the text suggest addressing conflicts between stakeholder aims?

Compromise is suggested as a solution.
Creating a central plan may adapt objectives.
Protecting community interests is crucial.
Decisions should consider the impact on affected parties.
Clear priorities should be established by management.

Describe the impacts of purchasing IT-controlled automated machines on owners and suppliers.

Owners:
- Positive: Increased efficiency, profit, control quality
- Negative: IT failure risk on output
Suppliers:
- Positive: Demand for machinery, maintenance, replacement parts
- Negative: Reduced demand for worker safety equipment

Why are trade unions considered stakeholders?

Trade unions represent workers' interests.
Interested in business profits to negotiate worker pay rises.
Advocate for improved conditions and benefits.

What is the importance of stakeholder influence in businesses?

Stakeholder influence impacts business decisions significantly.
Accountability to stakeholders ensures businesses meet community responsibilities.
Failure leads to issues like planning challenges or premises use restrictions.
Using local suppliers can reduce transport costs and improve local relations.

What benefits can businesses gain by accepting stakeholder responsibilities?

Develop good relations with the government.
Increase likelihood of future expansion approvals.
Gain access to valuable government contracts.
Be considered for subsidies to expand business.
Likelihood to set up new operations awarded to compliant businesses.

What might pressure groups focus on in a business context?

Pressure groups aim to influence business actions ethically.
Focus on fair wages and environmental friendliness, like reduced pollution and packaging.

What is the importance of stakeholders' influence on business accountability?

Influence and accountability of stakeholders require businesses to address concerns.
Maintaining responsibilities enhances:
1. Supplier relationships
2. Employee loyalty
3. Customer satisfaction
4. Motivation
5. Communication

What are examples of business responsibilities to the local community?

Offer secure employment to reduce job loss fears.
Use local suppliers to lower transport impacts.
Maintain environmental interests at a minimum.
Engage in community projects like playgrounds.

What should businesses consider regarding stakeholder conflicts?

Difficult to meet all responsibilities to all stakeholders.
Compromises might be necessary.
Aim to meet as many stakeholder aims as possible.
Prioritize needs of the most important group each time.

In what way is the local community a business stakeholder?

The local community may be affected by business activities, especially if they cause issues like noise pollution.

What is the importance of stakeholders to businesses?

Stakeholders impact and are affected by business objectives.
Businesses must acknowledge various stakeholder groups.
Stakeholders influence business decisions.
Effective stakeholder management can lead to long-term benefits.

What are the benefits of businesses accepting stakeholder responsibilities?

Improves employee loyalty and reduces turnover
Attracts good workers
Employees reflect business ethics
Promotes:
1. Security in employment
2. Training
3. Working conditions
4. Communication

What are the benefits of businesses accepting community-related responsibilities?

Improved relations with local councils.
Increased likelihood of planning permissions.
Opportunities for expansion and community engagement.
Mitigation of negative operation effects via local support.

What is the impact of purchasing IT equipment and automated machines on stakeholders?

Employees: May be made redundant; industrial action possible.
Local Community: Local suppliers may face loss of sales; need retraining for jobs.
Customers: Benefit from better quality and lower prices.

How should businesses consider customer responsibilities?

Provide quality products at reasonable prices.
Ensure accurate advertising.
Avoid high-pressure sales tactics.
Encourage customer feedback for improvement.
Build consumer loyalty through repeat purchases.

What is the stakeholder concept in business management?

Stakeholder concept: businesses affect and are affected by a wide range of groups.
Recognizes wider interest beyond just shareholders.
Stakeholders include: employees, customers, suppliers, government, community.

Why is corporate social responsibility increasingly important in business decision-making?

Enhances accountability to stakeholders.
Builds positive reputation and trust.
Businesses show understanding of stakeholder concerns.
Aligns with ethical decision-making.

Why is supplier quality crucial for businesses?

Product quality depends on supplier quality.
Poor quality can lead to customer dissatisfaction.
Consistent quality maintains customer trust.
Choosing reliable suppliers is essential for business success.

How does building a new factory to expand business impact stakeholders?

Impact: Employees might worry about job security.
Reaction: Union might demand better conditions.
Community: Concerns about traffic and infrastructure strain.

How can businesses respond to increased accountability demands?

Understand and include stakeholder input in decision-making.
Improve transparency in operations.
Provide regular feedback to stakeholders.
Engage in community-building activities.

What is the role and responsibility of local government as a stakeholder in business?

Role: Provide local services and legal order for business activities.
Right: Maintain a legislative body overseeing businesses.
Responsibility: Regulation, resolution of disputes, and addressing externalities.

How has the view of business responsibility evolved recently?

Traditional view focused on shareholder value.
Recent views include broader stakeholder interests.
Considers legal, community, public, and environmental impacts.
Businesses should balance multiple interests.

What is the impact of a horizontal or integration takeover on stakeholders?

Impact: Business becomes more secure, possibilities for rationalization to reduce waste.
Reaction: Possible job threats, industrial action feared.