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LO5 - The relationship between businesses and stakeholders. - Coggle…
LO5 - The relationship between businesses and stakeholders.
5.1 - Stakeholders and their objectives
What is a stakeholder?
An individual/group who has an interest in a business and may be directly affected by activities of the business
Every business has many stakeholders all with different objectives.
E.g. - a large bakery opened in a quiet residential area. The bakery opens at 6am - the residents might not want employees and deliveries arriving early in the morn.
In this situ the stakeholders are the local community, employees, the suppliers, financial institutions and the customers.
Types of stakeholders
Key terms
5.2 - Way different stakeholder groups attempt to alter business behavior
Stakeholders can influence a business's decisions and processes
5.3 - How businesses respond to the different objectives of stakeholders.
Each stakeholder will have different objectives e.g.
They may be concerned about the environmental impact of the organisation on the local countryside
They may want the business to expand to improve its economic prospects
They might want to make the organisation's manufacturing processes more efficient.
Stakeholder analysis
Conflict
Can arise when needs of stakeholder groups clash/compromise the expectations of other stakeholder groups.
Means business have to make choices that some stakeholders wont like.
All viewpoints should be discussed and communicated considering the importance & impact that the issues highlighted will have on the business.
Conflict resolution
Using civil methods to avoid negative responses that could escalate into bad publicity, damaging their reputation taking months or years to rebuild.
Sometimes a 3rd party is a mediator - they must remain unbias and focus on immediate issues.
The mediator must; identify the facts - review the evidence - assess the impacts - agree the issues to be resolved based upon the main stakeholder objectives.
Mediator will also need to listen to both parties, understand the issues and make the negotiation process towards a resolution for both parties.
5.4 - Consequences of a business not listening to stakeholders.
Stakeholders can influence and change the way a business operates in a competitive world.
They can be the key element in decision making, but if business gets it wrong there may be consequences for its stakeholders.
Access to technology and the popularity of social media means mistakes can be seen worldwide - can have huge implications for immediate and future business prospects.
Important to be proactive over reactive to stakeholder needs and objectives.
Anything controversial decisions should be clearly justified if and when, to various stakeholder groups.