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Chapter 5 - Unit 1 - Stakeholders In a Business - Coggle Diagram
Chapter 5 - Unit 1 - Stakeholders In a Business
5.1 Stakeholders and stakeholder concept
Why has the stakeholder concept and many organisations moved away from the view that all decisions must be taken with only shareholder' interest in mind?
Increasing recognition that business activity should operate in wider interest of society
Extensive negative publicity for companies and senior managers who are seen not to be acting in society's interests - and the impact this can have on long run profitability too.
Stricter legal controls over businesses decisions, for example, pollution levels, wage levels, product standards etc.
5.2 How stakeholders are affected by business decisions and activities
Businesses have responsibilities to stakeholders.
Examples include:
Workers
- fair pay, job security, safe working conditions
Suppliers - payment on time
Customers
- good value, safe products, fair competition
Local community
- pollution kept to minimum, support for locals
Burberry made a decision to relocate some production from UK factories to ones in China. The
impacts are:
Customers - Lower quality? Lower cost?
Local communities - UK job losses will depress local incomes - vice versa in China
Retailers worldwide - will reliability of deliveries be high?
Shareholders - profits should be higher as long as quality image is maintained
Chinese Workers - jobs gained, but employee welfare?
Chinese Government - higher taxes. Potential environmental issues
UK Government - reduced taxes - higher unemployment
UK Workers - jobs lost
5.3 Roles, rights and responsibilities of important stakeholders
I have done a Word Document and it is in my files
5.5 Changing business objectives and impact on stakeholders
A manufacturing LTD converts to a PLC and the business changes the objective from retaining control to rapid growth - meaning more employment opportunities for workers; higher government tax revenue but pressure groups might be worried about environmental impact of increased industrial output.
Economic recession forces a business to change objective from growth to survival - workers may lose jobs or have pay reduces
5.4 Conflicting stakeholder objectives
When making a decision that will have an effect, they need to think -
which stakeholder groups are
most important
in this decision?
- and
which ones may have to be
negatively
impacted.
I have put some examples on a Word Document in my revision resources files.
Stakeholders' objectives often conflict.
Often impossible for a business to satisfy all stakeholders all of the time.
A compromise may sometimes need to be figured out