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LO5: Understand the relationship between businesses and stakeholders -…
LO5: Understand the relationship between businesses and stakeholders
stakeholders
stakeholder is any group or person who is affected by, or may be affected by, the activities of a business
stakeholders are split into 2 groups - internal and external
internal stakeholders are based within the business
external stakeholders come from outside of the business
different stakeholders have different objectives
main stakeholders & objectives
internal stakeholders
owners (sole traders & partners)
make enough profit
achieve business growth
be competitive
employees & trade unions
job security
good working conditions
high pay
external stakeholders
customers
low prices
good choice of products
high quality products
suppliers
high prices
regular orders
being paid on time
shareholders & potential investors
high dividends
high share prices
voting rights
banks and lenders
high interest rates
being paid back on time
business loyalty
local residents
minimise pollution
reduce traffic congestion
more jobs
central government
health and safety
collecting taxes
being environmentally friendly
pressure groups
stop child labour
preserve the woodlands and forests
stop product testing on animals
local government
environmental health
building control
stopping fly tipping
ways in which different stakeholder groups attempt to alter business behavior
employees refuse to work overtime
working extra hours beyond what employees are contractually obliged to do
trade unions call a strike
a refusal to buy goods/services from a business
customers decide to boycott the business
organised form of industrial action where workers withdraw their labor and do not turn up
pressure groups hold a protest
suppliers refuse to supply the business
local residents complain to local residents
local gov withholds planning permission
central gov fines the business - for late payment of taxes
shareholders call an extraordinary meeting
how businesses respond to the different and sometimes conflicting objectives of different stakeholders
when objectives of the business differ from the objectives of oneor more stakeholder groups, conflict can occure
conflict between a business and its stakeholders can harm the business e.g. loss of profit, bad publicity, damaged reputation
a business needs to resolve the conflict with its stakeholders if at all possible
if conflict cannot be resolved, then the conflict should be managed to minimize its impact on the business
conflict resolution and conflict management can take up a lot of a businesses time, but are beneficial because they can improve the relationship between the business and its stakeholders
conflict resolution - dealing with and resolving a disagreement completely
conflict management - process of limiting the negative effects of a conflict
consequence to a business of not listening to its stakeholders
refusing to listen to stakeholders could mean...
bad publicity
weaker cash flow position
loss of market share
negative effect on business growth
reduced cash inflows
financial difficulties
reduced output
unhelpful staff
increased staff abscence
employees quitting their jobs
falling share price
reduced sales revenue
lose out to competition
loss of profit
fewer investors
loss of customers
demotivated staff
may not be able to achieve business objectives
hostility to new proposals
businesses should not underestimate the importance of listening to its stakeholders. with todays technology the disappointment of anger of just one employee, customer, local resident could be spread across the globe in seconds. an unfavorable post on social media could ruin the reputation of a business in a matter of hours, a reputation that may be impossible to rebuild