Chapter 1
The Internal Stakeholders in a Business (4)
Business Owner/Entrepreneur
Managers
Employees
Investors/Shareholders
What should a business do with a low power - low interest stakeholder?
A: Keep Satisfied
B: Keep Informed
C: Manage Closely
D: Monitor
D: Monitor
What should a business do with a low power - high interest stakeholder?
A: Keep Satisfied
B: Keep Informed
C: Manage Closely
D: Monitor
B: Keep Informed
What should a business do with a high power - high interest stakeholder?
A: Keep Satisfied
B: Keep Informed
C: Manage Closely
D: Monitor
C: Manage Closely
What should a business do with a high power - low interest stakeholder?
A: Keep Informed
B: Keep Satisfied
C: Manage Closely
D: Monitor
B: Keep Satisfied
A co-operative relationship is
One where stakeholders are working towards a common goal. It is a win-win situation.
The External Stakeholders in a Business (5)
Consumers
Local Community
Government
Suppliers
Interest Groups/Trade Unions
CSR stands for ...
Corporate Social Responsibility
One where two stakeholders work towards mutually-exclusive goals. It is a win-lose situation.
What is the Importance of Stakeholder Mapping?
It helps a business allocate resources effectively as the business then knows who to manage closely and who to keep informed.
It also encourages proactive conflict resolution as the business is constantly staying engaged with key stakeholders and communicating any changes.
An employer and employee can have a co-operative relationship when the employer invests in training for the employee. How is this win-win?
The Employees become more skilled so they are in a better position to apply for a promotion or pay rise.
AND
The Employers benefit from more productive and effective staff in their business, leading to more profits.
What are the roles of The Government as a stakeholder of a business?
The Government:
1. Regulates and Oversees business activities
2. Offers grants and incentives for businesses to start up and expand
The Supplier and Manager of a business can have a co-operative relationship if they agree to discounts for larger orders. How is this win-win?
The Supplier will benefit by increasing their sales volumes, leading to greater profits for them and repeat purchases from the Business.
AND
The Business will benefit by getting a reduction in their cost per unit of items purchased. The Business is more likely to purchase from this supplier again because of this.
The Role of an Investor as a Stakeholder?
Provide financial support in exchange for ownership (equity) and potential returns through future dividends from business profits.
The Investor and the Manager of a business can have a co-operative relationship when they are both trying to grow the business. How is this win-win?
The Investor provides funding so the business can grow and become profitable, meaning they will receive a higher dividend.
AND
The Manager can invest funds in necessary resources to grow and achieve results for the business, leading to greater profits.
What are the Steps in Stakeholder Mapping? (4)
1. Brainstorm to Identify Stakeholders
2. Conduct a Stakeholder Analysis to Assess their Power and Influence
3. Map the Stakeholders to a Grid
4. Understand the Relationships and Allocate Resources Accordingly
How is the following scenario a competitive relationship (win-lose)?
The Employer wants to decrease pay to increase profitability
BUT
The Employee may want a pay rise to be able to have higher disposable income.
Employers LOSE and Employees WIN
1. They spot the gap in the market and source capital to set up a business to fill this gap.
2. Take a personal and financial risk in the hope of making a profit.
How is the following scenario a competitive relationship (win-lose)?
The Investor may want a higher return on their investment by receiving a higher dividend.
BUT
The Manager may want to reinvest the profits and minimise the dividend to be paid to investors.
The Investor wins if they get a higher dividend and the Manager loses as they will have less profits left to reinvest in the business.
What is the main difference between Mediation and Conciliation when resolving stakeholder conflict?
Mediation = facilitates discussion so the parties reach a voluntary solution themselves, they do not suggest or impose a solution.
Conciliation = takes a more active role than mediation, by offering advice or suggesting possible solutions.
Ways to Resolve Stakeholder Conflicts (5)
1. Meet and Talk
2. Negotiation or Bargaining
3. Mediation
4. Conciliation
5. Arbitration
What is Arbitration?
- More like a court proceeding
- The Arbitrator hears arguments and evidence from both sides
- They will then issue a solution
- It can be binding or non-binding depending on what the parties had agreed on in advance.
How is the following scenario a competitive relationship (win-lose)?
The Supplier may want to reduce the credit period or credit limit they give to customers, to reduce their chances of having bad debts.
BUT
The Manager may want to buy more goods on credit, so they can try to increase the amount of goods available for sale.
If the Manager negotiates a longer credit period, the Supplier will have to wait longer to be paid for the goods that they have supplied.
Interest Groups are ...
- Organisations that represent the common viewpoint, objectives and goals of a particular group of stakeholders.
- Known as pressure groups or lobby groups.
Name 1 of 3 Methods of Avoiding Conflict among stakeholders
1. Regular and Honest Communication
2. Good CSR
3. Stakeholder Engagement Plans to actively involve stakeholders in the decision-making process.