1.4 Stakeholders Flashcards
Stakeholder concept
The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders
Internal stakeholders
Employees
Managers
Shareholders
External stakeholders
Customers
Suppliers
Government
Banks and other creditors
Community
Competitors
What are the 4 types of methods of conflict resolution?
Arbitration
Worker participation
Profit sharing schemes
Share ownership schemes
Arbitration
To resolve industrial disputes between workers and managers
Advantage of arbitration
Independent arbitrator will listen to both arguments and decide on a fair solution.
It is fair
Disadvantage of arbitration
Neither stakeholder will have what they want
Costs of the business might get higher if the arbitrator decides on higher wages or better work conditions
Worker participation
To improve communication, decision making and reduce potential conflicts between workers and managers
Advantage of worker participation
Workers have a contribution
Can motivate staff
Disadvantage of worker participation
Some managers think that it wastes time and resources. Managers job to decide
Some information cannot be disclosed to staff
Profit sharing schemes
To reduce conflict between workers and shareholders over the allocation of profits and to share the benefits of company success
Advantage of profit sharing schemes
Motivate workers to work in ways that will increase long term profitability
Disadvantage of profit sharing schemes
Administration costs
Negative impact on employees motivation if share price falls
Employees may need to work for a few years before being able to gain profit and therefore does not motivate new staff