3.2.3

Question 1

what are stakeholders

Answer 1

groups or individuals who have an interest in a business.

Question 2

internal stakeholders

Answer 2

employees
managers
shareholders

Question 3

employees and managers

Answer 3

• good income
• job security
• safe working conditions
• opportunity for development/ promotion
• meet their targets

Question 4

shareholders

Answer 4

return on investment
increased value of shares
ethical business practices
growth of the company

Question 5

external stakeholders

Answer 5

suppliers
customers
local community
government agencies

Question 6

suppliers

Answer 6

regular trade
fair prices
paid on time

Question 7

customers

Answer 7

reliable products
good service
value for money
clear and fair pricing

Question 8

local community

Answer 8

employment investment in local area
no pollution

Question 9

government agencies

Answer 9

abide by legislation and rules
fair and open trade
employment opportunities
tax

Question 10

shareholder v stakeholder concept

Answer 10

The concept of managing stakeholder expectations is closely linked to that of social responsibility. Meeting the needs of stakeholders, especially the external stakeholders, encourages ethical practices by reducing the negative impact of a business’s decisions on a third party.

Question 11

downsides with meeting stakeholders needs

Answer 11

Meeting stakeholders’ needs can be expensive and time-consuming. Indeed, it can often compromise profitability in the short term. For example, investing in employee medical cover may benefit the business in the long run, but will increase short-term costs. The major conflict that many large businesses face is focusing on the needs of shareholders or the wider stakeholder groups.

Question 12

overlapping and conflicting interests

Answer 12

Sometimes stakeholder interests are aligned, but often satisfying one set of needs can lead to conflict elsewhere.

Question 13

stakeholder mapping

Answer 13

A stakeholder map is a tool to assess the interest and power of stakeholders in order to make decisions about how to manage them.

Question 14

keep satisfied

Answer 14

May be key customers who account for a significant percentage of sales. Keep them happy, consult and involve them in key decisions.

Question 15

keep informed

Answer 15

Perhaps local residents who are concerned with the business actions.
Communicate key decisions only. Possibly consult on low-impact decisions.

Question 16

manage closely

Answer 16

High power but low interest. May be key shareholders who are only interested in return on investment. Satisfy needs but try to increase their interest and involvement in the business.

Question 17

monitor

Answer 17

Minimal effort - make sure information is available to this group through newsletter or website.

Question 18

The likelihood of stakeholder conflict can be reduced through

Answer 18

effective communication and in some circumstances consultation.

Question 19

partnership

Answer 19

• decisions taken jointly
• implement actions together
• shared responsibility

Question 20

participation

Answer 20

• extensive two-way communication
• given responsibility for certain decisions

Question 21

consultation

Answer 21

• collect views / opinions
• share ideas as proposals

Question 22

push communication

Answer 22

• inform
• one-way communications
• emails, newsletters, mailshots

Question 23

pull communication

Answer 23

• information available for stakeholders if they choose to access e.g. website

Question 24

internal influences on stakeholder relationships

Answer 24

management and leadership
objectives
size /ownership

Question 25

management and leadership

Answer 25

Differing leadership styles will determine how managers view employees.

Question 26

objectives

Answer 26

Profit objectives will be more aligned to shareholder interests.
Growth objectives may be more aligned with employees interests.

Question 27

size/ownership

Answer 27

A sole trader will not have the pressures of meeting shareholder expectations and may not have as big an impact on the local community.

Question 28

external influences on stakeholder relationships

Answer 28

market conditions
stakeholder power
government policy

Question 29

market conditions

Answer 29

Demand and the
competitiveness of a market will change the priorities of a business.

Question 30

stakeholder power

Answer 30

Majority shareholders and key customers will be given greater focus than a
stakeholder with limited power to influence the business.

Question 31

government policy

Answer 31

A business will have to meet its legal requirements, no matter how this impacts its stakeholders.
For example new employment legislation.