mr jey 19mth march

Question 1

stakeholders

Answer 1

people and organisations who are affected by the activities of a business

Question 2

internal stakeholders

Answer 2

owners (sole trader or partners), employees (chief executives, directors, managers, supervisors & assistants) and trade unions

Question 3

external stakeholders

Answer 3

shareholders, customers, suppliers, potential investors, lenders (banks), local community, pressure groups, and central & local government (HMRC, environmental health & planning department)

Question 4

internal stakeholders

Answer 4

Owners
Profitable business to provide a source of income

Employees
Job security, pay & benefits, rewards and recognition

Trade unions
Job security, fair pay and safe working conditions for their members

Question 5

external stakeholders

Answer 5

Shareholders
High level of dividends and rising share price

Customers
Value for money and high quality goods & services

Suppliers
Regular orders and to be paid on time

Potential investors
High return on their investment

Lenders
Interest and repayments to be paid on time

Local community
Provision of goods and services, job creation and environmental issues (noise, litter, etc.)

Pressure groups
The business behaviour should meet the objectives of the pressure group (e.g. environmental concerns)

Central and local government
The correct amount of tax to be paid on time (HMRC) and for businesses to meet their laws and regulations

Question 6

how do stakeholder groups attempt to alter business behaviour?

Answer 6

Employees
Individual meetings to discuss pay etc.

Trade unions
Collective bargaining between TU representatives and managers
If necessary, strikes or other forms of industrial action
Shareholders
Raising concerns at the Annual General Meeting (AGM)

Customers
Directly contacting a business to raise concerns
Online reviews
Suppliers
Individually discussing payment terms and other concerns
Stop supplying goods on credit if not paid on time.
Lenders
Individual meetings to discuss concerns and, if necessary, demand early repayment of loan or overdraft
Local community
Contact and maybe hold meeting with the owners or managers of the business
Pressure groups
Negative publicity if the business not meeting their objectives

Question 7

CONFLICTING OBJECTIVES OF DIFFERENT STAKEHOLDERS

Answer 7

Shareholders want high profits in order to generate a high level of dividends.

Meeting the objectives of employees, trade unions, customers, suppliers and the local community may decrease profits and/or cash flow, which makes it harder to pay large dividends to shareholders

Question 8

How businesses respond to conflicting objectives depends on

Answer 8

• The degree of influence of individual groups of stakeholders

• The ability of the directors to carry out conflict resolution and conflict management

• The benefits and drawbacks of meeting stakeholder needs

Question 9

Consequences for a business of not listening to stakeholder groups.

Answer 9

• Falling share price if large numbers of shareholders sell their shares

• Demotivated employees and high levels of labour turnover and absenteeism

• Industrial action (e.g. strikes) by trade unions

• Loss of customers and loss of revenue

• Suppliers may not be willing to sell goods on credit to the business