Stakeholder - Conflict of interest Flashcards
What is conflict of interest?
This is when two stakeholders both cannot get what they want at the same time.
What is a conflict between employees vs owners/managers?
Employees want a pay rise, whereas owners want to maximise profits. If employees get a pay rise it will lower the amount of profits the owner will receive.
What is a conflict between customers vs owners/managers?
Customers want a low price and value for money, whereas owners want to raise prices to maximise profits and meet their own objectives. Low prices and high prices can’t both happen! So business and customers ‘meet in the middle’, known as the equilibrium price.
What is a conflict between suppliers vs owners/managers?
Suppliers want to be paid as soon as possible ideally in cash, whereas the owners want trade credit to keep a good cash flow in the business. Suppliers and owners can also disagree on the prices of products, discounts, quality of supplies, delivery time and so on.
What is conflict between the government vs owners/managers?
Governments may want to introduce legislations to improve society; however, owners may disagree with legislation as it will impact negatively on their business. For example, the government raising the minimum wage will lower the profits of a business as wage costs will increase.
