Stakeholder Perspectives

Question 1

What is decision making?

Answer 1

-ultimately a final decision will be influenced by
•mission of a business, its corporate objectives
•If risk it worth the reward
•is opportunity cost worth paying?
•does the probability and financial outcome make it worth it

Question 2

What other factors need to be taken into account when decision making

Answer 2

• ethics: moral values held by the business that help it make decisions, recyclable material, living wage, child labour?
• external factors: PESTLE, talking decisions in response to factors it cannot control
• resource constraints

Question 3

What is a stakeholder?

Answer 3

• perhaps most importantly the various stakeholders must be considered when making a decision
• a stakeholder is any individual or group with an interest in the business

Question 4

What stakeholders should a business listen to?

Answer 4

• stakeholders with low interest and power need minimal effort as they accept what they’re told
• low power and high interest need to be kept informed, might consult them with decisions
• low interest and high power must be kept satisfied, informing them of potential outcomes preventing them gaining more interest
• high power and interest must be managed closely, fully informed and kept happy

Question 5

How does a business decide their final approach on decision making

Answer 5

Given all their influences on decision making and differing roles of stakeholders a business can then chose from a variety of approaches

Question 6

What’s the shareholder approach?

Answer 6

• the traditional approach
• business acts in best interest of shareholders/owners
• principal aim is to maximise shareholder returns
• main focus is growth and profit

Question 7

What’s the stakeholder approach?

Answer 7

• it’s increasingly popular, business takes much more account of wider stakeholder interests
• approach based on consultation/communication
• for example, social and environmental concerns become more important

Question 8

What’s the win-lose approach?

Answer 8

-a business accepts that for most decisions that it makes some stakeholder groups will benefit more and some will benefit less

Question 9

What’s the win win approach?

Answer 9

• a business’ actions will benefit some in the short term and the rest will benefit long term
• eg reducing dividends, buying machines then later making more profit bc of the machines