How business decisions may have contradictory effects on stakeholders
Business decisions can affect stakeholders in a range of different ways. In particular, large businesses may find it very difficult to please all stakeholder groups. Often, this can lead to conflict. Common conflicts can result from maximising profit, low wages, environmental damage, poor quality products and late payment for materials. Overcoming a conflict will often require negotiation and willingness to compromise.
Stakeholder objectives
Different stakeholders will expect different things from a business. The business has to balance these various interests to avoid conflict where possible.
Some examples of the different priorities of stakeholder groups:
- shareholders and owners want to ensure the business is successful and are interested in how much profit the business can make
- managers want a good salary and opportunities for further career progression
- employees want good levels of pay, job satisfaction and job security, and may also be interested in career progression
- customers want good quality and a range of products at reasonable prices
- suppliers want to receive payments on time, and regular orders
- the local community (people living in the area) may be looking for work, which local businesses can provide
- pressure groups want to increase knowledge of their cause, eg if a business is going to increase traffic pollution in their area
- the government wants businesses to create more jobs in order to raise more money from taxes and save money on benefit payments
Conflict between stakeholder groups
The owners of a retail business decide to grant permission to extend the business’ opening hours on weekdays. Instead of being open from 8am to 8pm, the business will now be open from 7am to 10pm. The owners believe this will increase profits, but the decision is likely to cause conflict with the other stakeholders.
The owners will need to monitor the potential conflicts that could occur:
- managers might have to work longer hours
- employees may need to work different shifts, including working later
- some customers may want even longer opening hours, eg 24 hours a day
- suppliers could impact the local community by changing delivery routes and times
- the local community could be disturbed by increased traffic and noise
- pressure groups may be unhappy if longer opening hours are against their cause, eg groups promoting families spending more time together or improved work-life balance
- the government may require additional resources to monitor the impact on the local area, eg additional policing to deal with any shoplifting that takes place later in the evening
