Stakeholder Conflicts (DP IB Business Management)
Revision Note
Written by: Lisa Eades
Reviewed by: Steve Vorster
Possible Conflicts Between Stakeholder Groups
Stakeholder groups can have conflicting interests and objectives, which can lead to tensions and conflicts
Shareholders may prioritise profit maximisation, while employees may prioritise fair treatment and high wages
Customers may prioritise low prices, while the local community may prioritise environmental sustainability, which raises costs and prices
These conflicts can create challenges for businesses trying to balance the competing demands of different stakeholder groups
E.g. A company may need to invest in costly environmental technology to meet the demands of the local community, but this may reduce profitability and upset shareholders
Conflicts can also arise when stakeholders have different levels of power and influence
E.g. Pressure groups with strong public support may be able to influence business activity more than individual shareholders
Businesses should try to balance the needs of stakeholders as much as possible to reduce the disruptive impact of conflict
Managing stakeholder conflicts requires careful communication, transparency, and compromise
Real Business Examples of Stakeholder Conflicts
Stakeholders | Conflict |
---|---|
Employees vs. Employers |
|
Pressure Groups vs. Government |
|
Local Communities vs. Developers |
|
Managers & Employees |
|
Shareholders & Customers |
|
Managers & Local Communities |
|
Shareholders & Government |
|
Stakeholder mapping
Stakeholder mapping can help a business identify appropriate strategies for managing relationships with stakeholders, taking into account the level of interest and degree of power they hold
Diagram: stakeholder mapping
Diagram analysis
Group A stakeholders have low interest and little power
These needs of these stakeholders can usually be ignored
Group B stakeholders have high interest but little power
This group needs to be kept informed to instil a sense of belonging and encourage support
Little effort is usually required to achieve this - a newsletter or informative website may be enough
E.g. The local community
Group C stakeholders have low interest but are powerful
Satisfying this influential group is important
These stakeholders must feel included and their power acknowledged
E.g. The media. Businesses in certain sectors make great public relations efforts to keep the media 'on side' through press conferences and media events
Group D stakeholders have both high interest and a high degree of power
These are key players - they must be fully informed and satisfied
E.g. Shareholders and employees
Examiner Tip
The interests of stakeholders should be considered whenever a question asks you to weigh up business choices, typically in the longer-answer questions. You might consider the following:
Which stakeholders might be supportive of each option?
And which stakeholders might oppose each option?
Is there a conflict between different stakeholders?
How might conflict be overcome?
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