Stakeholder Conflicts (DP IB Business Management)

Revision Note

Written by: Lisa Eades

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	In 2020, British Airways faced criticism from its employees and unions after announcing plans to cut 12,000 jobs and reduce pay and benefits for remaining staff due to the impact of the COVID-19 pandemic on the airline industry The cuts were met with protests and legal challenges from unions and employees, who argued that the airline was unfairly targeting its workers
Pressure Groups vs. Government	In 2019, Extinction Rebellion, a climate change activist group, organised protests across the UK to demand government action on climate change While the group had the support of many members of the public, some politicians criticised the protests for disrupting public order and causing economic damage
Local Communities vs. Developers	In 2019, plans to build a new high-speed rail line, HS2, faced opposition from residents of areas affected by the proposed route, who argued that the project would damage the environment, disrupt communities, and be too expensive The project also faced opposition from environmental groups, who argued that the resources could be better spent on other infrastructure projects
Managers & Employees	In 2022 postal workers were engaged in strike action against their employer, Royal Mail, as they objected to a range of changes being made to their pay and working conditions intended to boost profits
Shareholders & Customers	Customers of UK energy suppliers have been concerned that record-breaking shareholder dividends in 2022 occurred at the same time as consumer prices rose by more than 60%
Managers & Local Communities	US grocery giant Walmart has faced numerous protests by local communities, angered by the businesses profit-driven decision to close underperforming stores
Shareholders & Government	Large corporations such as Amazon and Shell have been accused of tax avoidance through the offshoring of profit, reducing the amount of corporation tax paid to the UK 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

A stakeholder mapping tool helps the business to separate stakeholders into four groups based on their power and level of interest in the business — **Stakeholder mapping helps a business to prioritise its stakeholder strategies**

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 Tips and Tricks

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?

Last updated: 16 June 2024

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