Stakeholder Conflicts (DP IB Business Management)

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

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