1.4 Stakeholders

Question 1

Stakeholder concept

Answer 1

The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders

Question 2

Internal stakeholders

Answer 2

Employees

Managers

Shareholders

Question 3

External stakeholders

Answer 3

Customers

Suppliers

Government

Banks and other creditors

Community

Competitors

Question 4

What are the 4 types of methods of conflict resolution?

Answer 4

Arbitration

Worker participation

Profit sharing schemes

Share ownership schemes

Question 5

Arbitration

Answer 5

To resolve industrial disputes between workers and managers

Question 6

Advantage of arbitration

Answer 6

Independent arbitrator will listen to both arguments and decide on a fair solution.

It is fair

Question 7

Disadvantage of arbitration

Answer 7

Neither stakeholder will have what they want

Costs of the business might get higher if the arbitrator decides on higher wages or better work conditions

Question 8

Worker participation

Answer 8

To improve communication, decision making and reduce potential conflicts between workers and managers

Question 9

Advantage of worker participation

Answer 9

Workers have a contribution

Can motivate staff

Question 10

Disadvantage of worker participation

Answer 10

Some managers think that it wastes time and resources. Managers job to decide

Some information cannot be disclosed to staff

Question 11

Profit sharing schemes

Answer 11

To reduce conflict between workers and shareholders over the allocation of profits and to share the benefits of company success

Question 12

Advantage of profit sharing schemes

Answer 12

Motivate workers to work in ways that will increase long term profitability

Question 13

Disadvantage of profit sharing schemes

Answer 13

Administration costs

Negative impact on employees motivation if share price falls

Employees may need to work for a few years before being able to gain profit and therefore does not motivate new staff