3.2.3 Managers, Leadership And Decision Making

Question 1

What is a stakeholder in business?

Answer 1

Any individual or group that has an interest in, or is affected by, the activities and decisions of a business (e.g. customers, employees, shareholders, suppliers, local community, government).

Question 2

Why is it important for businesses to consider stakeholders when making decisions?

Answer 2

Ignoring stakeholders can lead to conflict, poor public image, protests, or loss of support. Considering stakeholders builds trust, loyalty, and long-term success.

Question 3

What is stakeholder mapping?

Answer 3

A tool used to analyse and prioritise stakeholders based on their level of interest in the business and their power to influence decisions.

Question 4

What are the four quadrants of a stakeholder map?

Answer 4

1. High power, high interest – Key players: manage closely
   
   2. High power, low interest – Keep satisfied
   3. Low power, high interest – Keep informed
   4. Low power, low interest – Monitor (minimal effort)

Question 5

Why is stakeholder mapping useful?

Answer 5

Helps businesses focus resources on stakeholders who matter most, ensuring key relationships are well-managed and conflicts minimised.

Question 6

What are some examples of different stakeholder needs?

Answer 6

• Shareholders – Profit, dividends, share price growth

•	Employees – Fair pay, job security, working conditions

•	Customers – Good value, quality, customer service

•	Suppliers – Fair prices, reliable orders

•	Local community – Environmental care, job creation

•	Government – Compliance, tax revenue

Question 7

Why do stakeholder conflicts occur?

Answer 7

Different stakeholders often have competing interests. For example, increasing profits for shareholders may require cost-cutting that impacts employee wages or product quality.

Question 8

Can stakeholder needs overlap as well as conflict?

Answer 8

Yes. Satisfied employees can improve customer service, which increases sales and benefits shareholders. Aligning interests can create win-win outcomes.

Question 9

How can businesses manage relationships with stakeholders?

Answer 9

Through open communication, consultation, negotiation, and by balancing stakeholder interests when making strategic decisions.

Question 10

What is stakeholder communication?

Answer 10

Keeping stakeholders informed about decisions, progress, and business activities. Builds transparency and trust.

Question 11

What is stakeholder consultation?

Answer 11

Involving stakeholders in decision making—asking for input and feedback—especially for those with high interest and/or power.

Question 12

Why is communication and consultation important?

Answer 12

Reduces resistance, improves decision quality, strengthens relationships, and helps identify potential issues early.