Stakeholder Conflict
A business can rarely make everyone happy at once. When stakeholders pull in different directions, something has to give. Learn why conflicts arise and how a business tries to balance them.
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You cannot please everyone
A business has many stakeholders, and they often want different things. Paying workers more leaves less profit for the owners. When groups pull in opposite directions there is a conflict. This module is about why conflicts happen and how a business tries to balance them.
Conflict and compromise words
Four ideas run through this topic:
What causes it?
What causes a conflict between stakeholder groups?
- Different groups want different things
- Every group wants exactly the same thing
- The weather turning cold
- A business has no stakeholders
A classic clash
One of the most common conflicts is over money.
Who is clashing?
- Higher pay against higher profit
- Expansion against a clean local area
- Lower prices against bigger profit
- Big budgets against low costs
- Employees and shareholders
- Owners and the local community
- Customers and shareholders
- Managers and shareholders
Something has to give
A business cannot satisfy everyone. It weighs up the interests, prioritises the most important stakeholders, and compromises where it can. It communicates honestly, and sometimes it has to accept that one group loses out. A good answer names a real conflict and a realistic balance.
Real conflicts
Which THREE of these are real stakeholder conflicts?
- Shareholders want profit but employees want higher pay
- Owners want to expand but the community wants low pollution
- Customers want low prices but shareholders want profit
- Every stakeholder wants the business to fail
- Customers and staff both simply want the shop to close
What each wants
- Shareholders
- Employees
- The local community
- Customers
- Higher profit and dividends
- Higher pay and job security
- Low pollution and local jobs
- Low prices and good quality
Handling a conflict
Put the steps of handling a stakeholder conflict in order.
- Identify the conflicting stakeholders
- Understand what each side wants
- Weigh up the costs and benefits
- Decide and compromise where possible
- Explain the decision to those affected
Complete the idea
A _____ happens when stakeholders want different things. Paying staff more can lower the _____ that shareholders want. A business cannot please everyone, so it must _____ the most important groups and _____ where it can. Sometimes one group has to _____ out.
True or not?
Tap the TWO statements that describe a real conflict.
- Shareholders want higher profit but employees want higher pay.
- The community wants less pollution but the owners want to expand.
- All the stakeholders want exactly the same thing.
- Customers and shareholders both simply want the business to close.
- There are never any disagreements in a business.
Handle it fairly
How might a business handle a stakeholder conflict fairly?
- Weigh the interests and compromise where possible
- Always give the owners everything they want
- Ignore every group and do nothing
- Close the business at the first disagreement
Cutting costs
A factory owner wants to cut costs. Different stakeholders react. Choose the best response.
- To cut costs, the owner considers lowering wages. Who is in conflict here?
- The workers threaten to strike. What is a fair first step?
- How might the owner balance the conflict?
Explain it
A supermarket plans to cut its prices. Explain a stakeholder conflict this could cause, and how the business might balance it.
- Name two stakeholder groups in conflict
- Explain what each group wants
- Explain why they cannot both be fully satisfied
- Suggest how the business could balance the conflict