This article analyzes the likely positive and negative effects of business decisions on three different stakeholder groups. Stakeholders are people or groups of people who have interest in a business organization and its operations.
Additionally, there might be potential conflicts of interest between stakeholder groups resulting from the following business activities. Stakeholder conflict typically arises when stakeholders have conflicting interests or objectives.
1. Business decision: Expansion of the business
Impact on employees: More job and career opportunities. More complex lines of communication after expansion.
Impact on customers: Better service provided by bugger business with more staff. Larger business could be less personal and therefore offer inferior customer service.
Impact on local community: More jobs for local residents and increased spending in other local businesses. External costs caused by increased traffic and loss of green fields for amenity use.
2. Business decision: Takeover of a competing firm
Impact on employees: The larger business may be more secure and offer career promotion opportunities. Rationalization may occur to avoid waste and cut costs – jobs might be lost.
Impact on customers: The larger business may benefit from economies of scale, which could lead to lower prices. Reduced completion could have the opposite effect – less customer choice and higher prices.
Impact on local community: If the business expands on the existing site, local job vacancies and incomes might increase. Rationalization of duplicated offices or factories might lead to closures and job losses.
3. Business decision: New IT system introduced into production methods
Impact on employees: Training and promotion opportunities might be offered to employees. Fewer untrained staff will be required and those unable to learn new skills may be made redundant.
Impact on customers: More efficient and flexible production methods might improve quality and offer more product variety. It reliability problems could cause supply delays.
Impact on local community: Local businesses providing IT services could benefit from increased orders. Specialist workers may not be available locally, so more staff may need to commute.
Think about other examples of business decisions and their impact on different stakeholders, both internal stakeholders and external stakeholders. Try to use actual and recent examples from your own country. Analyze the potential conflict of interests between any three stakeholder groups.
