IB Business Management Unit 1/Section 1.4-1.5 Stakeholders and External Environment

1.4 - 1.5 STAKEHOLDERS & the external environment On completing this chapter you should be able to Outline the interests of internal stakeholders. Outline the interests of external stakeholders. Discuss areas of mutual benefit and conflict between stakeholders’ interests. Prepare a STEEPLE analysis of an organization. Explain the consequences of a change in any of the STEEPLE factors for a business’s objectives and strategy.

STAKEHOLDERS - Stakeholder: Any person or organization with a direct interest and affected by the activities and performance of a business. They have a stake or interest in the business. 1. INTERNAL STAKEHOLDER: Members of the organization. Employees, managers, directors and shareholders ( individuals who own shares in a company). 2. EXTERNAL STAKEHOLDERS: Do not form part of the business but have a direct interest or involvement in the organization. Customers & Consumers, Suppliers, Local Community, Pressure groups, Government, Financiers, Media. Grey areas exist between internal and external stakeholders (one person can be both). Competitors are not considered to be stakeholders. Even though they have a direct impact they don’t have anything at stake, usually they want the business to fail.

STAKEHOLDER conflict - Situations where people are in disagreement due to differences in their opinions, creating friction between stakeholders of the organization. - Conflict arises because a business cannot simultaneously meet the needs of all its stakeholders. - Conflict Resolution is an important aspect of Business Strategy. Most strategies aim for a “best fit” compromise so that needs of all stakeholders are reasonably addressed. The outcome of any negotiation will depend on the relative bargaining power.

Model that asses the relative interest and power of stakeholders. STAKEHOLDER mapping Model that asses the relative interest and power of stakeholders. Managers will deal with conflict in different ways depending on their leadership style and the organizational culture. LEVEL OF POWER LEVEL OF INTEREST LOW HIGH A- Minimal effort: limited energy & attention. B- Keep informed: Newsletters, events conveying sense of belonging C- Keep satisfied: flatter self esteem to make them feel important. D – Key players/maximum effort: Should involve and satisfy. Must consult with them before major decisions. Should focus on their needs.

STAKEHOLDER analysis Center: Map how close each stakeholder is to decision making Center: Owners and Managers Second level: Employees, financiers, consumers, suppliers Third level: Government, Media, local community, pressure groups

Business environment Refers to various conditions external to the business, that have an impact on it. Tools for planning and making contingency plans for changes in the external environment are opportunities & threats in the SWOT analysis. Framework for analyzing the external environmental factors affecting business objectives and strategies.

Business environment analysis PEST: POLITICAL ECONOMIC, SOCIAL,TECHNOLOGICAL PESTLE: POLITICAL, ECONOMIC, SOCIAL, TECHNOLOGICAL, LEGAL, ECOLOGICAL STEEPLE: SOCIAL, TECHNOLOGICAL, ECONOMIC, ETHICAL, POLITICAL, LEGAL, ECOLOGICAL/ENVIRONMENTAL

In-class presentation In groups of three, create a STEEPLE analysis of one of the following situations. Present your findings to the rest of the class. 1. Kraft Foods takeover of Cadbury. 2. L’Oreal investing in 5 tech start-ups. 3. Disney new theme park in Shanghai. 4. Avianca’s possible new owners: Delta/United. 5. Johnson & Johnson to buy Actelion for US$30bn. 6. The U.S. auto industry affected by Trump’s actions with Mexico. - Consider particular influences of each element on the business. - Analyse which has the most important influence (how relevant to its current strategy and objectives). - Develop a strategy to consider them.

In-class workshop – 20 marks 1. State 3 internal stakeholders and their interests. AO1 – 2 marks 2. State 3 external stakeholders and their interests. AO1 – 2 marks 3. Choose one of the following largest rivalries in business history, and analyse how this rivalry affected internal and external stakeholders. AO2 – 6 marks Coca-Cola - Pepsi Ford – General Motors Boeing – Airbus McDonalds – Burger King Nike – Adidas 4. Use the case study below and examine how different stakeholder groups are likely to be affected by Microsoft’s takeover of Nokia. AO3 – 10 marks