1. Unit 1: Business organization and environment
1.4 Stakeholders –3 hrs

2. 1.4 Stakeholders
Analyse the interests of internal stake holders & external stake holders
Examine possible areas of mutual benefit and conflict between stakeholders´ interests.

3. KWALAQ What do you already Know?
What do you want do learn or find out?
How will you go about finding this information
What did you learn from the experience?
What further clarification would you like?
What questions have arisen?
KWALAQ

4. Timeline Nov 12 Review quiz 1.3 / Introduction to 1.4
Nov 13 Unit 1.4: Analyse the interests of internal stake holders & external stake holders pages
Nov 17 Unit 1.4: Examine possible areas of mutual benefit and conflict between stakeholders´ interests. Page 56-60
Nov 19 Quiz Unit 1.4
Nov 23Unit 1.4: Review quiz 1.4/ Introduction to 1.5

5. SETTING THE SCENE
Tata Nano divides opinions It is three metres long, seats four, does 100 kilometres an hour and aims to revolutionise travel for millions. The ‘People’s Car’ is also the cheapest in the world at rupees (US$2600) – about the same price as a DVD player in a Lexus. Rattan Tata, the company chairman, unveiled the cute, snub-nosed car that will allow millions of Asia’s emerging middle classes to buy a car for the first time. ‘This will change the way people travel in India and Asia. Most people are denied mobility due to the high prices of cars. This is a car that will be affordable to millions of consumers for the first time,’ he said when the car was launched. The car will be built in a factory in West Bengal. This will offer relatively well-paid factory employment to thousands of workers for the first time. The country will gain export revenue when the car is sold abroad. The steel and other materials used in the car will be purchased from Asian suppliers, which will help to boost local economies and suppliers. The idea of millions of Nanos on the road alarms environmental groups. Rajendra Pachauri, the UN’s chief climate scientist, said that he was ‘having nightmares’ about it. Delhi, where air pollution levels are more than twice the safe limit, is registering 1000 new cars a day, and this could double when the Nano is in production. Average speed of traffic at rush hour is 10 kilometres an hour and the government might be forced to spend much more on building new roads if Nano ownership became widespread. Bus operators also fear increased competition from private car users. Source: 11 January 2008 (adapted)

6. Points to think about:
● List the groups of people who might benefit from Nano car production.
● List the groups who might be badly affected by the use of large numbers of Nano cars.
● Do you think Tata, the manufacturer, has a responsibility to all of these groups? What makes the Nano so cheap?

7. Analyse The interests of internal stake holders & external stake holders. AO2- 2hr
Branson offers some dads one year leave on full pay
Define the terms: Stakeholder, Internal Stakeholder, External Stakeholder
What are the interests of each stakeholder?
State 3 internal stakeholders and their interests (aims).
State 3 external stakeholders and their interests (aims)
What is the difference between shareholder and stakeholders?
What is the difference between internal and external stakeholders?
Can an individual have multiple stakeholder interests in a business?
What ethical interests do the different stakeholder groups of multinational company X have?

8. Analyse The the interests of internal stake holders & external stake holders. AO21hr
6. Case Study: go to
Read the article shareholders vs. stakeholders – a new idolatry from the Economist.
Which stakeholder group is the most important in the 21st century? (justify your answer).
7. Examine how poor performance of a school or college might affect any of its stakeholder groups.(Choose at least 2)

9. Analyse The the interests of internal stake holders & external stake holders. AO21hr
8. Case Study: Nokia and Microsoft Paul Hoang page 48:: How were different stakeholder groups affected by Microsoft´s takeover of Nokia?
9. Give an example of possible actions taken by pressure groups. (How can this affect the business? How would other internal and external stakeholders be affected)

10. Analyse The the interests of internal stake holders & external stake holders. AO2 2hr
10. Be an Inquirer: Case Study: go to
and investigate one of the largest rivalries in business history:
Coca – Cola and Pepsi
Ford – General Motors
Boeing – Airbus
McDonalds – Burger King
Nike – Addidas
(analyse how this rivalry affected internal and external stakeholders).

11. Analyse The interests of internal stake holders & external stake holders. AO2 2hr
Stakeholder: Any person or organization with a direct interest in, and is affected by, the activities and performance of a business. They have a stake or interest in the business.
INTERNAL STAKEHOLDER: Members of the organization (work within the organization). Ie. Employees, managers, directors and shareholders.
Employees: Strive to improve their pay and other financial benefits, working conditions (hours of work and working environment), job security and opportunities for career progression.
CEO, Managers and Directors: Aim to maximize their benefits, such as annual bonuses and other perks. Aim for profit maximization – this pleases the shareholders. They aim for long- term financial health of their organization.
Shareholders (stockholders): Individuals who own shares in a company. Strive to maximize dividends, and to achieve capital gain in the value of their shares. (can be internal or external stakeholders – if they are not involved in daily operations)
Exam Tip: Do not confuse the terms ‘stakeholder’ and ‘shareholder’. Stakeholder is a much broader term that covers many groups, including shareholders.

12. Analyse The interests of internal stake holders & external stake holders. AO2 2hr
EXTERNAL STAKEHOLDERS: Do not form part of the business but have a direct interest (often financial)or involvement in the organization (outside the business).
Customers & Consumers: The needs are greater choice of better quality products at competitive prices. Businesses look for quality stock on time and at reasonable prices, preferential credit terms. Businesses use market research to find out what customers want. Complaints and suggestions can be used by managers to keep customers happy and loyal.
Suppliers: Provide the business with stocks of raw materials, component parts and finished goods needed for production. They can also provide commercial services (maintenance and technical support). Suppliers strive for regular contracts at competitive prices, the request that customers pay outstanding bills on time (a stable relationship).

13. Analyse The interests of internal stake holders & external stake holders. AO2 2hr
EXTERNAL STAKEHOLDERS II
Local Community: Focus on the impact of the business in the local area. (demands to create jobs, diminish impact on environment, sponsor local fund raising events).
Pressure groups: Individuals with a common interest who seek to place demands on organizations to act in a particular way or to influence a change in their behavior. (focus on the impact of the business on their area of concern).
They may influence the businesses directly or by influencing government policy. Actions:
Boycotting: Refusal to buy products as a sign of protest, creating adverse publicity for the business.
Lobbying: influencing key issues with employers, legal representatives and the government.
Public relations (PR) getting positive publicity about a specific opinion or cause, to raise public awareness and support.
Direct Action: action to achieve its cause, eg. Staging mass protest or taking legal action against a firm.

14. Analyse The interests of internal stake holders & external stake holders. AO2 2hr
External Stakeholders III
Government: Focuses on how the business operates in the business environment.
Can have a significant influence on business activities, by:
Governments can also be shareholders.
Constraining business to assure
Stimulating business activity
Unfair business practices are avoided.
lowering interest rates and/or taxes
Correct amount of corporate tax is paid.
Offer incentives such as tax concession and subsidized rent
Health and safety standards are met.
invest in road building and communications networks
Compliance with employment legislation.
Consumer protection law are upheld.

15. Analyse The interests of internal stake holders & external stake holders. AO2 2hr
External Stakeholders IV
Financiers: Focus on returns on their investments.
Media: Focus on the impact of the business in terms of news stories.
Some authors consider competitors as external stakeholders, others say they are not: even though they have a direct impact they don’t have anything at stake, usually they want the business to fail.
Competitors: Rival businesses. Rivalry can create an incentive to be innovative and/or to produce new products. To remain competitive, businesses need to be aware of and respond to the practices of their rivals. To benchmark performance, ie. To compare key indicators.

16. Analyse The interests of internal stake holders & external stake holders
Grey areas exist between internal and external stakeholders (one person can be both)

18. Examine Possible areas of mutual benefit and conflict between stakeholders´interest 1hr. AO3
1. Define: STAKEHOLDER CONFLICT
2. Case Study: The Royal Bank of Scotland Group BM Paul Hoang – page 51
3. TOK: Is it possible to know which stake holder group is the most important to an organization? What knowledge issues would be made in such a case?
4. Question Case Study: Skoda Auto. BM Paul Hoang – page 52
5. TOK: Is it unethical if a business chooses to ignore the demands or needs of one particular stakeholder group?
6. Case Study : Royal Dutch Shell. BM Paul Hoang – page 52
7. Consider how the CUEGIS CONCEPTS apply across the different stakeholders discussed in this unit.
8. Compare and contrast the position of different stakeholders, in relation to a decision of a pay rise for employees.
9. Case Study: Anigam. BM Loykie Lominé & Others – page 60

19. Examine Possible areas of mutual benefit and conflict between stakeholders´ interest 1hr. AO3
STAKEHOLDER CONFLICT
Situations where people are in disagreement due to differences in their opinions thus creating friction between stakeholders of the organization.
Conflict arises because a business cannot simultaneously meet the needs of all its stakeholders.
In deciding how to deal with conflicting stakeholder needs, leaders need to look at 3 key issues:
1. The type of organization.
2. The aims and objective of the business.
3. The source and degree of power (influence) of each stakeholder group

20. Examine Possible areas of mutual benefit and conflict between stakeholders´ interest 1hr. AO3
MUTUAL BENEFITS OF STAKEHOLDERS´ INTEREST
There are mutual benefits in simultaneously meeting the competing needs of different stakeholders.
It is unlikely that a business can fulfil the aims of all its stakeholders at the same time, yet it is undesirable to maximize the need of just one stakeholder group. If a particular group is not catered for, then its possible they will cause disruptions and problems for the business.
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.

21. Conflict Resolution Arbitration Worker participation Profit Sharing
Share-ownership Schemes
Both sides are heard/agreement is binding
Neither gets 100% of what it wanted.
Costs.
Contribution/motivation
Waste of time & resources/ confidential information
Encourages long-term profitability
Reduces retained profits & payment to shareholders
Aligns interests of workers & shareholders
Administration costs/loss of individual participation/ - if price goes down/ usually requires to stay for a # of years.

22. Examine Possible areas of mutual benefit and conflict between stakeholders´ interest 1hr. AO3
STAKEHOLDER MAPPING: model that asses the relative interest and power of stakeholders. Lets managers assess how to deal with changing and conflicting stakeholder objectives.
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- minimum effort: limited energy & attention.
B- keep informed: News letters, events conveying sense of belonging
C- keep satisfied: flatter self esteem to make them feel important.
D – maximum effort: Should involve and satisfy. Must consult with them before major decisions. Should focus on their needs.

23. Center: Owners and Managers
Examine Possible areas of mutual benefit and conflict between stakeholders´ interest 1hr. AO3
STAKEHOLDER ANALYSIS: 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

24. FURY AT BANGLADESH MINE SCHEME
A huge open-cast coal-mining project by a British firm, that would involve moving the homes of up to workers in Bangladesh, is at the centre of an international row. The company, GCM, plans to dig up to 570 million tonnes of coal in a project that will displace people from Phulbari, in north-west Bangladesh. A river will also have to be diverted and the mangrove forest, which is a world heritage site, would be destroyed too. The project has attracted widespread hostility. In protests against the scheme 18 months ago, three people were killed in an area now said to be controlled by the armed forces. Many international campaign groups have written to the Asian Development Bank demanding that it turns down a $200 million loan for the project. The World Development Movement is claiming that the social and environmental damage can never be repaired if the scheme receives government approval. A spokesman for GCM, on the other hand, stressed the importance to one of the world’s poorest countries of jobs, incomes and exports

25. FURY AT BANGLADESH MINE SCHEME - EXAM PRACTICE QUESTION
Read the case study and then answer the questions that follow.25 marks, 45 minutes
1 Using examples from the case study, explain the differences between internal and external stakeholders. [4]
2 Explain the benefits of any two stakeholder groups resulting from this mine project. [6]
3 Explain the disadvantages to any two stakeholder groups resulting from this mine project. [6]
4 Discuss the ways in which GCM could reduce the impact of the disadvantages it has created for stakeholder groups negatively affected by the mine. [9]