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IB Syllabus 1.4
IB Syllabus 1.4
The learning outcomes (or assessment objectives) for this section of the IB Business Management syllabus are:
Internal stakeholders (AO2)
External stakeholders (AO2)
Conflict between stakeholders (AO2)
1.4 In-Class Activities
1.4 In-Class Activities
Day 1:
Internal and External Stakeholder Interests
Internal and External Stakeholder Interests
Choose 1 out of the 3 options (local business, large conflict, you) below and answer here:
Option 1: Local Business
1) Think of a local business
2) Identify possible Internal Stakeholders & External Stakeholders
3) What do the different stakeholders expect from the business? Are there any structures and provisions that exist to represent their interests?
4) What are some potential conflicts and mutual benefits that can happen (long and short term implications)?
5) What are some solutions to those conflicts or ways to increase mutual benefits? How would these solutions effect various shareholders?
Option 2: Large Conflict
1) Think of a large potential conflict between stakeholders (eg. Oil discovered in Panama, Amazon moving into town, New automatic self driving technology, Mandatory Recycling, Only Electric Cars, Violent Conflict, Famine, etc)
2) Identify possible Internal Stakeholders & External Stakeholders
3) What are some potential conflicts and mutual benefits that can happen (long and short term implications)?
4) What are some solutions to those conflicts or ways to increase mutual benefits? How would these solutions effect various shareholders?
Option 3: You
1) Think of something in your life that involves other people (can be a big decision, an extra curricular activity, or something important to you)
2) List possible Stakeholders
3) What do the different stakeholders expect from you?
4) What are some potential conflicts and mutual benefits that can happen (long and short term implications)?
5) What are some solutions to those conflicts or ways to increase mutual benefits?
Answer on the Jamboard: https://jamboard.google.com/d/15bovMUfp9OMDwfih-Xx1stbg6_G4Q91OEoGzjBzLZq8/edit?usp=sharing
Day 2:
Conflict Roleplay
Conflict Roleplay
People problem 1: Unfair dismissal?
People problem 2: The failing employee?
People problem 3: Sexual harassment?
People problem 4: A case of grievance?
People problem 1: Unfair dismissal?
The school principal publicly humiliates a teacher in the staffroom. The teacher storms out of the school in tears and wants the backing of her trade union to sue the school for constructive dismissal. The union representative meets with the principal. Should the principal fight the case or reach a settlement?
People problem 2: The failing employee?
Lisa was one of the top salespeople at Tours Corp. However, she has recently been late for work and has not been meeting her sales targets. Ellie, the sales manager, wants Lisa sacked (fired) from her job but Ryan, the marketing director, disagrees. What should they do?
People problem 3: Sexual harassment?
Debbie has complained that Nial, her line manager, has been sexually harassing her over the past three months. Nial denies the charges and claims that Debbie is simply incompetent. What should the business do?
People problem 4: A case of grievance?
Edd has been accused of stealing from his employers. His boss claims that a witness saw the incident. The boss says that he is willing to forgive Edd if he accepts a whole week’s wages to be deducted to pay for the stolen goods. Edd is adamant of his innocence. What should he do?
Reflections
What did you learn about conflict and conflict resolution from being part of and/or observing these role plays?
What you should know
By the end of this subtopic, you should be able to:
define the following terms: (AO1)
stakeholders
internal stakeholders
external stakeholders
shareholders
distinguish between internal and external stakeholders (AO2)
explain the interests of a particular stakeholder group (AO2)
explain at least one possible area of mutual benefit, or at least one potential conflict, between stakeholders (AO2)
suggest possible solutions to stakeholder conflict (AO2)
https://quizlet.com/pa/724169894/14-stakeholders-flash-cards/?new
https://www.gimkit.com/view/631dd1b7846660004b9b7da6
Arbitration
Method of stakeholder conflict resolution with all stakeholder groups in conflict agreeing to accept the decision or judgment of the independent arbitrator.
Competitors
These are the firm’s rivals, which operate in the same industry and contest for the same customers.
Conciliation
Method of stakeholder conflict resolution which aims to align the incompatible interests of different stakeholder groups by helping different parties to better understand each other’s interests.
Conflict
This refers to the mutually exclusive and incompatible interests of different stakeholder groups. If this is not managed, it often leads to protracted disagreements, disputes, and arguments in the workplace.
Customers
These are the firm’s clients, individuals and other businesses, who purchase the organization’s goods and/or services. Their interests include competitive prices, fit-for-purpose products and overall value for money.
Directors
The group of senior managers who run a company on behalf of the owners of the company.
Employees
These are the workers within an organization. Their interests include: job security, a competitive remuneration package, a safe working environment, and opportunities for career development.
External stakeholders
Stakeholder groups that are not directly involved in the running of an organization but have a direct interest in its operations.
Financiers
Financial institutions (such as banks) and individual investors who provide source of finance for businesses. They are interested in the organization’s ability to generate profits and to repay debts.
Government
The ruling authority within a state or nation. The government, as an external stakeholder, is interested in businesses complying with the laws of the country, such as employment legislation.
Internal stakeholders
These stakeholders are part of the organization, such as employees, managers, directors, and shareholders.
Local community
The general public and local businesses that have a direct interest in the activities of the organization. They are interested in the firm’s ability to create jobs and to operate in a socially responsible way.
Managers
The people hired to be responsible for overseeing certain functions, operations, or departments within an organization.
Pressure groups
Individuals who come together or organizations that are set up for a common concern. They aim to influence government and public opinion in order to create the desired social change.
Shareholders (stockholders)
The people or organizations that have shares in a company. Their interest is financial, i.e. regular dividends and a higher share price.
Stakeholder conflict
Refers to differences in the varying needs, perspectives, and priorities of the numerous stakeholder groups of an organization.
Stakeholder mapping
A business management model used to determine the relative interest of stakeholders and their level of influence (or power) on an organization.
Stakeholders
The individuals, organizations, or groups with a vested interest in the actions and outcomes of a specific organization. They are directly affected by the performance of the business.
Suppliers
Organizations that provide the goods and support services for other businesses. Their interests include receiving regular orders and receiving payments from their business customers on time.
extra Notes
extra Notes
Stakeholders:
Any individual or group that affects, or is affected by, an organisation.
Railway Company Example
Internal stakeholders (AO2)
Internal stakeholders (AO2)
Internal stakeholders are individuals or groups who are part of the organization.
An internal stakeholder is an individual or group that affects, or is affected by, an organisation and is directly involved inside the organisation.
Examples:
employees
managers
directors (executives), and
shareholders (the owners of the business)
Employees:
Employees are the individuals who work for the company.
Employees want:
Improved terms and conditions of employment
Better pay and bonuses
Equal opportunities
Improved job satisfaction
Improved job security, and
Wider opportunities for career progression
Managers:
Managers are the individuals who run the organisation. They are responsible both for setting aims and objectives, and for making sure these aims and objectives are met.
Managers want:
Striving to improve operational efficiency, labour productivity and profits as these are all measure of management performance.
Aiming to improve customer relations in order to maintain or improve the organization’s competitiveness.
Aiming to improve their own salaries, bonuses and other fringe benefits - just like all employees of the organization
Directors:
Directors must also keep company records and report any changes to the authorities. Other responsibilities of directors include:
Advising and supporting the CEO
Filing company annual accounts
Target setting and devising long term strategic plans
Establishing organizational policies and codes of conduct / practice; which in turn means shaping the corporate culture
Monitoring and controlling the organization’s overall activities and financial results
identifying and recording people with significant control (PSC) in the company.
Interests of Directors:
They have similar interests to managers, but are also likely to strive to improve their share ownership rights and performance related bonuses.
They are concerned with the organization’s return on investment for their shareholders.
They strive to improve the competitiveness of the organization as measured by market share and market growth.
Shareholders / Stockholders
Shareholders are the owners of the company and invest into a business to receive a return on their investment.
Shareholders want:
primarily concerned with the company’s profitability.
Profits will allow shareholders to receive a return on their investment in the form of dividends or an increase in the value of their ownership interest (capital gains).
Note:
Shareholders are sometimes considered to be external stakeholders because, in the case of large publicly held companies, they are generally not involved in the day-to-day running of the business.
External stakeholders (AO2)
External stakeholders (AO2)
An external stakeholder is an individual or group that affects, or is affected by, an organisation, but who is not directly involved inside the organisation.
Customers:
Customers include both individuals and other businesses that purchase the products of the organisation.
demand good service
quality products
safe
sold at a reasonable price.
Suppliers:
Suppliers are the individuals and businesses that sell goods and services to another organisation.
Suppliers want:
to be paid fair and reasonable prices for these inputs.
to maintain a stable business relationship with the companies they supply in order to ensure a reliable market for their goods.
the health and continued existence of the businesses to which they sell.
Suppliers are interested in securing contracts for regular orders from their business customers.
They demand prompt payment from their business clients for the orders placed and the deliveries made.
Whilst they may offer larger business customers price discounts, suppliers strive to achieve reasonable prices for the goods and services they supply.
Having a good professional relationship with suppliers means the business is more likely to receive timely deliveries and better credit terms.
Governments:
Governments regulate organisations in order to protect the public interest.
enforce laws and reprimand businesses when necessary.
dependent upon businesses to provide tax revenues and employment.
In some cases governments are also customers of businesses, as is the case for the defence industry and the pharmaceutical industry.
Labour unions
A labour union is an organization that aims to protect the interests of its worker members. In particular, it focuses on the terms and conditions of employment, such as workers’ pay and benefits.
Labour unions want:
improve working conditions and safety
an increase in pay and benefits
reduce working hours
improve the terms of employment for employees but increase costs for employers.
Banks and financial institutions
Financiers (or financial lenders) are commercial banks, investors, insurance companies, and other financial backers that provide finance for a business.
Financiers interested in:
the financial health of an organization in order to judge the ability of the business to repay its debts and to generate profits.
expect regular and prompt repayment of the money lent to the business.
demand a positive yield (competitive financial return) on their investment funds.
Society / Local Community
The local community refers to the general public and local businesses (not necessarily competitors though) that have a direct interest in the activities of the business in question.
Members of the local community try to encourage the business in question to act in a socially responsible way, such as sustainable activities that protect the environment.
They expect the business to create jobs in the local area.
The local community may also want financial support (such as sponsorships and donations) for local events.
Competition
Competitors are other businesses selling similar products or services in the same industry
They want to know about your business's products, prices, and strategies so they can compete effectively
Competitors look at your finances like sales, profits, costs, as well as employee salaries and fringe benefits to compare
The way your business behaves can impact the whole industry's reputation, so competitors pay attention
Some competitors may own shares of your business to have influence or insight into its operations
Rivals are also interested in benchmark data to measure their own performance, such as sales turnover, market share, and financial ratio analysis.
Pressure Groups
Pressure groups are organizations consisting of like-minded individuals who come together for a common cause or concern.
Examples:
Friends of the Earth (environmentalism and human rights)
Greenpeace (environmentalism and peace)
Oxfam International (poverty eradication and disaster relief)
World Wildlife Fund (environmentalism, conservation, and ecology).
Pressure groups:
strive to influence government and public opinion in order to create the desired social change, such as protection of the environment, fairer terms of international trade or the upholding of human rights.
put pressure on organizations to operate in a socially responsible and ethical way, such as the fair treatment of workers. Action from pressure groups help to hold businesses accountable for the impact of their operations and activities on local communities and the natural environment.
The Different Types of Stakeholders
1.4 Stakeholders Poster.pdfConflict between stakeholders (AO2)
Conflict between stakeholders (AO2)
Examples
Employees demand higher wages, which raises production costs so can reduce the amount of profits from which shareholders receive dividend payments.
Similarly, senior managers and directors may demand large bonuses for their work, but this may also reduce the profits available to distribute to the company’s shareholders.
Shareholders may demand regular and higher dividend payments, but this may result in less retained profits (see Unit 3.2) available for production and marketing managers to improve their functional roles.
Customers may want lower prices, but this reduced the firm’s profit margin so can upset the company’s shareholders.
Employers may want greater efficiency and productivity gains by investing in new technologies, but this might create job losses for employees.
The local community want demand businesses operate in a socially responsible way and create jobs in the local area, although this can create congestion and noise and air pollution in the local area, thereby upsetting other members of the community.
In-Class PowerPoint
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