IGCSE, A Level Business Student Forum

Q18 State any two possible conflicts between shareholders & customers & give solutions to them. [6]

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Possible Structure
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

[KN] Profit margin
[AN] Companies can address this conflict by being transparent about their pricing strategies and justifying price increases with added value, innovation, or improved services.
[AN+] Shareholders should be informed about the importance of maintaining a loyal customer base for long-term profitability.

[KN] Quality of products Vs using cost saving methods
[AN] Companies should strike a balance between cost-efficiency and maintaining quality standards.
[AN+] Shareholders and management should consider the long-term impact on customer loyalty and reputation.

[KN] Dividend Payments vs. Customer Satisfaction
[AN] To maximize their returns on investment, shareholders might want the company to set aside a sizeable portion of its profits for dividend payments. To guarantee a better customer experience, customers might want the business to reinvest profits into product quality, innovation, and customer service.
[AN+] By establishing a dividend policy that distributes a portion of profits to dividends and reinvests a reasonable amount in customer-centric initiatives, the company can achieve a balance. Managing expectations for both customers and shareholders can be facilitated by open and honest communication about the company's financial priorities.

[KN] Cost Reduction vs. Product/Service Quality
[AN] Cost-cutting initiatives may come under pressure from shareholders in an effort to boost profits and share value. Customers might not be happy if cost-cutting compromises quality because they expect a certain caliber of goods or services.
[AN+] The business should concentrate on increasing efficiency without sacrificing the caliber of its goods or services. Cost-cutting and continuous process optimization techniques should be applied carefully, with an emphasis on preserving or improving customer satisfaction. Customer feedback on a regular basis can be used to pinpoint areas where costs can be cut without sacrificing quality.

[KN]the quality of the product being sold
[AN]this can create a conflict with customers who prioritize safe and high-quality products
[SOL] quality assurance processes to ensure that products meet or exceed industry standards and customer expectations.

[KN]pricing and value perception
[AN]this can lead to a conflict if customers believe they are not receiving sufficient value for their money
[AN+]Actively seek and incorporate customer feedback to understand their perceptions of pricing and value.

[kn] quality in question [an] the customers want high quality which takes high costs where as the shareholders want to reduce costs [an+] quality should not be compromised upon and instead the firm should work for other ways to reduce costs

[kn] profits and the price put to attain them [an] the customers want low prices but the shareholders want to put a price to cover costs and gain somewhat profits [an+] the shareholders can use pricing strategies like dynamic pricing which can be more appealing to the general public

[KN] Product Quality
[AN] Shareholders may want to cut costs to increase profits but this would have a negative effect on the customer as they prefer high quality goods
[AN+] business should understand that quality should not be compromised and customers should be offered with high quality goods

[KN] Pricing and Discounts
[AN] sometimes customer may prefer lower prices but shareholders might have to increase the prices of products to earn profit
[AN+] business should adopt a policy in which both shareholders and customers are in benefit thus reducing the conflicts

[KN] profit margins which caused increased in prices
[AN] when there is an increase in prices the customer will be conflicted
[AN+] the solution could be that the firm may not increase it's prices and if the customer is not satisfy the business will start losing it's market share to competitors

[KN]low quality of the product
[AN] when there is an decrease in quality the customer will be conflicted
[AN+] the solution is that the business keeps quality standards

[KN]Profit maximization vs high prices
[AN]shareholders may charge high prices to increase profit margins for high dividends however customer would want to purchase more products at low prices
[AN]To resolve this a business must do a cost-benefit analysis and then set prices or may use other ways of maximizing profits to retain customers


[KN]Quality over quantity
[AN]Shareholders are likely to increase output to cater to maximum demand and so quality may be compromised but customers would want to buy high quality products to get value for their money
[AN]to resolve this a business must keep a check on quality control to make sure no customers remain dissatisfied and no products are returned

[kn] pricing
[an] shareholders would aim for maximum profitability meaning increased prices while customers demand for lower
[an+] the business should price their products according to the quality of products to ensure customer satisfaction while gaining profits as well

Products quality
The shareholders may decrease the products quality by putting lesser quality materials in the product to achieve more profit whereas the customer would want their product to be pf maximum quality as they are paying for it thus the business needs to understand that the quality of their product is their businesses reputation

Being more efficient.
customer wants their product to be delivered on time but the business is not efficiently producing since they are cutting production costs for maximum profit hence the business should look into their manufacturing and increase their efficiency.

[KN] Customer satisfaction v/s cost cutting measures.
[AN] Shareholders might want to reduce operational costs in order to increase profitability while it is possible customer might experience a decline in quality of products and services they receive hance reducing their satisfaction level.
[AN+] Thus in order to solve this shareholders must implement these measures in a moderate way, which do not compromise the quality hence will help maintain their relations too.

[KN] Communication gaps.
[AN] Poor communication between both the groups may result in misunderstandings etc.
[AN+] Thus this can solved through direct interaction which can be either through social media etc.

[KN] Profit margin
[AN] Companies can address this conflict by being clear about their pricing strategies and justifying price increases with added value innovation
[AN+] Shareholders should be informed about the importance of maintaining a loyal customer base for long-term profitability
[KN] Quality of products against using cost saving methods
[AN] Companies should strike a balance between cost-efficiency and maintaining quality standards.
[AN+] Shareholders and management should consider the long-term impact on customer loyalty and reputation.