Top 8: Discuss how the objectives of stakeholders groups in a profitable business might be in conflict. [12]

[Sir Afzal Shad]

Topical Q8: Discuss how the objectives of stakeholders groups in a profitable business might be in conflict. [12]
Topical Past Paper: 9707/12/MJ 2010/ Q6

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Solution:
Point 1:
[KN] Stakeholders in a profitable business often have diverse and sometimes conflicting objectives due to their different roles, interests, and expectations.
[AN+APP] For example, shareholders typically seek to maximize financial returns and shareholder value, which may conflict with the objectives of employees who prioritize job security, fair wages, and career advancement opportunities.
[AN+] Moreover, customers may prioritize quality, affordability, and convenience in products or services, which may conflict with the objectives of suppliers who seek to maximize profits or negotiate higher prices.
[AN+] Additionally, regulators and government agencies may have objectives related to consumer protection, environmental sustainability, or fair competition, which may conflict with the objectives of businesses seeking to minimize regulatory burdens and maximize operational efficiency.

Point 2:
[KN] Conflict among stakeholder objectives can arise in various areas, including resource allocation, decision-making processes, and strategic priorities of the business.
[AN+APP] For instance, conflicts may arise between shareholders seeking higher dividends or share buybacks and employees advocating for increased investments in wages, benefits, or training programs.
[AN+] Moreover, conflicts may arise between customers demanding lower prices or better quality products and suppliers pushing for higher prices or longer payment terms to maximize their profits.
[AN+] Additionally, conflicts may arise between businesses seeking to maximize short-term profits through cost-cutting measures or aggressive marketing tactics and regulators enforcing rules and regulations to protect consumer rights, labor standards, or environmental sustainability.

Point 3:
[However] Managing conflicts among stakeholder objectives is essential for businesses to maintain long-term sustainability, reputation, and stakeholder trust.
[AN+] One approach to addressing conflicts among stakeholders is to foster open communication, dialogue, and collaboration among stakeholders to identify common interests, shared goals, and mutually beneficial solutions.
[AN+] Moreover, businesses can adopt stakeholder engagement strategies that involve stakeholders in decision-making processes, soliciting feedback, and addressing concerns to build trust, transparency, and accountability.
[AN+] Additionally, businesses can adopt a stakeholder-oriented approach to decision-making, considering the interests and impacts of all stakeholders in strategic planning, resource allocation, and performance evaluation to achieve a balanced and sustainable approach to business operations.

[EVAL]
[SOL] One solution to manage conflicts among stakeholder objectives in a profitable business could be to develop a stakeholder management framework that identifies key stakeholders, assesses their objectives and expectations, and outlines strategies for engaging and addressing conflicts among stakeholders.
Another solution could involve adopting a stakeholder-centric approach to corporate governance, where businesses prioritize stakeholder interests alongside shareholder interests in decision-making processes, board composition, and executive compensation structures, ensuring that business objectives are aligned with the needs and expectations of all stakeholders.

[External Factors] Factors to consider before making a final decision include:
1. Industry dynamics: Assessing industry norms, benchmarks, and best practices related to stakeholder engagement, corporate governance, and sustainable business practices can provide insights into how businesses can effectively manage conflicts among stakeholder objectives while maintaining competitiveness and profitability.
2. Regulatory environment: Compliance with laws, regulations, and industry standards related to corporate governance, stakeholder engagement, and social responsibility is essential for businesses to mitigate legal and reputational risks associated with conflicts among stakeholder objectives.
3. Market conditions: Understanding market trends, competitive pressures, and consumer preferences can help businesses anticipate conflicts among stakeholder objectives and proactively address them through strategic planning, innovation, and stakeholder engagement initiatives.

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Disclaimer: This is the possible answer with some extra information to make you understand better, the wordings must be managed according to the time allocated for each 12 marker.
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