Stakeholder Interests and Responsibilities

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Questions and Answers

What is the definition of a stakeholder?

People or groups of people who can be affected by, and therefore have an interest in, any action by an organization.

What is the definition of the stakeholder concept?

The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders.

Which of the following is NOT an example of an internal stakeholder?

  • Employees
  • Directors
  • Customers (correct)
  • Managers

Which of the following is an example of an external stakeholder?

<p>Suppliers (A)</p> Signup and view all the answers

Which of the following is a benefit of a business expansion?

<p>All of the above (D)</p> Signup and view all the answers

What are the factors that lead to a decrease in unit cost as more is produced?

<p>Economies of scale</p> Signup and view all the answers

Which of the following is NOT a type of economy of scale?

<p>Environmental (D)</p> Signup and view all the answers

What are the factors that lead to an increase in the unit cost of production as output increases past a certain point?

<p>Diseconomies of scale</p> Signup and view all the answers

Which of the following is NOT a type of external economy of scale?

<p>Government regulations (D)</p> Signup and view all the answers

Which of the following is an example of an external diseconomy of scale?

<p>Both A and B (C)</p> Signup and view all the answers

Which of the following is NOT a way that businesses grow?

<p>Government intervention (B)</p> Signup and view all the answers

What is the definition of an internal growth strategy?

<p>Internal growth refers to growth that is generated by a business through its own operations, without relying on external factors such as partnerships, mergers, or acquisitions.</p> Signup and view all the answers

Which of the following is NOT an advantage of internal growth?

<p>Lower risk compared to external growth (A)</p> Signup and view all the answers

Which of the following is NOT an advantage of a merger or acquisition?

<p>Decreased competition in the market (B)</p> Signup and view all the answers

What is the definition of a joint venture?

<p>A joint venture is a business arrangement in which two or more companies collaborate to create a new entity, usually for a specific purpose.</p> Signup and view all the answers

What is the definition of a franchise?

<p>A franchise is a business arrangement in which a franchisor grants a franchisee the right to operate a business using the franchisor's brand, trademarks, and business model.</p> Signup and view all the answers

What are the main types of vertical integration?

<p>The main types of vertical integration are backward vertical integration and forward vertical integration.</p> Signup and view all the answers

What is a conglomerate integration?

<p>Conglomerate integration refers to the merger or takeover of two companies that are in completely different industries or chains of production.</p> Signup and view all the answers

What is the definition of a multinational corporation (MNC)?

<p>A multinational corporation is a business that operates in multiple countries, and it is typically headquartered in a country that is different from the countries in which it conducts its operations.</p> Signup and view all the answers

What is the definition of a host country?

<p>A host country is any country in which a multinational corporation operates or produces goods or services, excluding its home country.</p> Signup and view all the answers

What is the purpose of the Ansoff matrix?

<p>Both A and B (C)</p> Signup and view all the answers

What are the four product and market growth strategies outlined by the Ansoff matrix?

<p>The four strategies outlined by the Ansoff matrix are market penetration, market development, product development, and diversification.</p> Signup and view all the answers

What is the definition of a SWOT analysis?

<p>A SWOT analysis is a structured planning method used to identify and analyze a company's strengths, weaknesses, opportunities, and threats.</p> Signup and view all the answers

Why are cash cows considered to be the most profitable products in a company’s portfolio?

<p>Cash cows are products that have a high market share in mature markets with low market growth, making them highly profitable because most of their development costs have already been incurred.</p> Signup and view all the answers

What is the purpose of a product portfolio strategy?

<p>A product portfolio strategy is used to help businesses allocate resources and manage their product mix in order to achieve long-term growth and profitability.</p> Signup and view all the answers

What are the main benefits of globalization?

<p>The main benefits of globalization include increased international trade, investment, cross-cultural exchange, and the spread of technology and ideas.</p> Signup and view all the answers

What are the main challenges of globalization?

<p>The main challenges of globalization include the potential for economic inequality, environmental degradation, cultural homogenization, and the rise of global corporations that can exert considerable influence on national economies and policies.</p> Signup and view all the answers

What are the main benefits of MNCs to the host country?

<p>The main benefits of MNCs to the host country include increased investment, job creation, economic growth, skills transfer, and improved infrastructure and technology.</p> Signup and view all the answers

What are the main costs of MNCs to the host country?

<p>The main costs of MNCs to the host country include potential job losses for local workers, environmental damage, exploitation of workers, and a loss of cultural diversity.</p> Signup and view all the answers

What are the main advantages of being a franchisor?

<p>The main advantages of being a franchisor include receiving a steady stream of income from franchise fees and expanding their business faster than they could do organically.</p> Signup and view all the answers

Flashcards

Stakeholder

A person or group affected by or interested in an organization's actions.

Stakeholder concept

Businesses have responsibilities to multiple groups, not just shareholders.

Internal Stakeholder (Employee)

Employees, managers, and directors within an organization.

Employee interests

Better pay, career advancement, job security and equal opportunities.

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Manager interests

Improving customer relations, operational efficiency, and profits.

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Director interests

Organization's ROI for shareholders, improving competitiveness, and performance-related bonuses.

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Shareholder interests

Share price growth and increased profits (dividends).

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External Stakeholder (Customer)

Customers, competitors, financiers, trade unions, and pressure groups.

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Customer interests

Good quality, low price, and excellent customer service.

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Competitor interests

Focus on operations, finances, and benchmarking against other firms.

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Economies of scale (E of S)

Lower unit costs as production increases.

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Managerial E of S

Specialized managers lead to more efficient production.

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Marketing E of S

Advertising costs lower per unit with increased output.

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Technical E of S

Using capital equipment more efficiently.

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Bulk buying E of S

Lower input costs with larger orders.

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Financial E of S

Lower interest rates for larger firms.

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Diversification E of S

Reduced risk from depending on any one product or market.

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Internal diseconomies of scale

Increased unit costs as output expands past a certain point.

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Bureaucracy

Complex paperwork and policies hindering efficiency.

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Control and Coordination

Difficulty managing all employees as company size increases.

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External economies of scale

Cost decrease for all firms in the industry caused by the industry's overall growth.

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External diseconomies of scale

Cost increase for all firms caused by industry growth.

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Internal growth

Business growth through increased demand and expansion.

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External growth (Mergers/Takeovers)

Business growth by joining with another company.

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Merger

Two or more companies combining into one.

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Acquisition

One company buying another.

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Joint Venture

Two or more companies forming a new one for a time.

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Study Notes

Stakeholder Definition

  • Stakeholders are individuals or groups affected by an organization's actions.
  • They have an interest in the organization's activities.

Stakeholder Concept

  • Businesses have responsibilities to various groups, not just shareholders.
  • This concept is closely linked to corporate social responsibility (CSR).

Employee Interests

  • Better pay and working conditions.
  • Career advancement opportunities.
  • Job security.
  • Equal opportunities.

Manager Interests

  • Enhancing customer relations to maintain competitiveness.
  • Improving salaries, bonuses, and benefits like other employees.
  • Operational efficiency and increased labour productivity.
  • Profit maximization.

Director Interests

  • Maximizing the return on investment for shareholders.
  • Improving share ownership and related performance bonuses.
  • Boosting organizational competitiveness via market share and growth.

Shareholder Interests

  • Increasing share prices.
  • Achieving higher profits for greater dividends.

Customer Interests

  • High-quality and safe products.
  • Affordable prices and value for money.
  • Excellent customer service.

Competitor Interests

  • Company operations (product range and pricing strategies).
  • Financial position (strength as a rival).
  • Benchmarking performance (sales turnover, market share, financial ratios).

External Stakeholders (Examples)

  • Customers
  • Competitors
  • Financiers
  • Trade Unions
  • Pressure groups
  • Suppliers
  • Government
  • Local community

Internal Stakeholders (Examples)

  • Employees
  • Managers
  • Directors
  • Shareholders

Conflicts Between Stakeholders

  • Employee demands for higher wages vs. shareholder desires for higher dividends.
  • Managers' demands for bonuses vs. shareholder interest in dividends in a company.
  • Shareholders demanding dividends vs. management needing retained earnings for production and marketing.
  • Customer demands for lower prices vs. firm's profit margins.
  • Shareholders/managers wanting efficiency/productivity gains via new technology vs. potential employee job losses.

Mutual Benefits Between Stakeholders

  • Increased employee pay can lead to higher motivation, loyalty, productivity, and better profits.
  • Business expansion creates more jobs in the community, more taxes for the government, more orders for suppliers, and more profits for shareholders.
  • Customers seek value for money, good quality products, with competitive pricing, which is a positive aspect for the management and shareholders.

Economies of Scale (E of S)

  • Factors that drive down the unit cost as production increases.
  • Types include managerial, marketing, technical, bulk buying, financial, and diversification economies of scale.

Internal Diseconomies of Scale

  • Factors that increase unit cost past a certain output level.
  • Types include Bureaucracy and Control & Co-ordination.

External Economies of Scale

  • Occur when industry growth reduces a firm's average cost.
  • Factors include skilled labour, infrastructure, and ancillary firms.

External Diseconomies of Scale

  • Occurs when a firms average cost of production increases as the industry grows.
  • Factors include Congestion and Increased competition for resources.

Business Growth

  • Internal growth (organic): Increased demand for goods or services leads to increased company size.
  • External growth (Mergers & Takeovers): The expansion of a company through merging with another company or acquiring another company.

External Growth - Examples

  • Mergers and Acquisitions (M&As)
  • Takeovers
  • Joint ventures
  • Strategic alliances

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