Stakeholder Management and Interests

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Questions and Answers

What is the primary focus of strategies aimed at increasing the usage rate of existing customers?

Launching new products in different markets

Investing heavily in market research and prototyping

Gaining market dominance and reducing competition (correct)

Expanding the company's workforce for better service

Which of the following represents a characteristic of market development?

Carries medium risk due to potential new market challenges (correct)

Focus on increasing usage among current customers

Involves introducing new products to existing markets

Requires little investment in distribution networks

What might be a consequence of product development in existing markets?

It can significantly increase operational costs

It usually involves developing products that replace existing ones (correct)

It eliminates the need for customer feedback

It requires minimal market research efforts

Why could establishing a business in new markets be expensive?

It requires a greater distribution network and investment Signup and view all the answers

Which approach is least likely to help in gaining market dominance in growing markets?

Reducing customer engagement initiatives Signup and view all the answers

Which factor allows larger firms to reduce the marketing cost per unit?

Higher production volume Signup and view all the answers

What is a possible disadvantage for larger firms as they expand?

Increased bureaucracy Signup and view all the answers

What type of diseconomy of scale is related to challenges in managing large organizations?

Control and coordination Signup and view all the answers

Why might larger firms have an advantage in borrowing money from banks?

They possess more assets and collateral. Signup and view all the answers

What is an example of an external economy of scale?

Access to skilled labor Signup and view all the answers

What impact does bulk buying have on larger firms?

Decreases unit costs Signup and view all the answers

Which of the following statements is true regarding diversification in larger firms?

It limits exposure to market fluctuations. Signup and view all the answers

What is a reason why larger firms may experience internal diseconomies of scale?

Increased bureaucracy and policies Signup and view all the answers

What is the primary purpose of a SWOT analysis?

To map a company’s internal strengths and weaknesses and external opportunities and threats Signup and view all the answers

Which of the following best describes the 'Cash Cow' category in the Boston Matrix?

High market share and low market growth Signup and view all the answers

What does a balanced product portfolio help a business achieve?

Reduced risks associated with having only one product Signup and view all the answers

What is typically considered a weakness in a SWOT analysis?

Lack of resources compared to competitors Signup and view all the answers

Which type of growth does a 'Star' represent in the Boston Matrix?

High market share and high growth Signup and view all the answers

In the context of SWOT analysis, what is a threat?

A competitor's new product that affects market share Signup and view all the answers

What does it mean to diversify in business strategy?

To introduce new products into new markets Signup and view all the answers

What aspect of a firm's internal environment does the 'Strengths' section of a SWOT analysis focus on?

Internal resources and capabilities Signup and view all the answers

What is a primary concern for financiers regarding a business?

The financial health of the organization Signup and view all the answers

Which of the following interests concerns trade unions the most?

Employee pay and conditions Signup and view all the answers

What do customers generally seek from a business?

Good quality and safety Signup and view all the answers

What is a common interest for suppliers when dealing with a business?

Securing long-term contracts at a fair price Signup and view all the answers

Which interest is most relevant to pressure groups?

Socially responsible and ethical operations Signup and view all the answers

What is a primary concern of competitors regarding a business?

Product pricing strategies and market share Signup and view all the answers

Which interest is crucial for the local community concerning businesses?

Provision of good quality, well-paid local jobs Signup and view all the answers

What is a significant regulatory interest for the government concerning businesses?

Compliance with laws related to consumer protection and safety Signup and view all the answers

What is the financial strategy used for cash cows in a business portfolio?

Harvesting profits from best-selling products Signup and view all the answers

Which of the following describes a home country for a multinational company?

The country where the business originally started Signup and view all the answers

What is a potential negative impact of a multinational corporation (MNC) on a host country?

Depletion of natural resources Signup and view all the answers

What impact do MNCs typically have on local job markets in host countries?

Possibly leading to a reduction in local firms Signup and view all the answers

What benefit do MNCs provide that can contribute to economic growth in a host country?

Contribution to GDP through produced goods and services Signup and view all the answers

How might MNCs influence local wages in host countries?

By providing only low wage employment opportunities Signup and view all the answers

What is a significant drawback of MNCs in terms of labor conditions?

Exploitation of labor with poor working conditions Signup and view all the answers

What does the term 'dogs' refer to in a business portfolio context?

Underperforming products that should be divested Signup and view all the answers

What is a potential environmental consequence of MNCs operating overseas?

Higher levels of air, water, and soil pollution Signup and view all the answers

How can MNCs affect the tax revenue of host countries?

Generate limited tax revenue if tax breaks are provided Signup and view all the answers

What cultural impact can MNCs have on local populations?

Loss of cultural diversity due to globalization Signup and view all the answers

What is a typical economic benefit for local suppliers when MNCs are present?

Increased profits for local suppliers Signup and view all the answers

Which of the following is NOT a benefit of MNCs leading to improved current accounts?

Decreased exports Signup and view all the answers

Study Notes

Stakeholder Definition

People or groups affected by an organization's actions, having a vested interest
Include owners, employees, customers, suppliers, local community, government

Stakeholder Concept

Businesses have responsibilities to various groups, not just shareholders
Closely linked to Corporate Social Responsibility (CSR)

Employee Interests

Better pay and working conditions
Wider career progression opportunities
Improved job security and satisfaction
Equal opportunities

Manager Interests

Improved customer relations for maintaining/improving competitiveness
Higher salaries, bonuses, and benefits (like other employees)
Increased operational efficiency, productivity, and profits

Director Interests

Organization's return on investment (ROI) for shareholders
Improved share ownership and performance-related bonuses
Increased organization competitiveness measured by market share and growth

Shareholder Interests

Increased share price
Higher profits leading to greater dividends

Customer Interests

Good quality and safe products
Low price and good value
Good customer service

Competitor Interests

Operations (product range and pricing strategies)
Finances (strength, sales, market share, financial ratios)
Performance measurement using benchmarks

Financier Interests

Organization financial health for loan repayment and profit generation
Regular and prompt loan repayment

Trade Union Interests

Employee pay and conditions (e.g., safety)

Pressure Group Interests

Socially responsible and ethical operations by organizations
Ensuring compliance with laws (e.g., consumer protection)
Compliance with labor, environmental, equal opportunity and safety rules and taxes.

The Government Interests

Ensuring adherence to laws (consumer protection, employment, environmental, equal opportunity, health, and safety)
Collection of taxes

Local Community Interests

Limited/no pollution
Locally available, good quality, and well-paid jobs

Possible Areas of Mutual Benefit between Stakeholders

Improved employee pay leads to increased motivation, loyalty, and productivity.
Business expansion can result in more profits for shareholders, more jobs for the local community, more taxes for the government, and more orders for suppliers.
Customer value for money and quality can positively impact shareholder returns.
Efficiency increases due to new technologies can lead to profits and reduced costs.

Economies of Scale (E of S)

Factors reducing unit costs as production increases
Types: Managerial, Marketing, Technical, Bulk Buying, Financial, Diversification

Internal Diseconomies of Scale

Factors increasing unit costs as production increases past a certain point
Types: Bureaucracy, Control and Coordination

External Economies of Scale

Firm's average cost decreases as the industry grows. The benefits are spread across all firms in the industry
Types: Skilled labor, Infrastructure, Ancillary firms

External Diseconomies of Scale

Firm's average cost increases as the industry grows.
Types: Congestion, Increased competition

Business Growth

Ways to grow a business: Internal growth (organic), and External growth (mergers/acquisitions)

External Growth

Types: Mergers & Acquisitions (M&As), Takeovers, Joint Ventures, Strategic Alliances

Ansoff's Matrix

Decision-making tool for product and market growth strategies (Market penetration, Market development, Product development, Diversification)

Product Portfolio Strategy

Strategies for different product stages in the product life cycle (Stars, Cash cows, Question marks, Dogs)

Globalisation

Integration of local markets into a single global market
Multinational Corporations (MNCs) operate in multiple countries

MNC Benefits to Host Country

Reduced unemployment
Infrastructure investment from foreign direct investment
Increase in economic growth
Transfer of skills and knowledge
Increased exports

MNC Costs to Host Country

Potential loss of local jobs
Resource depletion
Exploitation of labor
Increased pollution
Reduced tax revenue
Cultural clashes

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Description

Explore the various interests of stakeholders in an organization, including employees, managers, directors, and shareholders. This quiz highlights the concept of Corporate Social Responsibility (CSR) and the responsibilities businesses have to different groups beyond just shareholders.