Stakeholders, conflict and the impact of recession

A stakeholder is anybody who has an interest in the matters of the business. It can be a person, group or organisation that has a direct or indirect stake within a company. This means they can affect and be affected by the company’s actions, choices and therefore consequences of those. The objectives and policies of the company will also affect the stakeholder. They can exist both internally, within the company, and externally, outside of the company and although stake-holding is often self legitimising, not all parties within the stakeholder community are entitled to the same considerations. For example, a firm’s customers are entitled to fair trading practises but are not entitled to the same considerations as the firm’s employees.

Conflict occurs between different stakeholders when actions are not agreed upon. The stakeholders can be split into many groups such as; owners, employees, the government, suppliers, trade unions, society, customers etc. As there are so many different groups of stakeholders, it is easily understood that different parties will wish to address different matters. For example, the government will take interest in taxation, VAT and unemployment whereas the owners of the company will have an interest in profit, performance and direction.

A common conflict is between suppliers and customers. As you would agree, we as customers want the best products on the market for the cheapest prices available. As it is extremely unlikely for a company to sell the product for less than they bought it for, it is down to the supplier as to how low prices are for customers to purchase. In the recession, we may not strive for the best of quality on the market but for the best quality available for our budget. As money is short in the recession, customers require low prices, to save as much money as possible. On the other hand, suppliers wish to gain as much money as they can as they too will have less money in the recession. They will not be up for selling their products to their customers for financial amount that does not benefit them for their hard work. Therefore, they try to sell their produce for the most amount of money they can get from their customers. A conflict is therefore apparent as customers want low prices which are not available due to high priced supplies. The end result often sees one of the conflicting parties end up worse off than the other, and is often the customer.

The alternative these quality products is cheaper, lower quality products such as supermarkets own brand. As these products are of lower quality, they are also of lower value and can therefore be sold for a much lower price. Production costs are also reduced by the fact that the company has produces the product themselves and as a result are not at the mercy of their suppliers and their high demands for the products they create and produce.

It is not only these two groups that are affected by the recession. Each individual group is affected in their own way such as the government and the unemployment rates. As the recession deepens, we see a rise in unemployment. This of which is a main concern for the government. A conflict for them arises with owners of businesses when they wish to reduce unemployment as they require more job availability but owners are letting staff go. It is inevitable that people will spend less money when there is less money circulating their country as they are unlikely to see a return, due to lack of funding within the economy. This creates a chain reaction that will eventually result in the inevitable, the reduction of staff amounts which raises unemployment.

These two examples, of many, show that two parties cannot often both win within a conflict as one stakeholder will always achieve a better result than the other. This is why there is conflict between stakeholders. The conflict however is made much worse by the economy as it introduces more problems for each section within the stakeholder’s community. Therefore, more issues need to be addressed and decisions are made harder as a wrong turn down the path to success could lead straight to failure in a very short space of time.

Steven Hawkins