Speaker 1: Hi again, everyone, and welcome back to our VCE Business Management series. In our last video, we identified the key stakeholders in a business, both internal and external. Today, we're going to take that a step further by discussing the interests of these stakeholders and how conflicts can arise between them. It's crucial for any business to understand these dynamics because effectively managing stakeholder relationships can be the difference between success and failure. Don't forget to check out the study notes and practice questions in the description below that are tailored to help you reinforce what you learn in this video. All right, so let's dive into the different interests of stakeholders and explore how these can sometimes conflict using examples from both large and small Australian businesses. So each stakeholder group has its own interests and expectations from the business, which we established in the last video. These interests can vary widely depending on the stakeholder's relationship to the business and their priorities. So let's start with owners and shareholders. Their primary interest is in the profitability and growth of the business. They want to see a return on their investment, typically in the form of dividends and an increase in the share price, perhaps. For example, shareholders in a large corporation like West Farmers expect steady growth and robust financial performance to maximize their returns. However, even in a small family-owned cafe, the owner's interest is in maintaining a profitable business that can sustain their livelihood and potentially expand. So next, let's consider employees. Their interests include job security, fair wages, and a safe, supportive work environment. For instance, employees at a medium-sized manufacturing company might be particularly concerned about job stability, especially if the company is undergoing restructuring. Conflicts can arise if the business decides to cut costs by reducing staff or freezing wages, which directly impacts the employee's interests. Moving on to customers. Customers are primarily interested in receiving high-quality products and services at reasonable prices. Their satisfaction is crucial for the business's success. For example, a small pet store's customers might value personalized service and expert advice, while a large retailer like Woolworths must ensure a wide variety of products and competitive pricing to meet customer expectations. Conflicts can occur when the business's strategies to increase profitability, such as raising prices or reducing product quality, negatively affect customer satisfaction. Suppliers. They seek stable long-term relationships with businesses to ensure consistent orders and timely payments. For example, a local cafe depends on reliable suppliers for fresh ingredients to maintain the quality of its offerings. Conflicts can arise if the business delays payments or switches suppliers to cut costs, potentially damaging the relationship and the supplier's business. Moving on to the community, which has a vested interest in the social and environmental impact of the business. A business that provides jobs and supports local initiatives is generally viewed positively. However, conflicts can emerge if the business's activities harm the local environment or fail to contribute to community welfare. For instance, a mining company like Rio Tinto might face opposition from local communities if its operations are perceived to harm the environment, even if the company provides jobs and contributes to the local economy. Competitors are interested in gaining market share and outperforming other businesses in the industry. While they are external stakeholders, their actions can directly influence a business's strategies. For example, a small cafe might feel the pressure to innovate or offer unique products if a new competitor opens nearby. On a larger scale, Telstra might respond to aggressive pricing from a competitor like Optus by lowering its own prices, potentially sparking a price wall that affects the entire industry. Finally, government stakeholders are concerned with ensuring that businesses comply with regulations, pay taxes, and contribute to the economy. Conflicts with government stakeholders can arise if a business is found to be violating laws or regulations, such as environmental standards or employment laws. For example, a small construction company might face penalties if it fails to comply with safety regulations which can lead to legal and financial challenges. So in summary, conflicts between stakeholders are inevitable because different groups have different interests and priorities. For instance, a decision that benefits the shareholders like cutting costs to boost profits might negatively impact employees through job losses or wage cuts. Similarly, strategies to increase market share might involve aggressive pricing that could harm supplier relationships or even lead to a price wall with competitors. Understanding these potential conflicts and managing them effectively is crucial for maintaining a balanced and sustainable business. By carefully considering the interests of all stakeholders and finding ways to align these interests where possible, businesses can mitigate conflicts and work towards long-term success. Don't forget to download the study notes and try out the practice questions linked in the description. They're designed to help you solidify your understanding of stakeholder interests and conflicts. In our next video, we'll discuss management styles and how they can influence the way these conflicts are handled. Make sure you subscribe with notifications turned on so you don't miss it. Thanks for watching and remember, mastering these business concepts is key to your success in VC business management. See you in the next video.