Lena's bakehouse plan: Lena and Marco want one large bakehouse for all three shops. Before the lease is signed, Lena lists everyone the plan touches: the stakeholders from 1.4.1.
The plan
- Now. Lena's Bakery Ltd has three shops, and each one bakes its own bread in a back room that is too small.
- The bakehouse. One large bakehouse on Mill Lane that bakes for all three shops through the night.
- Deliveries. Vans take the bread out at five in the morning.
- The money. It will cost $250,000. Last year the company made a profit of $60,000.
Each of those groups wants something from the bakery (its interests, sometimes called its objectives). An interest is what the group gains or loses when the business decides something: money, security, time, a quiet street. To see a clash coming, first be clear what each group wants.
| Stakeholder | What it wants from the bakery | What the bakehouse plan means to it |
|---|---|---|
| Shareholders (Lena 50%, Marco 33%, Marco's cousin 17%) | A share of the profit (dividends) and a company worth more each year | A bigger company later, but this year's profit spent on ovens instead of paid out |
| Employees (the bakers and shop staff) | Fair pay, a secure job, hours they can live with | Twelve new jobs, but baking moves to a night shift starting at two |
| Managers (the three shop managers) | The resources to run their shop well, and a way up | Bread arrives ready each morning; one of them may run the whole bakehouse |
| Customers | Good bread at a fair price, fresh every morning | The same bread, cheaper to make, so prices can stay where they are |
| Suppliers (the mill that sells Lena her flour) | Steady orders, a fair price, and payment on time | Much bigger orders, but Lena wants 60 days to pay instead of 30 |
| Local community (the people living on Mill Lane) | Quiet nights, safe streets, local jobs | Vans at five in the morning and ovens running all night next door |
| Government (the town council) | Jobs, taxes, and its rules followed | New jobs and business rates, and a planning decision to make |
Say what they want, in their own terms: Employees want pay, security and hours they can live with. Shareholders want profit and a growing company. The community wants a good place to live.
Put every interest as something the group gains or loses. 'Employees are affected' says nothing; 'the bakers lose their daytime hours' says exactly what is at stake.
Some interests point the same way (common interests). Every group on the list is better off if the bakery survives: the bakers keep their jobs, the mill keeps a customer, the council keeps the taxes. The trouble starts where one group's gain is another group's loss.
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The $60,000 profit is sitting in the bank, and three people want it.
Three claims on one pot
- Marco's cousin wants it paid out as dividends: he bought his shares for the income.
- The bakers have asked for a 6% pay rise, which would cost $18,000 a year.
- Lena wants all of it for the bakehouse ovens.
One pot, several claims: A clash between stakeholders (stakeholder conflict) happens when a decision that serves one group's interest works against another group's.
Most clashes have the same cause: the money, time or space is limited. The same $60,000 cannot pay a dividend, a pay rise and an oven.
Profit against pay
- Owners want costs down, so that profit goes up
- Wages are the bakery's biggest cost
- A 6% rise for the bakers is $18,000 less profit for the shareholders
Growth against the neighbours
- The business wants to grow: more ovens, more vans, longer hours
- Mill Lane residents want quiet nights and safe streets
- The bakehouse brings twelve jobs, and a van past their windows at five every morning
Now against later
- Marco's cousin wants his dividend this year
- Lena wants the profit reinvested, so the company is worth more in five years
- Both are shareholders; they disagree about when to be paid
Two more clashes run through almost every business. Customers want low prices and the owners want a healthy margin, so every price rise pleases one and annoys the other. And the mill wants to be paid in 30 days while Lena wants 60: each day the money stays in the bakery's account helps her cash flow and hurts the mill's.
Tracing a clash back to where it starts
The decision
Every conflict starts with something the business decides or plans: move baking to a night shift, freeze pay, keep the profit. Name the decision first.
Who loses, and what
Say which group it harms and how, in that group's own terms: the bakers lose their daytime hours; the residents lose their sleep.
Who gains, and why they want it
Say whose interest the decision serves: the shareholders get a lower cost per loaf and a company worth more.
How it was done
A decision made without asking the people it affects (without consultation) is a source of conflict on its own. The bakers read about the night shift on the noticeboard.
Different interests are not yet a conflict: Bakers wanting good pay and shareholders wanting profit is not a conflict on its own. It is the everyday life of every business.
The conflict arrives with a decision that makes one group pay for another group's gain. Name the decision, then the group it harms.
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Lena cannot give everyone everything: The bakehouse is going ahead. Lena cannot give every group what it wants.
What will not happen
- The profit will not stretch to a full dividend, a 6% pay rise and the ovens.
- The Mill Lane residents will not stop minding the vans because they are asked nicely.
Lena's job
- Not to make the conflict disappear.
- To find a deal each group can live with.
- Where no deal exists, to decide whose interest comes first and say why.
Businesses usually go about it in four ways. None of them is free: each one gives something up, money, time or speed, to buy agreement.
| What the business does | What Lena does | What it costs her |
|---|---|---|
| Ask before deciding (consultation) | Meets the Mill Lane residents before signing the lease, and moves the loading bay to the main-road side | Two months' delay and a dearer building plan |
| Meet in the middle (compromise, negotiation) | Offers the bakers 4% now and a bonus if the bakehouse reaches its target, plus a rota so nobody works nights every week | Less than the 6% they asked for, and a harder rota to plan |
| Share the gain | Pays the cousin a $10,000 dividend and keeps $50,000 for the ovens | The ovens are paid for more slowly |
| Explain the reasons (communication) | Tells every group what was decided and why, before they hear it from someone else | Time, and some will still disagree |
Splitting the cake, or making it bigger: If the bakehouse fails, there is less for everyone: no dividends, no pay rises, no orders for the mill. If it works, the lower cost per loaf leaves more profit to share next year.
A shared stake: A business that shows each group how it gains from the plan turns a fight over one fixed sum into a shared stake in a bigger one. It does not always work, but it is the strongest argument Lena has.
Where no deal is possible, the business has to choose. A sensible choice weighs what each group stands to lose, what the business needs to survive, and what is fair. The bakery cannot bake at night and keep every Mill Lane resident happy; it can bake quietly, pay for double glazing on the nearest houses, and explain why the bread has to be on the shelves by seven.
Balance, not a winner: An answer that says 'the business should do what the shareholders want' ignores the conflict. So does one that says 'it should keep everyone happy'.
Name the groups, say what each gives up under each choice, and pick one with a reason.
How this comes up: Stakeholder conflict comes up as a four-mark case question and a longer ten-mark one.
Short: four marks
- Explain two sources of stakeholder conflict at the business.
- The case describes decisions, often a pay cut or a change in hours made without asking.
- The conflict is found in those decisions.
Longer: ten marks
- Discuss the impacts on a community if a business builds something there.
- Each group in the community gains or loses something different.
- The answer weighs them.
The four-mark pattern
- Name the first source. The decision that caused the conflict: Lena's Bakery moved all baking to a night shift starting at two, announced on a notice.
- Show who it harms and how. The bakers lose their daytime hours and had no say, while the owners gain a lower cost per loaf.
- Name the second source. Another decision: the $60,000 profit goes on the bakehouse, not on dividends.
- Show who it harms and how. Marco's cousin bought his 17% for the income and gets nothing this year, while Lena and Marco want the company to grow.
The trap: two names are not a source: 'Owners and employees' is not a source of conflict. It is two names. The source is the decision between them: the night shift, the pay freeze, the plan nobody was asked about.
The second mark on each source comes from the case: who is harmed, and exactly how.
Explain two sources of stakeholder conflict at Lena's Bakery Ltd.
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