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ACCA Applied Knowledge · Business and Technology · Stakeholders in business organisations

Zentra Ltd plans to close a factory to cut costs and raise returns for its shareholders. Employees and the local community oppose the closure. Which statement best describes this situation?

This is a conflict of stakeholder objectives. Shareholders want higher returns through cost cutting, while employees want job security and the community wants local economic stability. The closure benefits one group at the expense of others, so their interests are not aligned.

  1. AA conflict of stakeholder objectives, because shareholders seek higher returns while employees and the community seek job security and local prosperityCorrect
  2. BNo conflict, because all stakeholders share the same objective of company profitability
  3. CA conflict only between internal stakeholders, because the community has no legitimate interest
  4. DA conflict between connected stakeholders and shareholders, because shareholders are external to the company

Explanation

Shareholders focus on financial return, while employees want secure jobs and the community wants local economic stability. These objectives clash over the closure. The community is an external stakeholder with a legitimate interest, so the other options misstate the position.

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