how conflict might arise from stakeholders having different aims and objectives

Cambridge International Business (9609) – AS & A‑Level Syllabus Notes

Learning Objectives

• Explain the nature and purpose of enterprise, the different business structures and sizes, and how objectives are set.
• Identify internal and external stakeholders, analyse their relative importance, power and potential for conflict, and evaluate how businesses manage that conflict.
• Describe the core functions of Human Resource Management, Marketing, Operations Management and Finance & Accounting, and relate them to organisational decision‑making.
• Apply analytical tools (e.g., Power/Interest grid, SWOT, break‑even analysis) to real‑world business situations.
• Understand the accountability mechanisms that businesses use to answer to stakeholders.

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1.1 Enterprise

Key concepts

• Enterprise: an organisation that combines resources (human, financial, physical, information) to produce goods or services for profit or social benefit.
• Entrepreneur: an individual who creates, develops and assumes the risks of a new business venture.
• Business plan: a written document that sets out the purpose, objectives, market analysis, organisational structure, financial forecasts and risk assessment for a new or existing business.

Why a business plan matters

1. Provides a roadmap for the entrepreneur and management team.
2. Helps secure finance (banks, investors, venture capital).
3. Identifies potential problems early (market, cash‑flow, legal).
4. Facilitates performance monitoring against targets.

Typical structure of a business plan

Section	Purpose
Executive summary	Brief overview – what the business does and why it will succeed.
Company description	Legal form, mission, vision, location.
Market analysis	Industry trends, target market, competitor review.
Organisation & management	Ownership, board, key personnel.
Products / services	Features, benefits, life‑cycle, IP.
Marketing & sales strategy	4‑Ps, pricing, promotion, distribution.
Operations plan	Location, technology, supply chain.
Financial projections	Sales forecast, cash‑flow, profit & loss, break‑even.
Risk analysis	SWOT, contingency measures.

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1.2 Business Structure

Economic sectors

Sector	Primary activity	Examples
Primary	Extraction of natural resources	Agriculture, mining, fishing
Secondary	Manufacturing and construction	Automobile factories, shipbuilding
Tertiary	Service provision	Retail, banking, education
Quaternary	Knowledge‑based services	IT, research, consultancy

Ownership forms & key features

Ownership type	Legal status	Liability	Capital raising	Typical examples
Sole trader	Unincorporated	Unlimited – owner liable for all debts	Personal savings, loans	Corner shop, freelance designer
Partnership	Unincorporated	Joint & several liability (unless limited partnership)	Partners’ contributions, bank loans	Law firms, small manufacturing co‑ops
Private limited company (Ltd)	Separate legal entity	Limited to share capital	Shares, bank finance, retained profits	Family‑owned manufacturing
Public limited company (PLC)	Separate legal entity	Limited to share capital	Shares on a stock exchange, bonds	Large multinationals (e.g., Tesco PLC)
Franchise	Legal agreement between franchisor & franchisee	Franchisee liable for own operations	Franchise fees, royalties	Fast‑food chains (McDonald’s)
Co‑operative	Member‑owned, democratic control	Limited – members’ liability limited to share value	Member contributions, grants	Retail co‑ops, agricultural co‑ops
Joint venture	Separate entity created by two or more firms	Liability varies with structure	Combined capital of partners	Airline alliances, R&D projects
Social enterprise	Can be Ltd, CIC, charity	Limited – depends on legal form	Grants, social‑impact investors	Fair‑trade organisations

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1.3 Size of Business

Measuring size

• Turnover (sales revenue) – total value of goods/services sold in a period.
• Number of employees – head‑count or full‑time equivalents.
• Market share – proportion of total industry sales.
• Asset base – total value of physical and intangible assets.

Why size matters

• Economies of scale – lower average cost as output rises.
• Access to finance – larger firms often find cheaper capital.
• Regulatory burden – larger firms may face stricter compliance.
• Flexibility – small firms can adapt quickly to market changes.

Growth strategies (AS level)

Strategy	Definition	Example
Organic growth	Expansion through internal resources (new products, new markets)	Apple launching a new iPhone model.
External growth	Growth by acquiring or merging with other firms	Facebook’s purchase of Instagram.
Joint venture	Shared ownership of a new entity to enter a market	Sony‑Ericsson mobile phones.
Franchising	Replicating a proven business model under licence	Subway restaurants worldwide.

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1.4 Business Objectives

Types of objectives

• Private (profit‑oriented) objectives – profit maximisation, return on capital, market share.
• Public (non‑profit) objectives – social welfare, environmental sustainability, community development.
• Corporate Social Responsibility (CSR) – ethical, environmental and social commitments beyond legal requirements.

SMART criteria for setting objectives

SMART	What it means
Specific	Clear and unambiguous.
Measurable	Quantifiable – e.g., “increase sales by 8 %”.
Achievable	Realistic given resources and constraints.
Relevant	Aligned with overall mission and stakeholder expectations.
Time‑bound	Set a deadline – e.g., “by end of FY 2027”.

Link between mission, aims, objectives, strategy & tactics

1. Mission statement – why the organisation exists.
2. Aims – broad, long‑term outcomes derived from the mission.
3. Objectives – specific, measurable targets that help achieve the aims.
4. Strategy – overall plan of how to reach the objectives (e.g., cost leadership).
5. Tactics – detailed actions (e.g., introduce a new low‑cost product line).

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1.5 Stakeholders – Relative Importance, Influence and Conflict

Key concepts (re‑stated for clarity)

• Stakeholder: any individual or group that can affect, or is affected by, the achievement of an organisation’s objectives.
• Internal stakeholder: part of the organisation (owners, managers, employees, trade unions).
• External stakeholder: outside the organisation (customers, suppliers, community, government, NGOs, creditors).
• Relative importance: the degree to which a stakeholder’s needs influence strategic choices.
• Power (influence): ability to affect actions, resources or reputation.
• Conflict: incompatibility between the aims, objectives or expectations of two or more stakeholders.
• Accountability: obligation to explain, justify and be answerable for actions to stakeholders.

1.5.1 Classification of stakeholders

• Internal
  • Owners / shareholders
  • Board of directors & senior managers
  • Employees (including trade unions)
• External
  • Customers / clients
  • Suppliers & distributors
  • Local community & NGOs
  • Government & regulators
  • Potential investors / creditors

1.5.2 Rights and responsibilities of stakeholders

Stakeholder	Key rights	Key responsibilities
Shareholders / owners	Vote at AGM, receive dividends, access to information	Provide capital, hold managers to account, act in long‑term interest
Managers	Authority to make operational decisions, confidential information	Deliver results, act ethically, protect stakeholder interests
Employees	Safe conditions, fair pay, right to organise	Perform duties competently, respect policies, contribute to productivity
Customers	Safe, fit‑for‑purpose goods; consumer protection	Pay for products/services, provide feedback, act responsibly
Suppliers	Contractual rights, timely payment	Deliver quality goods/services, honour agreements
Local community	Healthy environment, consultation on local projects	Support local employment, engage in dialogue, act as good neighbours
Government / regulators	Enforce laws, levy taxes, grant licences	Ensure compliance, pay taxes, cooperate with inspections

1.5.3 Stakeholder mapping – Power/Interest grid

The grid helps managers decide how much attention and what type of communication each stakeholder needs.

Stakeholder	Interest (high/medium/low)	Power (high/medium/low)	Relative importance	Power‑Interest quadrant	Typical conflict	Decision impact
Shareholders / owners	Very high	High	Very high	Manage closely	Short‑term profit vs long‑term growth	Cutting R&D saves costs but may lower future earnings.
Employees	High	Medium	High	Keep satisfied	Cost‑cutting vs wage expectations	Plant closure → redundancies, possible strikes.
Customers	High	Low‑Medium	High	Keep satisfied	Price increase vs perceived value	Price rise → loss of sales, complaints.
Suppliers	Medium	Low‑Medium	Medium	Monitor	Quality standards vs cost of inputs	Switching supplier may affect quality.
Local community	Medium	Low	Medium	Monitor	Expansion vs noise, traffic, pollution	New plant → protests, planning delays.
Government / regulators	Medium	High	High	Manage closely	Regulatory constraints vs profit margins	New environmental law → costly upgrades.

1.5.4 How business decisions affect stakeholder aims (Decision‑Impact analysis)

1. Decision taken – e.g., increase product price by 5 %.
2. Stakeholder aim affected – customers seek value for money; shareholders want higher margins.
3. Stakeholder reaction – customers may switch brands; shareholders may welcome higher profit.
4. Business response – launch loyalty scheme, communicate quality improvements, report projected margin uplift.

Example – Price increase decision

Stakeholder	Aim before	Aim after	Possible reaction	Business response
Customers	Good quality at affordable price	Pay more for same product	Seek cheaper alternatives or demand justification	Introduce promotional discounts, highlight added value.
Shareholders	Steady dividend, capital growth	Higher profit margin per unit	Support decision, expect higher returns	Report margin uplift in next AGM.
Employees (sales team)	Meet sales targets	Potential drop in volume	Concern over commissions, need new selling points	Provide value‑selling training, adjust incentives.
Suppliers	Maintain order volumes	Possible reduction in orders	Negotiate better terms or look for other buyers	Offer earlier payment, discuss long‑term partnership.

Illustrative case study – Expansion of a manufacturing plant

Decision: Board approves a £20 million expansion to increase capacity and profit.

• Shareholders – aim: higher returns → support investment.
• Employees – aim: job security & fair pay → welcome new jobs but demand higher wages.
• Local community – aim: environmental quality & livability → protest over traffic, noise, pollution.
• Government / regulators – aim: compliance & tax revenue → impose stricter environmental standards.
• Suppliers – aim: stable orders → see larger contracts but fear delayed payments.

Potential conflicts – profit growth vs community wellbeing; wage demands vs cost control; regulatory compliance vs project timetable.

Resolution steps (conflict‑management process)

1. Stakeholder analysis – map each group on the Power/Interest grid.
2. Early community consultation – offer a £1 million environmental improvement fund.
3. Negotiated wage package – link pay rises to productivity targets.
4. Engage regulators early – adopt best‑practice emissions technology.
5. Regular progress reports to shareholders – maintain confidence while showing responsible growth.

1.5.5 Managing stakeholder conflict

• Stakeholder analysis: identify interests, power, rights and responsibilities.
• Communication strategy: two‑way, transparent dialogue (briefings, surveys, public meetings).
• Negotiation & compromise: seek win‑win outcomes (e.g., community investment for planning consent).
• Prioritisation: allocate resources to high‑power/high‑interest stakeholders while monitoring others.
• Monitoring & review: update the Power/Interest map after major events.

1.5.6 Accountability to stakeholders

• Corporate governance – board structures, audit committees, shareholder voting.
• Financial reporting – annual reports, interim statements, compliance with IFRS/GAAP.
• Non‑financial reporting – sustainability reports, CSR disclosures, ESG metrics.
• Stakeholder engagement mechanisms – consultation forums, grievance procedures, community liaison panels.
• Legal compliance – health & safety, consumer protection, environmental legislation.
• Ethical standards – codes of conduct, whistle‑blowing policies, CSR initiatives.

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2 Human Resource Management (HRM)

Key concepts

• HR planning – forecasting labour demand and supply.
• Recruitment & selection – attracting and choosing suitable candidates.
• Training & development – enhancing skills, knowledge and attitudes.
• Motivation theories – Maslow, Herzberg, McClelland, Vroom.
• Performance management – setting objectives, appraisals, rewards.
• Industrial relations – trade unions, collective bargaining, conflict resolution.
• Management styles – autocratic, democratic, laissez‑faire, transformational.

HRM process flow‑chart (simplified)

1. Analyse organisational objectives →
2. Forecast labour needs →
3. Recruit & select →
4. Induction & training →
5. Appraise performance →
6. Reward / develop →
7. Review & adjust.

Motivation – comparison of three major theories

Theory	Key drivers	Implications for managers
Maslow’s Hierarchy of Needs	Physiological → Safety → Social → Esteem → Self‑actualisation	Ensure basic pay & conditions first, then address social and development needs.
Herzberg’s Two‑Factor Theory	Hygiene factors (salary, security) prevent dissatisfaction; Motivators (recognition, achievement) create satisfaction.	Fix hygiene issues, then design jobs that provide achievement and growth.
Vroom’s Expectancy Theory	Motivation = Expectancy × Instrumentality × Valence	Clarify performance‑reward link, ensure rewards are valued.

Industrial relations – typical stages of a trade‑union dispute

1. Grievance raised (e.g., pay claim).
2. Negotiation between union and management.
3. Mediation or arbitration if talks stall.
4. Industrial action (strike, work‑to‑rule).
5. Resolution – new agreement or settlement.

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3 Marketing (AS Level)

Marketing mix – the 4 Ps

Product	Price	Place	Promotion
Features, quality, branding, packaging, warranty.	Pricing strategy (penetration, skimming), discounts, credit terms.	Distribution channels, logistics, retail locations, e‑commerce.	Advertising, sales‑promotion, public relations, personal selling.

Market research – primary vs. secondary

• Primary research: data collected directly (surveys, focus groups, interviews). Provides up‑to‑date, specific information but can be costly.
• Secondary research: existing data (industry reports, government statistics, competitor websites). Faster and cheaper, but may be outdated or not perfectly relevant.

Segmentation, Targeting and Positioning (STP)

1. Segmentation – divide market by demographics, psychographics, geography, behaviour.
2. Targeting – select one or more segments to serve (undifferentiated, differentiated, concentrated, micro‑marketing).
3. Positioning – create a distinct image in the minds of the target segment (value proposition, USP).

Simple STP exercise (example)

• Product: premium sports shoes.
• Segmentation: age (18‑35), lifestyle (active), income (middle‑high).
• Targeting: urban young adults who train for marathons.
• Positioning: “Lightweight, high‑performance shoes that help you beat your personal best.”

Customer Relationship Management (CRM)

• Collect and analyse customer data (purchase history, preferences).
• Use loyalty programmes, personalised communication, after‑sales service.
• Goal: increase customer lifetime value and reduce churn.

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4 Operations Management (AS Level)

Transformational process

Input → Transformation (processes, technology, labour) → Output.

Key operational concepts

• Efficiency – producing the same output with fewer resources (e.g., lean production).
• Effectiveness – meeting quality standards and customer expectations.
• Capacity planning – matching production capacity with forecast demand.
• Inventory control – balancing holding costs vs stock‑out risk (EOQ model).
• Outsourcing – contracting out non‑core activities to reduce cost or focus on core competence.

Basic Economic Order Quantity (EOQ) formula

EOQ = √(2DS / H) where D = annual demand, S = ordering cost per order, H = holding cost per unit per year.

Example – EOQ calculation

Annual demand = 12,000 units, ordering cost = £50, holding cost = £2 per unit.

EOQ = √(2 × 12,000 × 50 / 2) = √(600,000) ≈ 775 units per order.

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5 Finance & Accounting (AS Level)

Why finance is needed

• Start‑up capital, working‑capital for day‑to‑day operations, investment in assets, contingency funds.

Sources of finance

Source	Type	Typical cost	Control
Owner’s capital / retained earnings	Internal	Low (opportunity cost)	High
Bank loan	External – debt	Interest (fixed/variable)	Medium
Debentures / bonds	External – debt	Interest, usually higher than bank loan	Medium
Equity (shares)	External – equity	Dividends, dilution of control	Low
Leasing	External – hybrid	Rental payments	Medium
Trade credit	External – short‑term	Usually interest‑free if paid within terms	High

Break‑even analysis

Break‑even point (units) = Fixed Costs ÷ (Selling price per unit – Variable cost per unit).

Example

• Fixed costs = £120,000 per year.
• Selling price = £30 per unit.
• Variable cost = £18 per unit.

Contribution per unit = £30 – £18 = £12.

Break‑even units = £120,000 ÷ £12 = 10,000 units.

Budgets – basic components

• Sales budget – forecast of revenue.
• Production budget – units to be produced to meet sales + opening stock – closing stock.
• Cash‑flow budget – inflows and outflows of cash, showing net cash position.
• Profit & loss budget – projected income statement.

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6‑10 A‑Level Extensions (overview)

If the course progresses to A‑Level, the following units should be added. Brief outlines are provided; detailed notes can be developed later.

6 External Influences on Business

• PESTLE analysis – Political, Economic, Social, Technological, Legal, Environmental factors.
• Globalisation – trade blocs, exchange rates, cultural differences.
• Ethical & sustainability issues – CSR, green supply chains.

7 Strategic Management

• Vision, mission and strategic objectives.
• Strategic analysis tools – SWOT, Porter’s Five Forces, Value Chain.
• Strategic options – cost leadership, differentiation, focus.
• Implementation – change management, balanced scorecard.

8 Organisational Structure & Culture

• Forms of structure – functional, divisional, matrix, network.
• Centralisation vs decentralisation.
• Organisational culture – types, impact on performance.
• Leadership styles – transactional, transformational.

9 Advanced Marketing

• Extended marketing mix – 7 Ps (People, Process, Physical evidence).
• Brand equity, positioning maps.
• Digital marketing – SEO, social media, data analytics.
• International marketing – standardisation vs adaptation.

10 Advanced Operations & Finance

• Operations strategy – lean, agile, mass customisation.
• Quality management – TQM, Six Sigma, ISO standards.
• Advanced financial analysis – ratio analysis, cash‑flow forecasting, capital budgeting (NPV, IRR).
• Risk management – hedging, insurance, contingency planning.

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Suggested diagrams for classroom use

• Power/Interest matrix with stakeholder icons placed in the four quadrants.
• PESTLE wheel illustrating the six external influence categories.
• Porter’s Five Forces diagram with brief description of each force.
• Value chain diagram (primary and support activities).
• Break‑even chart showing fixed costs, total cost line, revenue line and break‑even point.