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Evaluate the two arms and recommend which is most suitable for a business, such as Unilever - Edexcel - A-Level Business - Question 2 - 2017 - Paper 2
Question 2
Evaluate the two arms and recommend which is most suitable for a business, such as Unilever. The stakeholder approach considers that a business should consider all ... show full transcript
Worked Solution & Example Answer:Evaluate the two arms and recommend which is most suitable for a business, such as Unilever - Edexcel - A-Level Business - Question 2 - 2017 - Paper 2
Step 1
Stakeholder approach - arguments for
Answer
The stakeholder approach augments a business's public image by addressing its environmental impact and emphasizing its contributions to society. By actively considering the needs of all stakeholders, such as customers and suppliers, Unilever can foster better relationships that lead to increased loyalty and support from its customer base, ultimately driving its long-term success.
Step 2
Shareholder approach - arguments for
Answer
The shareholder approach emphasizes the necessity of maximizing company profits to satisfy shareholders. This approach can lead to improved financial efficiency and clear focus on growth metrics. However, it may result in increased costs or a decline in service quality if stakeholder interests are not adequately recognized. There's a danger of confusion and inefficiency if management fails to strike a balance between shareholder returns and stakeholder engagement.
Step 3
Potential recommendation
Answer
Given the dynamics of modern business, especially in service-oriented industries like that of Unilever, adopting a stakeholder approach is recommended. This approach not only ensures compliance with consumer expectations around corporate social responsibility, but also reinforces goodwill and long-lasting relationships, which are essential for sustained growth. While shareholder interests are important, they should not eclipse the equally vital need to nurture stakeholder relationships that ultimately contribute to a business’s resilience and adaptability.