Analyse how internal and external stakeholders influence business decisions, and practise resolving conflicts between their different interests.
Klar
Klar is a factory that bottles mineral water for use in large water dispensers. The factory is located on a hill next to a spring from where water flows naturally. Klar uses a flow production method with a production capacity of 35 million litres per year. Klar has a 60 % share of the national market and also exports bottled mineral water to several countries.
A multinational company called Kaiser is interested in acquiring Klar. "If the acquisition takes place, we will expand Klar's production to gain economies of scale; we will also add a new range of flavoured drinks that will be produced in batches and sold in 1.5 litre bottles. Our maximum production capacity of flavoured drinks will be 3 million bottles a year," says Roman Hitschfeld, Kaiser's Production Manager.
The forecast costs for producing Klar's new flavoured drinks are as follows:
- variable cost per bottle:
- estimated sales price per bottle:
- fixed costs: .
Klar is facing fierce competition from other companies that use plastic bottles and offer lower prices to consumers. Although the cost of glass bottles is higher than plastic ones, up until now Klar has only used re-useable glass bottles to support its ethical objectives of being environmentally-friendly. Now, Klar is considering switching from re-useable glass bottles to non re-useable plastic ones. The environmental pressure group Plastic No More! is campaigning against the use of plastic. A spokesperson from Plastic No More! said: "there is a growing trend among consumers to purchase products that will not damage the environment, but we are still a minority".
Define the term pressure group.
Suparman Fish ( SF )
Gepa Suparman owns and operates four fishing boats in Indonesia. There is a growing demand for canned (tinned) food, including cans of fish. Gepa wants to enter the secondary sector by opening a small factory producing cans of fish.
Gepa's business will be called Suparman Fish ( S F ) and will be a private limited company. Gepa will own all of the shares. The factory will be located in a village three miles from the harbour. Because unemployment is high in the village, Gepa should easily find workers for the new factory. In addition to the manager's salary, workers' wages, and the cost of fish, supplies, and cans, S F will have the semi-variable cost of electricity.
Gepa has prepared a four-month cash-flow forecast based on the following information:
- opening balance month 1: .
- month 1 : sales revenue of increasing by 20 % per month.
- manager's salary: per month.
- workers' wages: per worker per month.
- variable costs (fish, supplies, and cans) are equal to 40 % of sales revenue.
- semi-variable cost of electricity: fixed cost of per month, plus a variable cost of per kilowatt hour (kwh). Month 1 usage: 100 kwh , increasing by 10 % each month.
Although S F would create several jobs in the village, many residents are not happy about the new factory. The new factory would use chemicals, which cause pollution. Residents are concerned about the unpleasant smells from the factory. A representative from the local employment office is concerned whether Gepa's factory will provide a safe working environment.
Examine two potential stakeholder conflicts when Gepa opens his factory.