Explain why there might be conflict between stakeholder groups of a large mining company.
CAMBRIDGE
A level and AS level
Year Examined
February/March 2019
Topic
Stakeholders
👑Complete Model Essay
Stakeholder Conflict in Large Mining Companies
Mining companies, especially large, multinational ones, operate at the heart of a complex web of stakeholders, each with their own set of interests and objectives. This intricate interplay often leads to conflicts as the company strives to balance its own goals with the often-divergent demands of its stakeholders. This essay will explore the potential sources of conflict between stakeholder groups of a large mining company, examining the inherent tension between profit maximization and the social and environmental responsibilities associated with this industry.
Profit vs. Wages and Working Conditions
A fundamental conflict arises from the competing interests of shareholders and employees. Shareholders, driven by profit maximization, desire high dividends and share price appreciation. In contrast, employees seek fair wages, safe working conditions, and job security. Mining, being a labor-intensive industry, often faces pressure to minimize labor costs to remain competitive. This can lead to conflict, as seen in numerous instances of miners' strikes demanding better pay and improved safety measures. For example, the 2012 Marikana massacre in South Africa, where police killed striking miners, highlighted the tragic consequences of this conflict (Alexander, 2012).
Economic Growth vs. Environmental Protection
Another major point of contention lies between the company's pursuit of economic growth and the environmental concerns of local communities and pressure groups. Mining activities, by their very nature, can have significant environmental impacts, including deforestation, habitat destruction, and pollution of water resources. These consequences often clash with the desire of local communities for a clean and healthy environment. The ongoing controversy surrounding the proposed Pebble Mine project in Alaska, a gold and copper mine facing strong opposition due to potential harm to a vital salmon fishery, exemplifies this conflict (EPA, 2020).
Short-Term Profits vs. Long-Term Sustainability
The pursuit of short-term profits can also create conflict between management and stakeholders focused on long-term sustainability. For instance, managers might prioritize immediate cost-cutting measures that harm the environment or compromise worker safety to boost short-term profits. This contradicts the interests of communities and pressure groups concerned about the long-term environmental and social costs of mining. The legacy of abandoned mines, often leaving behind a trail of environmental damage and health risks, stands as a stark reminder of this conflict. The case of the Ok Tedi Mine in Papua New Guinea, where decades of mining led to widespread river pollution and social disruption, highlights the potential for long-term negative consequences when short-term economic gains are prioritized (Kirkpatrick, 2000).
Conclusion
The operation of a large mining company inherently involves navigating a complex landscape of stakeholder interests. Balancing the pursuit of profit with the social and environmental responsibilities towards employees, local communities, and future generations poses a significant challenge. Addressing these conflicts requires a proactive and transparent approach that involves engaging with stakeholders, incorporating their concerns into decision-making processes, and prioritizing sustainable practices that ensure the long-term viability of both the company and its surrounding environment.
References
Alexander, P. (2012). Marikana, turning point in South African history. Review of African Political Economy, 39(134), 561-570.
EPA. (2020). EPA takes action to protect Bristol Bay, Alaska, from Pebble Mine. Retrieved from https://www.epa.gov/newsreleases/epa-takes-action-protect-bristol-bay-alaska-pebble-mine
Kirkpatrick, C. (2000). The Ok Tedi Settlement: Impacts, precedents and outcomes. Asia Pacific Viewpoint, 41(2-3), 269-288.
Explain why there might be conflict between stakeholder groups of a large mining company.
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Writing an A-Level Business Studies Essay on Stakeholder Conflict in a Large Mining Company
This guide will help you write an effective A-Level Business Studies essay exploring the potential conflicts between stakeholder groups in a large mining company. Remember to use the provided headings, bolding, and paragraph structure to format your essay.
Introduction
Start your essay by introducing the concept of stakeholders and their diverse interests in a business. Define a large mining company and its key characteristics, such as its impact on the environment, the local community, and the global economy. Briefly mention the potential for conflict between stakeholders due to their differing objectives, setting the stage for the essay's main argument.
Stakeholder Groups and Objectives
Identify and discuss the various stakeholder groups within a large mining company, including:
- Shareholders: Profit maximization, high dividends, share price growth, ethical investments.
- Employees: Fair wages, job security, good working conditions, opportunities for advancement, safety.
- Managers: Organizational growth, efficiency, profitability, career progression, bonuses.
- Local Community: Environmental protection, job creation, community development projects, reduced noise and pollution.
- Government: Tax revenue, employment, economic growth, environmental regulations, safety regulations.
- Suppliers: Secure contracts, timely payments, fair prices, stable business relationships.
- Customers: Competitive prices, consistent quality products, ethical sourcing, availability of products.
- Environmental Groups: Minimized environmental impact, sustainable practices, conservation of natural resources.
Sources of Conflict
Explore the potential areas of conflict between different stakeholder groups, using specific examples:
Profit vs. Wages
Shareholders desire high profits and dividends, potentially conflicting with employees who seek higher wages. Cost-cutting measures to maximize profits could lead to lower wages, job losses, or reduced benefits for employees.
Growth vs. Profits
Managers may prioritize organizational growth and expansion, even if it leads to short-term losses in profits. This could be detrimental to shareholders who focus on immediate financial returns.
Community Needs vs. Production
Local communities may face increased noise, pollution, and disruption due to the expansion of mining operations, creating tension with the company’s need to maximize production and generate profits.
Environmental Concerns vs. Profitability
Environmental groups and local communities might oppose mining activities that threaten the environment, potentially clashing with the company's pursuit of profitability and economic growth.
Working Conditions vs. Efficiency
Employees may demand better working conditions and higher wages, which can conflict with the company's goal of maintaining efficiency and controlling labour costs to maximize profits.
Resolution Strategies
Discuss potential strategies for resolving stakeholder conflicts, including:
- Negotiation and Compromise: Open dialogue and mutual understanding can help find solutions that satisfy the needs of multiple stakeholders.
- Corporate Social Responsibility (CSR): Companies can implement initiatives that address social and environmental concerns, demonstrating commitment to stakeholder interests beyond profit.
- Stakeholder Engagement: Regularly consulting with stakeholders can lead to more informed decision-making and minimize conflict.
- Ethical Practices: Adopting ethical business practices, such as fair wages, safe working conditions, and environmental responsibility, can build trust and reduce conflicts.
- Transparency and Accountability: Being transparent about company operations and financial performance can build trust and mitigate stakeholder concerns.
Conclusion
Summarize the key points of your essay, reiterating the potential conflicts between stakeholder groups in a large mining company. Conclude by emphasizing the importance of balancing stakeholder interests for long-term sustainability and responsible business practices. You can also offer a final thought on the potential for innovative solutions and collaborative approaches to manage stakeholder relationships effectively.
Tips for Writing Your Essay
- Choose a specific example: Select a real-world mining company to provide context and illustrate your points.
- Use evidence: Back up your arguments with relevant data, statistics, or case studies.
- Be critical: Analyze the potential consequences of stakeholder conflict and consider different perspectives.
- Structure your essay clearly: Use headings, subheadings, and bullet points to organize your ideas.
- Proofread thoroughly: Ensure your essay is free of grammatical errors and typos.
By following these guidelines and using your own critical thinking skills, you can write a thoughtful and insightful essay on the complexities of stakeholder conflict in a large mining company.
Extracts from Mark Schemes
Stakeholder Conflict in a Large Mining Company
Stakeholders are groups or individuals that are affected by and/or have an interest in the operations and objectives of the business. E.g. directors, managers, employees, shareholders, customers, suppliers, competitors, government, local community, pressure groups, media.
Different stakeholder objectives include: profit, wages, cost reduction, job security, safety, share price, payment, product availability, product quality, product price, environmental impact, local impact, legal issues, tax receipts, job creation, CSR.
A mining company is a large employer, provides fuel (need), building material, gems, minerals etc. All bought by other businesses and used in consumer products. User of heavy plant and other resources from suppliers. Possibly large / inter-national company with a high level of investment in the area. Large profits to tax. Environmental impact likely to be high. Health and safety an issue. Alternative fuels. Possibly labour intensive (low paid). Possibly a high number of shareholders wanting dividends. Products may not be sold in the country of origin.
Potential Conflict Points
Conflict is likely where:
- Wage rises might be at the expense of lower profits and dividends.
- Managers want organisational growth at the expense of short-term profits.
- Expansion of production might cause extra noise and disruption in the local community.
- Long-term environmental damage is not considered.
- Poor working conditions and low pay vs high profits.