Stakeholder Relationships

Types of Stakeholder Relationships:

1. Co-operative
2. Competitive
3. Dependent
4. Dynamic

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1. Co-operative Stakeholder Relationship

A co-operative stakeholder relationship is where the parties in business work together for their mutual benefit. This type of relationship involves collaboration and shared objectives, resulting in a win-win situation where working together produces better outcomes than working alone.

Example: Entrepreneur and Investor: An entrepreneur has a viable business idea and attracts investors to fund it. The entrepreneur makes a profit, and the investor receives a good return on their investment, making both parties happy.

Results of a Co-operative Stakeholder Relationship

1. Mutual Benefit: Both parties achieve their goals and benefit from the relationship.
2. Increased Trust: Building of trust through collaboration and transparency.
3. Enhanced Efficiency: Better use of resources and streamlined processes.
4. Shared Success: Both parties enjoy the rewards of their combined efforts.

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2. Competitive Stakeholder Relationship

A competitive stakeholder relationship is where the parties do not work together and each has different objectives. This often results in a win-lose situation as only one party can succeed. The parties become rivals, each aiming to achieve their goals at the expense of the other.

Example: Two employees who both want a promotion. Each tries to work harder and impress their boss more than the other. One will receive the promotion (win) and the other will not (lose).

Results of a Competitive Stakeholder Relationship

1. Conflict: Increased tension and disputes between parties.
2. Reduced Cooperation: Less willingness to collaborate or share resources.
3. Win-Lose Outcomes: One party's success often comes at the expense of the other.
4. Lower Morale: Possible decline in morale if competition is too intense or perceived as unfair.

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3. Dependent Stakeholder Relationship

A dependent stakeholder relationship is when parties need each other to be successful. They cannot achieve their goals on their own and rely on the other party to provide what they need to succeed.

Example: Consumers and Producers: Consumers need producers to make products, and producers need consumers to buy these products. This mutual dependence ensures that both parties can achieve their goals.

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4. Dynamic Stakeholder Relationship

A dynamic stakeholder relationship is one that is constantly changing. It can shift between being competitive and cooperative depending on the circumstances and objectives of the stakeholders involved.

Example: Competing businesses in a town are usually be in competition with each other. However, they decide to work together to organise a town festival, like a fashion show, to attract more customers. This cooperation boosts sales for all businesses in the area, even though they typically compete.

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Study Aid: Co-operative vs Competitive Stakeholder Relationship

Co-operative relationship	Competitive relationship
Working towards the same goal	Working towards different goals
Win-win situation	Win-lose situation
Trust and collaboration	Rivalry and conflict
Enhanced efficiency and innovation	Potential inefficiency and wasted resources
Investor provides entrepreneur with business funding. When the business succeeds, both profit financially.	A number of employees competing for the same promotion.

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