CIMA E1 Syllabus A. Role of the finance function - How different Stakeholder groups interact - Notes 3 / 4
STAKEHOLDER GROUPS
The needs/expectations of the different stakeholders may conflict.
Some of the typical conflicts are shown below:
| Stakeholders | Conflict |
| Employees versus Managers | Wages versus Bonus (cost efficiency) |
| Customers versus Shareholders | Quality versus Profit/dividend |
| General Public versus Shareholders | Environment versus Profit/dividend |
Common Examples
Managers prefer short-term decisions which bring them short-term profit (bonuses)
however
Shareholders prefer Long-term decisions which bring them return in long-term.
Business expansion may require additional share issues or loans, which will reduce financial independence
When small businesses grow, the owners may lose control if they appoint managers to run the business