In Q 1.5.3. they discuss the rapid inflation rates in Zimbabwe and the crisis it caused, in July 2008.
The three factors that may be causing inflation in Zimbabwe are:
- one of the main factors is that the price of food is raising too much, one issue of this is the fact that Zimbabwe is forced to sell it's staple food, maize out of the country, and import such important products, which are more expensive than home-grown products. The high food prices mean that everyday, people need to spend more in order to buy them, making inflation worsen.
- there is also problems with electricty, as it is expensive to power the homes, it is difficult for even the government and companies to supply the vast demand of power, especially in the farming sector, as they need lots of power to irrigate their crops. All this means more money has to be spent to buy the power and keep the farms going, which are an important source of income for the country.
- the final problem is the huge amount of un-employment, which means that people just do not have the money to pay for these basic living costs, making large debts and raising inflation through that route.
The combination of all these factors has caused inflation to raise at such a high level, that it just makes things worse in the end. These problems must be curbed in order for Zimbabwe to have a chance of recovery.
The main problems that uncontrollable inflation could cause for Zimbabwe are:
- a raise in food prices, meaning that the cost of living would be put even higher
- a serious problem with importing and exporting goods, as the currencies would transfer to Zimbabwe dollars and be worth even less the next day
- wage costs would have to raise, to match the high living costs, which would make the production costs for a company higher, which would make the product it produces more expensive, which would make inflation higher (becoming an endless cycle without some way to change it)
- poverty will worsen, which it already has come to an intolerable level, if there is a tolerable level of poverty
- people will not be able to afford living costs
- mass emmigration out of the country in order to find work in places with lower living costs, which will cause problems with finding workers in the country, making it even worse off
- there will be less savings, as the worth of them will become lower, so then there will be more spending, and in the long term, much less money for investments
Some information on the problems in Zimbabwe were found at this website: http://news.bbc.co.uk/2/hi/business/6665749.stm
Dec 20, 2009
Strong Stakeholders
Skoda Auto, which is located in Czech, perhaps has too many high risk stakeholders. Because of it's large export habits, the country has become too reliant on the money it brings, leading to crisis when a worker strike could end up creating huge losses of income. This raises a huge issue of whether it is wise for a government to rely on an company with it's own private interests, in order to supply income for the economy. There is too much vested in a relationship that is so precarious.
Nonetheless, the two main internal stakeholder groups mentioned by this issues are the employees, who feel their benefits are not substancial enough, and require higher pay, or they will strike. And, the managers and directors, who have to decide whether or not to sacrifice a large portion of their income to satisfy worker wants, or find a way to violate the labour rights, and keep their income high. There is also an added pressure of the shareholders, as it will be difficult to keep them happy if they are losing a large amount of their dividends and the stock prices lower, due to the loss of income. They will surely rebel as well.
The main conflict that exists between the main stakeholders, is the wants of the workforce and employees, which conflicts with the objectives of the shareholders, as well as will put a heavy strain on the government, as they rely on the income that the company provides. It could cause major problems within the country itself and indirectly affect the consummers as well, as the prices will probably raise in order to compensate for the increase in production costs. The competitors will probably be happy though, as the prices will raise, and the customers will go to them instead, to get better deals. Although, with automobiles there is a slight difference, as the cars are different depending on the brand, and if Skoda really is such a huge company, the raise in prices may cause less damage for the amount of customers than if the company was small the the products were the same for every company. Hopefully, with Skoda's reputation, they will be able to hold on to their customers without losing them, and causing a greater loss of income because the customers do not want to pay such high prices. It would depend on the time in which this was occuring. Since the issue started in 2007, there may be less tolerance for the price rise, as that was soon after the economic crisis, so people were less willing to spend more. That was probably the first cause of the strike, as the workers were suffering from the affects of the economic crisis, and wanted a higher pay in order to balance out the difference.
There are several ways that this conflict could be minimized. One main way, would be to raise prices. It is risky as the customers may not tolerate it and cause a greater loss of income, but if it was coupled with a greater public acceptance, it may be the right move. The factors are risky, but if the company was able to market itself well and continue bringing in good customers, adding value due to reputation and better qualities, then it could make the price raise more acceptable. One other way would be to
Nonetheless, the two main internal stakeholder groups mentioned by this issues are the employees, who feel their benefits are not substancial enough, and require higher pay, or they will strike. And, the managers and directors, who have to decide whether or not to sacrifice a large portion of their income to satisfy worker wants, or find a way to violate the labour rights, and keep their income high. There is also an added pressure of the shareholders, as it will be difficult to keep them happy if they are losing a large amount of their dividends and the stock prices lower, due to the loss of income. They will surely rebel as well.
The main conflict that exists between the main stakeholders, is the wants of the workforce and employees, which conflicts with the objectives of the shareholders, as well as will put a heavy strain on the government, as they rely on the income that the company provides. It could cause major problems within the country itself and indirectly affect the consummers as well, as the prices will probably raise in order to compensate for the increase in production costs. The competitors will probably be happy though, as the prices will raise, and the customers will go to them instead, to get better deals. Although, with automobiles there is a slight difference, as the cars are different depending on the brand, and if Skoda really is such a huge company, the raise in prices may cause less damage for the amount of customers than if the company was small the the products were the same for every company. Hopefully, with Skoda's reputation, they will be able to hold on to their customers without losing them, and causing a greater loss of income because the customers do not want to pay such high prices. It would depend on the time in which this was occuring. Since the issue started in 2007, there may be less tolerance for the price rise, as that was soon after the economic crisis, so people were less willing to spend more. That was probably the first cause of the strike, as the workers were suffering from the affects of the economic crisis, and wanted a higher pay in order to balance out the difference.
There are several ways that this conflict could be minimized. One main way, would be to raise prices. It is risky as the customers may not tolerate it and cause a greater loss of income, but if it was coupled with a greater public acceptance, it may be the right move. The factors are risky, but if the company was able to market itself well and continue bringing in good customers, adding value due to reputation and better qualities, then it could make the price raise more acceptable. One other way would be to
Dec 9, 2009
Mind Your Own Business - Stakeholders
Stakeholders are the people or organization that have a direct interest in and is affected by the actions and performance of a business.
Internal Stakeholders are the members of the actual organization or business.
Some are:
Employees
Who strive to improve:
- pay
- working conditions
- job security
- training and career progression opportunities
Shareholders
Who's main objectives are:
- maximizing dividend payments
- rise of the value of share price
Managers and Directors
Who attempts to:
- maximize their own benefits (bonus and perks)
- profit maximization
External Stakeholders are not part of the business but have interest in the actions of the organization.
Some are:
Suppliers
Who rely on business co-operation and purchasing
Customers
Who rely on the product and business, and have the control of either buying or not the business' service or good
Special Interest Groups are an organization that advocates certain issues, and is also an external stakeholder, monitoring the ethical behaviour of companies.
Their members are passionate individuals who believe in the cause that they are trying to promote/protect.
Some of the types of SIG's are:
Trade Unions (Labour Unions)
They aim to:
- protect and enhance the conditions of the working members
- make sure that wages and salaries rise with inflation
- introduces minimum wage
- better working conditions
Pressure Groups:
They aim to:
- place influence on organizations to act a certain way
- lobby a change in legislation
- protet their point of interest
- provide public awareness on the issue
Industry Trade Groups:
- promoting particular industries through education and advertising
- funded by business in particular industry
Local Community:
They will place demands on businesses that operates in their community
Such as:
- job creation and opportunities
- consideration of the local environment
- wide choice of provision of products with competitive prices
- sponsorship and fundraising of local events
Unless the business does these things for the local community, it will not be accepted into the area and will be boycotted.
The factors which when completed can help SIG's complete their goals are:
- funding (public funding will provide more strength in an SIG)
- public opinion (the better people think of them, the more damage they can do if displeased and the greater effects they can make)
- number of members (the more people involved, the bigger impact if goods are boycotted or protested)
- commitment of members (if the members are commited, there is a greater chance of success as they will be willing to sacrifice a lot for their cause)
The reasons a company should pay notice to a SIG is because:
- the effectiveness of the SIG (could cause more damage)
- market power of the business (if they have a monopoly they may not need to care)
- costs (if the price is higher than they can pay it is not worth it, but if they can then should they?)
- views of directors, senior managers, and shareholders (if they believe the SIG should be noticed, it causes more pressure to notice them)
- aims and objectives of the business (whether or not the SIG follows or conflicts with the objectives)
Internal Stakeholders are the members of the actual organization or business.
Some are:
Employees
Who strive to improve:
- pay
- working conditions
- job security
- training and career progression opportunities
Shareholders
Who's main objectives are:
- maximizing dividend payments
- rise of the value of share price
Managers and Directors
Who attempts to:
- maximize their own benefits (bonus and perks)
- profit maximization
External Stakeholders are not part of the business but have interest in the actions of the organization.
Some are:
Suppliers
Who rely on business co-operation and purchasing
Customers
Who rely on the product and business, and have the control of either buying or not the business' service or good
Special Interest Groups are an organization that advocates certain issues, and is also an external stakeholder, monitoring the ethical behaviour of companies.
Their members are passionate individuals who believe in the cause that they are trying to promote/protect.
Some of the types of SIG's are:
Trade Unions (Labour Unions)
They aim to:
- protect and enhance the conditions of the working members
- make sure that wages and salaries rise with inflation
- introduces minimum wage
- better working conditions
Pressure Groups:
They aim to:
- place influence on organizations to act a certain way
- lobby a change in legislation
- protet their point of interest
- provide public awareness on the issue
Industry Trade Groups:
- promoting particular industries through education and advertising
- funded by business in particular industry
Local Community:
They will place demands on businesses that operates in their community
Such as:
- job creation and opportunities
- consideration of the local environment
- wide choice of provision of products with competitive prices
- sponsorship and fundraising of local events
Unless the business does these things for the local community, it will not be accepted into the area and will be boycotted.
The factors which when completed can help SIG's complete their goals are:
- funding (public funding will provide more strength in an SIG)
- public opinion (the better people think of them, the more damage they can do if displeased and the greater effects they can make)
- number of members (the more people involved, the bigger impact if goods are boycotted or protested)
- commitment of members (if the members are commited, there is a greater chance of success as they will be willing to sacrifice a lot for their cause)
The reasons a company should pay notice to a SIG is because:
- the effectiveness of the SIG (could cause more damage)
- market power of the business (if they have a monopoly they may not need to care)
- costs (if the price is higher than they can pay it is not worth it, but if they can then should they?)
- views of directors, senior managers, and shareholders (if they believe the SIG should be noticed, it causes more pressure to notice them)
- aims and objectives of the business (whether or not the SIG follows or conflicts with the objectives)
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