Question

The Big Pit Mining business (BPM) owns and operates coal and gold mines in several different countries. It employs thousands of workers. Most of them work in very dangerous conditions for low pay. Rubbish from the mines is often dumped in local rivers. 'Making higher profits and raising returns to our shareholders are our most important objectives', said the Managing Director of BPM to his other senior managers recently. 'Shareholders are our most important stakeholder group', he added. 1. What is meant by 'stakeholders'? [2) 2. Identify two objectives that the managers might set for BPM, apart from profits and returns to shareholders. [2) 3. Identify and explain two possible reasons why BPM has profit as an objective. [4) 4. Identify and explain how a decision to open a new BPM mine might affect two stakeholder groups. [6) 5. Do you agree with the Managing Director when he said that shareholders are the most important stakeholder group? Justify your answer. [6)

Answer 1

1. Stakeholders are individuals or groups who have an interest or are affected by the actions and decisions of a company. They can include employees, customers, suppliers, local communities, and shareholders.

2. Two objectives that the managers might set for BPM, apart from profits and returns to shareholders, could be:
- Ensuring the safety and well-being of their employees by providing proper training and implementing safety measures.
- Implementing sustainable practices to minimize the environmental impact of their mining operations.

3. There are several reasons why BPM may have profit as an objective:
- Profitability is essential for the company's survival and growth. It allows BPM to invest in new technologies, equipment, and infrastructure to improve efficiency and productivity.
- Profitability also enables BPM to attract investors and secure financing for future projects and expansions.

4. The decision to open a new BPM mine can affect different stakeholder groups:
- Local communities may be impacted by the environmental consequences of mining, such as pollution and habitat destruction. They may also experience economic benefits through job creation and increased economic activity.
- Employees may benefit from new job opportunities but may also face risks associated with working in dangerous conditions.
- Shareholders may see potential returns on their investment through increased profits and dividends.
- Environmental organizations and activists may express concerns about the ecological impact of the new mine.

5. Whether shareholders are the most important stakeholder group is a matter of perspective. While shareholders provide capital and expect returns, other stakeholder groups, such as employees, customers, and local communities, also play vital roles in the success and sustainability of a company. It is important for BPM to consider the interests and well-being of all stakeholders to maintain a balanced and ethical approach to business.