The directors of a well-known food manufacturing PLC have announced that they are moving production from the UK to Europe in order to reduce costs. This will result in the loss of 115 jobs. To what extent is this decision likely to benefit the business’

A stakeholder is any person, organisation, social group, or society at large that has a stake in the business. Thus, stakeholders can be internal or external to the business. With a large decision such as moving production abroad, there are a number of stakeholders who will have an opinion and be affected by the move and while some will benefit, others will not benefit and be unhappy with the decision.  The decision will benefit the stakeholders because of the possible reduction in prices as a result of moving abroad in order to reduce costs. Customers will hope that as the PLC is moving abroad to cut costs, they will reduce their prices which will not only make them more competitive but will benefit the customers. There is a risk that the PLC may choose not to drop their prices and instead enjoy the higher profit margin which may be needed if they are having to take significant measures to reduce costs. If the prices do stay the same, whilst it will not benefit customers, it will benefit shareholders as the will see greater profits which will lead to larger dividends. It must also be taken into account that a move to reduce costs may lead to a lower quality of product, possibly with poorer quality ingredients. The extent to which this will be a problem will depend on the type of food that is being produced, there will be less of an impact on long-life food whereas a decrease in quality will have more of an effect on fresh ready meals. The move abroad will definitely benefit at least one stakeholder, the customers will benefit if prices are lowered and the shareholders will be happy if their dividends increase as a result of higher profits. But it must be taken into account that a move abroad with reduced production costs may lead to lower quality which will have negative implications for customers and may damage the reputation of the company which will hurt the shareholders.  The decision will not benefit the stakeholders because the government will lose out income tax from the 115 employees of the production plant who will now be unemployed and are likely to require unemployment benefits before they can find a new job which may be a long time as the employees are most likely to be relatively unskilled workers with few transferable skills. Despite losing out on income tax, the government will continue to receive corporation tax from the PLC as although they are moving their production plant, they are not moving their headquarters and they business will continue to be based in the UK despite producing abroad. In addition, the government will not be concerned with 115 jobs being lost as in the greater scheme of things, those few jobs are fairly insignificant. Although the government may not lose out massively, the employees who lose their jobs will clearly not benefit from the move abroad and the business will also have to pay out for redundancy packages. Whilst this may have a small impact on the business, 115 jobs are very few for a large PLC who likely employees thousands of people.  To conclude, I think that the decision is likely to benefit the business’ stakeholders because it will benefit the remaining employees as the move will improve the longevity of the business and the stakeholders are likely to receive larger dividends. To what extent this decision is correct depends on how the redundancies and relocations are managed and if the business can maintain the quality that their customers have come to expect. For every decision that a business makes there are always winners and losers but moving production abroad may be essential for the business to remain competitive and if the business survives and prospers as a result then all stakeholders will benefit in the long-term.