2.3 role and importance of stakeholders

internal stakeholders

• employees

• managers

• shareholders

external stakeholders

• customer

• supplier

• government

• local community

• pressure groups

• competitors

• trade unions

primary stakeholder

affected directly by actions of the business - usually financially

secondary stakeholders

not directly affected by actions of the business

uses of stakeholder mapping

• help avoid resistance to change when making decisions

• help inform decision making

• informs managers of the importance of each stakeholder group - how involved they should be in decision making

• failure to involve stakeholders may become a negative influence

stakeholder map

issues with stakeholder mapping

• power and interests could change

• not always obvious

• opinion based

stakeholder engagement (managing relationship)

• communication

• consultation - finding out views

• participation - involve them in decision making

• partnership - working together

stakeholder conflict of needs

• shareholders - maximization of profits and returns on investment (ROI), concerned with the long-term financial health of the business

• employees - fair compensation, job security, career development, and a safe and healthy working environment

• Customers - quality products/services, good customer service, fair pricing, and reliability

• Suppliers - fair payment terms, long-term business relationships, and predictable demand for their products/services

• Government - compliance with laws and regulations, including tax laws, environmental standards, and labor laws, want businesses to operate ethically

• Local Communities- environmental responsibility, employment opportunities, and corporate social responsibility (CSR)

• Managers- achievement of business goals, team development, efficient processes, and a healthy culture

divorce between ownership and control

a situation where the owners of a company do not have direct control over the company's operations and management

role of shaeholders’s

• provide capital - shareholders invest money into the company, helping it fund operations, expansion

• influence decisions - through voting rights, shareholders can influence key decisions

• benefit from profit: shareholders receive dividends (a share of the company’s profits) and/or can benefit from an increase in the company’s share price

reason for buying shares

• capital Gains- shareholders hope to sell their shares at a higher price than they bought them for, making a profit.

• dividends -investors may buy shares in companies that pay regular dividends

• ownership & influence - some investors buy shares to have ownership in a company and to potentially influence its management or direction, particularly in smaller companies