1. Business Stakeholders

What are business stakeholders?

Individuals or groups that affect or are affected by the actions of a business

Who are business stakeholders?

• Owners

• Employees

• Pressure Groups

• Local Community

• Managers, Customers

• The Governmen

• Suppliers

Why does a business need to consider the needs and interests of its stakeholders?

To operate successfully and ensure long-term success

Who are shareholders and what is their primary objective?

Individuals or entities who own a portion of a company's stock. They invest in the company to make a profit

• Maximize their returns on investment

• They want the company to be profitable

• To generate a high return on their investment

Who are employees and what is their primary objective?

Individuals who work for a company

• Earn a living

• Have job security

• Be compensated fairly for their work

• Safe working environment

Who are managers and what is their primary objective?

Individuals responsible for the day-to-day operations of a company.

• Meet the company's goals and objectives

• Maximize profits

• Minimize costs

• Ensure the company operates efficiently

Who are suppliers and what is their primary objective?

Individuals or businesses who provide goods or services to a business.

• Sell their products or services and make a profit

• Be paid on time

• Maintain a long-term relationship with the company

Who are customers and what is their primary objective?

Individuals or businesses who purchase goods or services from a company

• Receive high-quality products or services at a fair price

• Good customer service

• Positive experience with the company

Who are pressure groups and what is their primary objective?

Organisations that seek to influence the policies and actions of businesses or governments

• Promote a specific cause or agenda

• They want the company to support their cause or take action on an issue

Who are the local community and what is their primary objective?

Includes individuals and organizations that live or operate in the area where a business operates.

• For the business to have a positive impact on the community, such as being environmentally responsible, providing jobs, and contributing to local causes

Who is the government and what is their primary objective?

Responsible for creating and enforcing laws and regulations that affect businesses.

• To promote the public good

• Protect the interests of citizens by ensuring companies operate within the law and contribute to the economy

How are stakeholders affected by business activity?

• Shareholders - Financial difficulties can lead to a loss of value in investments; profitability can lead to increased dividends.

• Employees - Financial difficulties may result in job losses or pay cuts; profitability may lead to bonuses or promotions.

• Customers - Affected by product availability, quality, and pricing.

• Local Community - Impacted by the environmental and social effects of business operations, such as pollution or job creation.

• Government - Affected by tax revenue and regulatory compliance (following the laws).

How can stakeholders impact business activity?

• Customers: Influence product development and pricing through purchasing decisions and feedback.

• Employees: Impact business activity through productivity, skills, and job satisfaction.

• Shareholders: Impact business activity through investment decisions and demands for returns.

• Local Community: Impact business activity through regulations, permits (local council), and social pressure.

• Pressure Groups: Impact business activity by lobbying for policy changes or boycotting products.

• Government: Impact business activity through taxes, regulations (laws), and subsidies.

How can managing possibly create conflicts between shareholder groups?

Effective communication, transparency, and compromise are key to handling stakeholder conflicts

How can conflicting interests possibly create conflicts between shareholder groups?

Stakeholder groups often have different priorities, which can lead to tensions

• Shareholders may prioritise profit maximisation, while employees focus on fair treatment and high wages

• Customers want low prices, while the local community may prioritise environmental sustainability, which could raise costs

How can conflict between different shareholder groups make it challenging for businesses to balance the competiting demands?

Balancing the competing demands of stakeholders can be difficult

• e.g. a company may need to invest in costly environmental technology to meet local community demands, but this could reduce profitability, upsetting shareholders

How can power and influence possibly create conflicts between shareholder groups?

E.g. Pressure groups with strong public support may be able to influence business activity more than individual shareholders