1.4 - Stakeholders

What is a stakeholder?

A stakeholder is an individual or group that has an interest in the behaviour and performance of a business.

Name 3 examples of a stakeholder

Customers, employees/managers, owners/shareholders, the local community, the government, pressure groups, suppliers, financiers

Which stakeholders are internal?

Employees/managers and owners/shareholders

What objectives do customers have?

Low prices, quality products and good customer service

What objectives do employees have?

High wages, good working conditions, job satisfaction + security, career progression

What objectives do shareholders have?

High + regular dividends/returns, high share price

What objectives do the local community have?

Local jobs, investment in local projects, minimal pollution + noise

What objectives do the government have?

Tax revenues, jobs (low unemployment)

What objectives do pressure groups have?

Improvements to the environment, influence actions, increase awareness of their cause

What objectives do suppliers have?

Being paid on time, guaranteed buyer

What objectives do financiers have?

High interest payments, confidence that they will be repaid

What is negotiation?

Negotiation is a dialogue between two or more people or parties to
reach the desired outcome regarding one or more issues of conflict. It is
an interaction between entities who aspire to agree on matters of
mutual interest. 

What is direct action?

The use of strikes, demonstrations, or other public forms of protest
rather than negotiation to achieve one's demands.

What is refusal to co-operate?

When the stakeholder engages in any act or omission that impedes
the ability of the business if it disagrees with the decision/actions of the
business

What is voting?

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Allowing different stakeholders to have a

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Are all business owned by their stakeholders?

No

Do stakeholder obejctives change over time?

Yes

Do all business have stakeholders?

Yes

Do stakeholders have different interests?

Yes

Do all stakeholders want the business to maximise profit?

No

Can businesses affect how stakeholders behave?

Yes

Can stakeholders influence the behaviour of a business?

Yes

What is an external stakeholder?

A stakeholder which is outside of the business

What is an internal stakeholder?

A stakeholder which is within the business

Why does the government want a business to be successful?

If a business employs more people, there will be less unemployment, these people will pay more tax and they will have more disposable income (income remaining after deduction of taxes, available to be spent), which will hopefully be spent on other local businesses. Also, once these people start earning, they will stop receiving money claims from the government.

Why do suppliers want businesses to be successful?

Because if the business is successful, they will require more supplies, so the supplier will have more business

Are suppliers internal or external shareholders?

External

Is the government an internal or external shareholder?

External

Are customers internal or external shareholders?

external

Is the local community an internal or external shareholder?

External

Are shareholders internal or external shareholders?

Internal

Are owners and employees internal or external shareholders?

Internal

Why do shareholders want a business to do well?

They will earn higher dividends and the share price will rise if the business earns more profit

What is procurement?

To obtain something (usually goods and services for a business)

Why are there stakeholder conflicts?

These groups of stakeholders all want different outcomes

What is a trade union?

An organisation who work to ensure that the interests and rights of their members (a group of workers) are protected

How do shareholders affect business activity?

- They make decisions about business activities
- Provide funding to enable it to start up + grow

How do managers affect the business activity?

• Make some recommendations + decisions that influence the business' activity

How do employees make an impact on business activity?

• They may refuse to work/not work as well as they should

How do customers affect business activity?

- Buy products + services
- Give feedback + how to improve
- They can recommend the business/warn others against using the business

How can suppliers affect business activity?

- Changes in quality of goods
- Reliability of their deliveries

How can the local community affect business activities?

- Protesting/objecting through the local council
- Can buy goods/services

How can pressure groups affect business activity?

- Improve working conditions for employees + help them get fair pay
- Influence customers' opinions of a business

How can the government affect businesss activity?

- Pass new laws
- Change tax levels
- Amend levels of government spending in ways that affect the business (eg. grants/funding)

What do managers do?

Responsible for implementing the decisions made by the owners and overseeing the work that's required

A business may become more profitable if key stakeholders are content with it. For

example, paying employees well and training them thoroughly might be expensive but

can make them more efficient. Efficient employees help businesses to reduce the

costs of producing a typical product. Lowering costs is an effective way of increasing

profits.

❖ Unilever’s customers may be more willing to buy its products if they meet their needs

more fully. For example, removing some of the calories in its ice cream may help to

offset consumers’ worries about their weight increasing as a result of eating the

product. Although this may involve higher short term research and marketing costs, it

could result in increased profits in the future if sales rise.

❖ Being environmentally friendly can be well received by many stakeholders of a

business, especially those that might be affected by its activities, such as people hwo

live near to the business’s premises. However, this can add to a business’s costs, for

example in using more expensive sources of renewable energy. This may result in

lower profits.

❖ The key here is that profits are more likely to increase in the long term. Treating

employees well and protecting the environment can be costly, but the benefits will

appear in the longer term in terms of increased sales and revenues. It is at this stage

that profits are more likely to increase. However, this is not certain. If competitors

adopt similar polices it can be more difficulty to achieve increased sales.

How can a buisness impact its environent?

• Factories

• Vehicles

• Chemicals

• Packaging (recycliable)?

• Energy use

• Transport

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