1.4 Stakeholders

STAKEHOLDERS - people who can be affected by and therefore have interest or stake in the business

Internal Stakeholders

• members of the organization

Interests

• Employees
  • job security
  • wage levels
  • work environment
• Managers
  • job security
  • salary and benefits
• Shareholders
  • annual dividends
  • share price
  • security of investment

External Stakeholders

• do not form part of the business but have a direct interest or involvement in the organization

Interests

• Suppliers
  • regular contracts
  • competitive prices
• Customers
  • value of money
  • product quality
  • quality of service
• Pressure Groups
  • enforce demands on organizations to act in a particular way
  • create jobs
  • don’t harm environment
  • ethical with employees
• Government
  • job creation
  • tax payments
  • impact of business on society & economy
• Competitors
  • fairness of prices
  • strategic plan of business
  • remain competitive
  • bench work performance

Stakeholder Conflict

• It isn’t possible to satisfy all stakeholders at the same time
• Conflicts always arise between different stakeholder interests
  • Shareholders want more profit by cutting employee benefits
  • Suppliers expect full payment, but business wants discount in exchange
  • Shareholders and employees argue that top managers are overpaid, but managers believe their job involves risky decision-making and the salaries are justified

Mutual Benefits of Stakeholder’s Interests

• There are mutual benefits of simultaneously satisfying different stakeholders.
• Addressing employee and manager needs leads to highly motivated staff, boosting productivity, and reducing absenteeism.
• This can improve corporate image, market share, and profits.
• Stakeholders are pleased and the greater output satisfies the government and pressure groups.