Business Organization and Environment: Stakeholders, External Environment, Growth and Evolution
1.4 Stakeholders
Internal Stakeholders: These are people or groups inside the business.
Examples: Owners (shareholders), the CEO, managers, and employees.
External Stakeholders: These are people or groups outside the business.
Examples: The government, suppliers, customers, the local community, and lenders (financiers).
Some groups can be both (Grey Areas):
Employees: They work inside the company (internal) but also live in the community and vote (external).
Consultants: They usually come from outside with special skills (external) but might work closely with the company for a while, acting like an insider.
Small Shareholders: Even if they own just a few shares in a huge company like Apple, they are technically owners (internal).
What Different Stakeholders Care About (Interests)
Shareholders: Want to make money from their investment (high profits).
CEO / Managers: Want the company to succeed and meet its goals.
Employees / Unions: Want good pay, fair treatment, and safe working conditions.
Government: Wants businesses to follow laws, pay taxes, and contribute to the economy.
Suppliers: Want steady business and to be paid on time.
Customers: Want good products that meet their needs at a fair price.
Community: Wants jobs, less pollution, and the business to be a good neighbor.
Financiers (Lenders): Want to be paid back with interest.
Pressure Groups: Care about specific issues, like environmental protection.
Where Stakeholders Might Agree or Disagree (Mutual Benefit and Conflict)
Even with common interests, groups can disagree.
Example: Employee Pay Raise
Employees: Strongly favor a pay raise because it improves their living standard.
Shareholders: Likely object because higher wages mean less profit for them.
Managers: Might support it to keep employees happy but also worry about the budget.
Local Community: Generally favors it because employees will spend more money locally, boosting the economy.
1.5 The External Environment
What "Environment" Means in Business: It's all the conditions and factors outside a business that can affect it.
Businesses Can't Control, Must Adapt: Companies usually can't change these external factors. Instead, they must plan and prepare to react to them.
STEEPLE Analysis: A tool to help businesses understand and focus on key external factors:
S - Social: How people live, their values, population changes, and trends.
Example: A growing demand for organic food (a social trend) leads supermarkets to stock more organic products.
T - Technological: New inventions, digital tools, and the internet.
Example: The rise of online shopping (technology) forces traditional stores to also sell online.
E - Economic: Money matters like inflation (prices going up), interest rates (cost of borrowing), and unemployment.
Example: High interest rates make it more expensive for people to borrow money for big purchases, which can slow down car sales.
E - Ethical: What's considered morally right or wrong in business, like fair trade or avoiding child labor.
Example: A clothing company ensuring its factories pay fair wages and don't use child labor (ethical practice).
P - Political: Government decisions, trade rules, and how stable the government is.
Example: A new government tax on sugary drinks (political decision) makes soft drinks more expensive and less attractive to customers.
L - Legal: Laws and regulations businesses must follow.
Example: New data privacy laws (like GDPR) change how companies can collect and use customer information.
E - Ecological: Environmental issues like climate change, pollution, and using renewable resources.
Example: Car companies developing electric vehicles to meet stricter emission standards and consumer demand for greener options.
How STEEPLE Analysis Has Changed
The inclusion of "Legal," "Ecological," and "Ethical" highlights how business thinking has evolved over the last 50 years.
Why the change? As businesses grew globally, they had to deal with laws in many countries. Also, people started caring more about how businesses impact society and the environment, not just profits.
How STEEPLE Changes Affect Businesses
Any change in these external factors will affect a business's goals and how it plans to achieve them.
Process:
A business looks at all the STEEPLE factors.
It identifies the most important ones that will influence it.
Then, it creates a plan (strategy) to deal with these influences.
Different Reactions: Not all businesses react the same way. What matters is how relevant the change is to their business.
Example: A luxury car maker might not care much about fast fashion trends, but a clothing retailer definitely would.
Be Flexible to Succeed: Businesses that can quickly adapt to changes are more likely to do well. Planning ahead can also give a "first-mover advantage," meaning they are among the first to react and benefit from a new situation.