1.4 stakeholders

Topic 1

 

Stakeholders

  • A stakeholder is any individual, group or organization with a direct interest in and/ or is affected by the activities and performance of a business.

  • They can be classified as internal or external stakeholders

 

Internal stakeholders

  • These are people inside the business

  • They have a direct interest in, and are affected by, the activities and performance of a business.

  • The main internal stakeholders are:

  • Employees

  • Managers and directors

  • Shareholders

 

Employee 

  • Employee are likely to have an interest in the organization they work for

  • They tend to strive for improvements in:

  • Pay and other financial benefits

  • Working conditions

  • Job security

  • Opportunities for career progression

 

Managers and directors

  • Managers are the people who oversee the daily operations of a business.

  • Directors are senior executives who direct business operations on behalf of shareholders.

  • They are primarily interested in:

  • Profit maximization

  • Job security and financial benefits

  • Long-term financial health of the company

 

Shareholders

  • Shareholders are a powerful stakeholder group due to their voting rights

  • They have two main interests:

  • Maximize dividends

  • Achieve capital gain in the value of the shares

 

External stakeholders (eg.hutong)

  • These are stakeholders who do not form part of a business but have a direct interest in, and are affected by, the activities and performance of business.

  • External stakeholders vary between organizations, but some key external stakeholders are:

  • Customers

  • Suppliers

  • Pressure groups

  • Competitors

  • Government

Customers

  • Customer care is instrumental to the survival of a business.

  • Their interests vary depending on the goods and/ or services provided by the business

  • However, they are generally interested in:

  • Value for money

  • Quality of goods and services

 

Suppliers

  • Suppliers provides a business with stocks of raw materials needed for productions.

  • Their main interests are:

  • Clients who pay their bills on time

  • Regular contracts with clients

  • Good working relationships with client

 

Financiers

  • These are the financial institutions and individuals investors who provides sources of finance for a firm.

  • Financiers earn money by charging interest on the amount of money borrowed

  • Their interests includes:

  • The ability of a firm to repay debts from generating sufficient profits

  • Establishing long-term relationships with firms in order to achieve subsequence earnings.

 

Pressure groups

  • Pressure groups consist of individuals with a common interest who seek to place demands on organizations to influence a change in their behavior

  • Their interests in the business depend on the purpose of the pressure group.

 

 

Competition

  • These are rival businesses of an organization

  • Their interests in the business includes:

  • Innovation that arises from rivalry

  • Responding to competitive threats

  • Performance benchmarking

 

Government

 

 

 

  1. Conflict between stakeholders

 

  1. Dealing with stakeholder conflict

  • Stakeholder conflict refers to the inability of an organization to meet all of its stakeholder objectives simultaneously.

  • This is due to differences in the varying needs of all its stakeholder groups

  • Resolving conflict depends on three key issues

  • Type of organization

  • Organizational aims and objectives

  • Source and degree of power (influence) each stakeholder group