2.3

• A stakeholder is anyone with an interest in the activities of a business
• Examples of stakeholders:

  • Owners / Shareholder
  • Customers
  • Employees
  • Government
  • Community
  • Suppliers
  • Financial Institutions
  • Trade Unions
  • Pressure groups
  • Competitors
  • Managers
• Types of stakeholders

  • internal / external
  • primary / secondary
• Owners / shareholders are internal, primary
• Customers are external, primary
• Government are external, primary
• Community are external, secondary
• Suppliers are external, secondary
• Financial institutions are external, primary
• Trade unions are external, secondary
• Pressure groups are external, secondary
• Competitors are external, secondary
• Manager are internal, primary
• Primary stakeholders - these are individuals or groups that are affected by a particular business activity, such as a decision to increase production
• Secondary stakeholders - these are groups or individuals who do not have a direct function or financial relationship with the business, although they are affected by, or can influence actions
• Businesses use stakeholder mapping to help inform decision making
• Stakeholder mapping maps the relative power of each stakeholder group against the degree of interest
• Stakeholder mapping helps inform managers on how important each stakeholder group is and therefore how involved they should be in the decision making process
• Low level of interest and high power

  • keep satisfied
  • government
  • potentially influential group with little interest in the business
  • beneficial to consult with them to try and increase the level of interest
• High level of interest and high power

  • manage closely
  • employees, stakeholders
  • most important group of stakeholders
  • should seek to involve them in decision making
• Low level of interest and low power

  • monitor
  • make a minimum amount of effort with this group
• High level of interest and low power

  • keep informed
  • community
  • keeping them up to date with developments can help build good relations
• Influences on the relationship with stakeholders

  • leadership style
  • mission and objectives (financial, social, ethical and environmental)
  • stakeholder power and interest
  • market conditions including competition
  • external influences e.g. legislation
  • business forms
• How to manage relationships with stakeholders

  • managing the relationship with different stakeholders (communication, keep informed, two way as well as one way, involve third parties)
  • consulation (share proposals and seek opinions early in the decision making process)