Shareholders Vs Stakeholders

• stakeholder: individuals or groups that affeect or are affected by the actions of a business
• list 3 internal stakeholders

  • employees
  • managers
  • owners
• list 3 external stakeholders

  • customers
  • shareholders
  • suppliers
• pressure group: seeks to influence policies and actions of businesses with the primary objective of promoting a specific cause
• shareholder approach: focus is on maximising profits in order to increase dividends and improve share price
• stakeholder approach: focus is on sharing benefits and drawbacks across all stakeholders and minimising the negative effects where possible
• what is the potential conflict between shareholders and employees?

  shareholders --> maximise profits

  employees --> higher wages --> lower profits
• what is the potential conflict between shareholders and customers?

  shareholders --> high prices --> high profits

  customers --> low prices --> high quality --> low profits
• what is the potential conflict between shareholders and management?

  shareholders --> receive profits as dividends

  management --> retain profits to reinvest in business
• what is the potential conflict between shareholders and government?

  shareholders --> profix maximisation

  government --> job creation and comply with laws and tax contributions