1.5 STAKEHOLDERS IN A BUSINESS

Cards (67)

  • Stakeholders
    Individuals or groups with an interest in the activities of a business
  • Types of stakeholders
    • Internal stakeholders
    • External stakeholders
  • Stakeholder
    An individual or group of people who can be affected by the organization's decisions and actions and therefore have an interest in any action taken by an organisation
  • Shareholder
    An individual, company, or institution that owns at least one share of a company and therefore has a financial interest in its profitability
  • The stakeholder concept is a view that businesses and their managers have responsibilities to a wider range of groups, not just shareholders
  • Common organisational stakeholders
    • Shareholders
    • Investors
    • Customers
    • Employees
    • Suppliers
    • Local community
    • Government
    • Lenders
  • Roles
    The function assumed or part played by a person or thing in a particular situation
  • Rights
    A moral or legal entitlement to have or do something
  • Responsibilities
    A thing which one is required to do as part of a job, role, or legal obligation
  • Roles of customers
    • Buy goods & services
  • Rights of customers
    • Receive goods & services that meet health & safety regulation, design, performance & so on
    • In the event of failure will be offered replacements, repairs, compensation
  • Responsibilities of customers
    • Make payment
    • Not to steal
    • Not to make false claim about poor services and goods
  • Roles of employees
    • Provide manual work & services to customers
  • Rights of employees
    • To be paid as stated the employment contract
    • Given minimum wage rate
    • Allow to join a trade union if desired
  • Responsibilities of employees
    • To be honest
    • To perform their duties & responsibilities well
    • To cooperate with management in all reasonable requests
  • Roles of suppliers
    • Supply goods & services to wholesalers or retailers
  • Rights of suppliers
    • To receive payment on time
    • To be treated fairly by the buyers, e.g. not to have lower prices forced on them
  • Responsibilities of suppliers
    • To supply goods and services ordered by the businesses on time, in good condition, good quality, & in correct quantities as it is stated in the business contract
  • Roles of local community
    • Provides local services & infrastructure to the business to allow it to operate, produce, sell within legal limits
  • Rights of local community

    • To be consulted about major changes that affect it, e.g. expansion plans or changing methods of production
  • Responsibilities of local community

    • To cooperate with the businesses, where reasonable to do so, on expansion and other plans
    • To meet reasonable requests from business for local services
  • Roles of government
    • Passes laws that restrain many aspects of the business activity
    • Achieve economic stability to encourage business activity
  • Rights of government
    • To punish businesses that are not producing goods & services within legal, health constrains
    • To pay tax on time
  • Responsibilities of government
    • Prevent unfair competition
    • Help establish good trading links with other countries to allow international trade
  • Roles of lenders
    • Provide finance to the business in different forms
  • Rights of lenders
    • To be paid on the agreed date
    • To be paid financial charges
  • Responsibilities of lenders
    • Provide agreed amount of finance on agreed date for the agreed time period
  • The impact of business decisions on stakeholders, and their reactions
  • The impact of stakeholder aims on business decisions
  • How and why a business needs to be accountable to its stakeholders
  • How conflict might arise from stakeholders having different aims and objectives
  • How changing business objectives might affect its stakeholders
  • Large expansion of the business - building a new factory
    • More job & career opportunities for employees
    • Harder to communicate when it's too big in size
    • More jobs, more businesses for the local residents
    • Increase traffic & loss of green fields
    • Better services for customers
  • Take over a competing firm - Horizontal Integration

    • Some employees may have career promotion but some may be laid off due to redundancy
    • Job & business opportunities but some may lose jobs and closure of factories & offices
    • Cheaper selling price due to economies of scale, less customer choice might result in higher price
  • Purchase of IT - controlled automated machines
    • Training & promotion opportunities for employees, untrained workers may be laid off
    • Local businesses providing IT services benefit from increase orders
    • Improve quality & offer more product variety for customers
  • A business cannot satisfy all stakeholder groups
  • A business needs to identify who the important stakeholders are and try their best to establish a good relationship with them while finding a compromise with the others
  • Responsibilities to customers

    • Satisfy customer demands
    • Not to break the law concerning consumer protection and accurate advertising
    • Not to take advantage of vulnerable customers
  • Benefits of accepting responsibility to customers
    • Consumer loyalty & repeated purchase
    • Good publicity through WOM (word-of-mouth) & good feedback
  • Responsibilities to suppliers
    • Source reliable suppliers
    • Give clear guidance to the supplier on what is required
    • Pay promptly, place regular orders and offer long-term contracts