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 affectedby 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