1.5 STAKEHOLDERS IN A BUSINESS

• 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