Business & Management

Topic 1Stakeholders

Learning Objectives

To know what is meant by a stakeholderBe able to differentiate between internal and

external stakeholdersAnalyse and comment on business responsibilities

to stakeholdersDiscuss possible areas of conflict between

stakeholdersHL – Evaluate ways in which conflicting stakeholder

objectives might be recognised and responded to by a business

• Stakeholders are people or groups that have an interest or “stake” in the activities of a business.

• Stakeholders may be able to influence the actions of a business

• Some stakeholders have more influence than others

• Stake holders can be internal or external• Conflict!

What does it all mean?

Key terms

• Stakeholder concept – the view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders

Don’t get confused

• Shareholder and Stakeholder are two separate things

• A shareholder IS a stakeholder

Stakeholders

Stakeholders

Large Business Small Business

Name some of the stakeholders you may find in a large business and a small

business

Internal and External Stakeholders

Internal StakeholdersThese are people who work for the

business. This means they are INSIDE the business and involved daily

External StakeholdersThese are people who do not work for the business, and are NOT involved in the day to day

running of the business. As such they are OUTSIDE

StakeholdersInternal External

StakeholdersInternal

• Employees – employment security, wage levels, conditions of employment, participation in the business

• Managers – employment security, salary and benefits offered, responsibilities given

• Shareholders – annual dividends, share price, security of investment

External

• Suppliers – Speed of payment, level and regularity of payment

• Customers – value for money, product quality, service levels

• Government – jobs created, taxes paid, value of output produced, impact on wider society

• Special interest groups– Banks and other creditors– Pressure groups– Community action groups

• Competitors – fairness of competitive practices

What do stakeholders want?

• Stakeholders are affected by the decisions made by a business

• They will try and get the business to do what they want

E.G– Owners want more profit– Workers want to work in a nice environment

Business responsibilities to stakeholdersBusiness responsibilities to stakeholders

Benefits of accepting responsibilities

Customers

Suppliers

Employees

Shareholders

Special interest groups

Competitors

Managers

Business responsibilities to stakeholders

Benefits of accepting responsibilities

Customers • Not to break laws on consumer protection and advertising

• Not taking advantage of vulnerable customers

• Giving customers assurances about quality, delivery dates, service

Suppliers • Effective two way communication• Avoid pressure on smaller suppliers to

cut prices• Pay fair prices and pay invoices promptly

Employees • Adhere to country´s law• Job training, security, pay more than

minimum wage, involve staff in some decision making

Shareholders • Company law• Annual accounts presented• Actions taken to increase shareholder

value over time

Special interest groups

• Banks – payment s made as required• Local community – avoid pollution

Competitors • Compete fairly and within the law

Managers • Job security• Competitive salaries and other benefits• Opportunities for responsibility and

career advancement

Fill in the second part of the table, what benefits to a business are there of accepting these responsibilities?

Task

1. In pairs, create a map of stakeholders for The Churchill College

2. Who do you think has the most influence? – Why?

3. Who do you think has the least influence? – Why?

4. Which stakeholders may argue? Why?

Stakeholder Conflicts

• Business decisions and activities can have both positive and negative effects on shareholders and stakeholders

• Unfortunately the different requirements of stakeholders can cause problems

• This is because there will be arguments about what the business should do

QuestionIf owners want more profits they may increase prices, customers however, will want lower pricesWhat should the business do?

BUSINESS DECISION \ ACTIVITY

IMPACT ON:

Employees Local Community Customers

Expansion of the business

Takeover of a competing firm

New IT introduced into production methods

Stakeholder Influence

• When conflict occurs it is likely that the stakeholder with the most influence will get what they want

• This will be different for every business

The customers of McDonalds have less influence than the customers of the school

cafeteria

Can you explain why?