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?