247E-Book Lecture: Full Lesson On Stakeholders

What are stakeholders?

A stakeholder is anyone with an interest in a
business. Stakeholders are individuals, groups
or organisations that are affected by the
activity of the business. They include:
* Owners who are interested in how much
profit the business makes.
* Managers who are concerned about their
salary.
* Workers who want to earn high wages and
keep their jobs.
* Customers who want the business to produce quality products at reasonable prices.
* Suppliers who want the business to continue to buy their products.
* Lenders who want to be repaid on time and in full.
The community which has a stake in the
business as employers of local people.
Business activity also affects the local
environment. For example, noisy night-time
deliveries or a smelly factory would be
unpopular with local residents.

* Internal stakeholders are groups within a
business - eg owners and workers.
* External stakeholders are groups outside a business - eg The Community




Influence of stakeholders on business
objectives


Board meeting

Owners have a big say in how the aims of the
business are decided, but other groups also
have an influence over decision making. For
example, the directors who manage the day-
to-day affairs of a company may decide to
make higher sales a top priority rather than
profits.

Customers are also key stakeholders.
Businesses that ignore the concerns of
customers find themselves losing sales to
rivals.
*In a small business, the most important or
primary stakeholders are the owners, staff
and customers.
*In a large company, shareholders are the primary stakeholders as they can vote out directors if they believe they are running the business badly.
Less influential stakeholders are called secondary stakeholders.

Conflicting stakeholder objectives

Different stakeholders have different
objectives. The interests of different
stakeholder groups can conflict. For example:

*Owners generally seek high profits and so
may be reluctant to see the business pay high
wages to staff.

*A business decision to move production
overseas may reduce staff costs. It will
therefore benefit owners but work against the
interests of existing staff who will lose their
jobs. Customers also suffer if they receive a
poorer service.