Topic 1: Business Organisation and Environment

1.4 Stakeholders

• A stakeholder is any person, group or organisation that is directly or indirectly affected by the actions, objectives, and policies of a business organization.

Internal Stakeholder

• LO: Explain the interests of internal stakeholders.

• Internal stakeholders are those who work for or own the business organization.– Employees– Shareholders– Managers

Employees

• If the business is to do well, staff must be:– Motivated– Secure– Able to maintain/improve on

current standard of living

• Main interest is the reason they are in the business: job security and income.

• Food, shelter, clothing.• Actions of business and effect these interests– Relocation– Salary decrease

Shareholders

• Owners of the business• Return of Investment (ROI)• Dividends: Interest on profit• Interests of shareholders may suffer, as long-term

strategic objectives may result in re-investment of profit.

Managers

• Interested in the successful operation of the business.

• Personal success (income) linked to success of the business.

• Have control over business • Divorce of ownership and

control.– Large salaries– Re-invest profits

Internal stakeholders: Internships November 2011

• Think back to your internship and identify:– Employees– Shareholders– Managers

• Did you notice any difference of interests?– If so, how did they show?– If not, why do you think so?

External Stakeholders

• Explain the interests of external stakeholders.• External stakeholders are those who do not

work for or own the business and are therefore outside or external– Suppliers– Customers– Special interest groups

Suppliers

• Interest in continued operation of a business– Suppliers retain their business

• If prices are fair and delivery is timely, relationship is usually sustainable.

Customers

• Primary interest in the goods and services that meet their needs and wants

• If products do harm or make them unhappy due to dissatisfaction, then a conflict of interest arises.

Competitors

• Businesses providing same or similar goods and services

• Interest based on success or failure of other business

• Interest in business plans

Special interest groups

• Usually have interest that is being challenged or threatened.– Banks– Environmental protection groups– Community based organizations

• Strength in numbers– Pressure groups are more

effective than individual attempts against corporate threats.

S.i.G: Banks

• Have lent money to business

• Would like money repaid

• Interest in interest• Have great influence on

success of businesses

S. i. G: Environmentalists

• Effectively challenge the negative effects being inflicted by some corporations on the environment.

S. i. G: CommunityAction Groups

• Small scale• Locally based focusing on

local issues• Interest in giving

communities a voice against large business interests

Stakeholders: Summary• Shareholders who are interested in how much profit the business makes.• Managers who are concerned about their salary.• Employees 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.• The special interest groups who have 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.

• Competitors have an interest as their business success can be dependent on the success of their rivals.

Stakeholder conflict

• LO: Discuss possible area of conflict between stakeholders.

• When stakeholders want different outcomes from a business activity and are unable to meet or accomplish their needs or wants, this is referred to as a conflict of interest.

• Think of three examples from your internships where there were conflicts of interest.– Identify the problem– Identify which stakeholders involved– Discuss the problems between them and

how these came about

Stakeholders: Working together