What is a stakeholder
A stakeholder is an individual,group or organisation that has an interest in a business. Stakeholders can affect or be affected, either positively or negatively, by the organisation.
Interest of owners
Profit focus-maximum return
Livelihood
Success
Reputation
Interest of shareholders (what are they )
Shareholders are part owners of a limited company
They want maximum return on their investment
Do not take part in the management of a business but attend the Annual General Meeting (AGM) and vote the Board of Directors.
Interests of managers and employees
Fair wage/salary
Good working conditions
Job security
Training and development
Career progression
Conflicts within internal stake holders
-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.
What are shares
One of the equal parts into which a company’s capital is divided, entitling the holder to a proportion of the profits
What is a dividend
A sum of money paid regularly (typically annually) by a company to its shareholders out of its profits
Why are competitors external stakeholders
the competitor has a stake in the knowledge of the business to improve and adjust their own business strategy
Interests of competitors
*Price
•Products
•Quality
•Service
•Growth
Why are suppliers external stake holders
Suppliers have a stake in the revenues and the safety of their business`
What are the interests of suppliers
*Financial stability
•Prompt payment
•Continued regular orders
•Fair deal
Why are consumers external stakeholders
Consumers have a stake in the product. They are directly impacted by the product or service of the business
What are the interests of consumers
*Competitive prices
•Good range of products
•Quality
•Customer service
•Good reputation
Why are financial institutions external stakeholders
They have a stake in the financial returns of the business.
What are the interests of financial institutions
*Financial stability
•Ability to meet repayments
•Sound business plans
Why is the local community an external stakeholder
They have a stake in the local health and safety of their community.
What are the interests of the local community
*Corporate social responsibility
•Noise reduction
•Traffic congestion
•Opening hours
•Care for the environment
•Community involvement
If a business cuts jobs to reduce costs what conflict will this cause between stakeholders
It will cause conflict between shareholders/banks and employees/local community as shareholders/banks will make more money and employees/local community will lose jobs
If a business adds extra shifts to increase factory capacity what conflict will this cause between stakeholders
It will cause conflict between Management /Customers /suppliers and the local community as Management/ Customers /suppliers will make more profit but the local community will experience an increase in noise and traffic congestion
If a business introduces new machinery to replace manual work what conflict will this cause between stakeholders
It will cause conflict between customers/shareholders and employees and customers will benefit from efficient and quicker service and shareholders will benefit as they will not have to pay employees although employees will suffer as their jobs will be axed
If a business increases selling prices by 10% to improve profit margins what conflict will this cause between stakeholders
It will cause conflict between shareholders/management and customers as the shareholders/management benefit as they will make more profit although the customers will suffer as they will pay more money.
What conflicts will be created by job creation/losses
Owners/board of directors will need to make decisions about creating/axing jobs depending on the market demand for their product in order to ensure the profitability of their business. Owners and employees
What conflicts will be created by changes to working conditions
Unions/Government/Employess may want changes in working conditions that might take away from profitability of a company
What conflicts will be created by profit distribution
The profit of company may need to be invested back into a company for one reason or another which reduces the amount of money that an owner/stakeholder receives
