1.3: Stakeholders

Question 1

define stakeholder

Answer 1

Any individual or group of individuals who have a direct interest in a business because the actions of the business will affect them directly.

They have a stake or interest in the business.

Ex:
- shareholder
- employee
- local community

Question 2

Describe the difference between internal and external stakeholders

Answer 2

Internal stakeholders: Have a position in the company.
ex: Owner, employee

External stakeholder: do not work in the company but may be affected from it
ex: suppliers, customers, government

Question 3

Describe the aims of internal stakeholders
- Shareholders
- Employees
- Managers

Answer 3

Shareholders:
- Maximise profits so they will receive a high dividend (portion of profits shared out between shareholders)

Employees:
- Want job security as they have bills to pay and families to support.
- Want good levels of pay, promotions and working conditions.

Managers:
- Want the organisation to do well and grow to ensure

Question 4

Describe the aims of external stakeholders
- customers
- suppliers
- government

Answer 4

Customers:
- Want low prices, high quality

Suppliers:
- Want to get regular orders, payment with short periods of credit.

• Government:
• Want to ensure the organisation follows the law,
  pays the correct taxes, provides employment for the population.

Question 5

Describe the influence of internal stakeholders on organizations and companies

Answer 5

Shareholders/owners:
- voting for particular directors
- The mosre shareholders you have more powerful influence in the company

Managers:
- have day to day decision making powers
- hiring staff

Employees:
- persuade the firm to do what they want.

Question 6

Describe the influence of external stakeholders on organizations and companies

Answer 6

Customers:
- can chose to buy or refuse to buy a firms products and services.
- Customers also recommend or bad mouth the firm affecting sales and reputation.

Suppliers:
- Change the level of discounts offered to the firm
Increase their prices.

The Government:
- Economic policies

Question 7

Explain why stakeholder conflict arises and give examples of stakeholder conflict

Answer 7

Customers: want high quality products and low prices Managers: want to high prices

Employees: want a pay increase
shareholders: opposed as it decrease profits

The CEO and senior managers: may be in support of these pay increases as it would increase motivation but may also be concerned that reduced profits may lead to less investment
The local community: would favour this as employees would have more disposable income to spend in local stores and restaurants

Question 8

Perform a stakeholder analysis using the conceptual model

Answer 8

degree of planning & level of interest
low & low= minimum effort
low & high= keep satisfy
high & low= keep informed
high & high= key players