1.4 Stakeholders

Question 1

What is meant by the term “stakeholders”?

Answer 1

Individuals and businesses that are affected by and affect a business.

Question 2

What are examples of stakeholders?

Answer 2

> owners/managers.
> customers.
> employees.
> local community.
> suppliers.

Question 3

What are examples of stakeholder conflicts?

Answer 3

• employees versus owners
↳ giving a pay rise to employees may mean that the business is less profitable which may mean the owners of the business receive smaller payments from its profits.

• customers versus managers
↳ managers want the highest profit possible on sales whereas customers want low prices for high quality goods

• customers versus suppliers
↳ a business may negotiate or impose a reduction on the prices it pays to its suppliers to allow it to produce its goods or services more cheaply. Consumers may benefit from this in terms of paying lower prices.

• local community versus owners
↳ the owners of factory may decide to operate for 24 hours a day, seven days a week to increase profits leading to the community suffering vehicle noise from deliveries and more air pollution.

Question 4

How can stakeholders influence a business?

Answer 4

• communication
↳ consumers are increasingly using social media to let businesses know their views on its products and activities. Wage rates and working conditions can be negotiated by employees and suppliers.

• direct action
↳ employees can go on a strike and refuse to work, consumers may boycott and suppliers may refuse to sell their products.

• using their power
↳ shareholders may vote against the others over a particular decision.