1.4 Stakeholders

Question 1

Stakeholders

Answer 1

Individuals or groups that may hold interest in the business or may be affected by its decisions.

Question 2

Internal stakeholders

Answer 2

People who are directly involved in the running of the business:
- owners or shareholders
- employees
- management

Question 3

External stakeholders

Answer 3

People who are indirectly involved in the running of the business or are simply affected/interested in its activity:
- suppliers
- customers
- pressure groups
- competitors
- government

Question 4

Interests of owners or shareholders

Answer 4

• Annual dividends at a level at least comparable to similar businesses
• Share price rising over time
• Security of investment
• Ability to sell shares when required

Question 5

Interests of employees

Answer 5

• Wage levels and benefits that compare well with similar jobs in other businesses
• Good conditions of employment, e.g. health and safety
• Some participation in decision-making within the business

Question 6

Interests of management

Answer 6

• Employment security
• Salary and benefits that compare well to similar posts of responsibility in other businesses
• Responsibilities offered and status of the post
• Opportunity for profit sharing or share purchase scheme

Question 7

Interest of suppliers

Answer 7

• Speed of payment
• Level and regularity of orders
• Fairness of treatment, e.g. not being exploited by a very large customer business

Question 8

Interest of customers

Answer 8

• Value for money
• Product quality and safety
• Guarantees
• Service levels
• Long-term rewards for loyalty

Question 9

Interest of pressure groups

Answer 9

• campaigning to achieve a change in business decisions/activities

Question 10

Interest of competitors

Answer 10

• Fairness of competitive practices

Question 11

Interests of the government

Answer 11

• Creation of jobs and incomes that boost the economy
• Taxes paid, e.g. Profit tax
• Value of output produced as this adds to GDP
• Impact on wider society

Question 12

Possible area of conflict between stakeholders

Answer 12

Conflict arises because the business cannot simultaneously meet the needs of all its stakeholders.
In deciding how to deal with conflicting stakeholder needs, leaders need to look at three key issues:
- type of organization
- aims and objectives of a business
- source and degree of power of each stakeholder group