1.5.1 Business stakeholders

Question 1

Who are stakeholders?

Answer 1

any individual or organisation who have an interested in the activities of a business

Question 2

What are some examples of business stakeholders?

Answer 2

• managers-want bonuses and long-term success
• pressure groups-want to influence business decisions and actions
• employees-want good pay and working conditions
• customers-want value for money
• local community-limited pollution
• government-wants low unemployment and competitive market
• suppliers-want regular orders
• owners(shareholders)-want profit and return on investments

Question 3

What are some examples of possible conflict between stakeholders?

Answer 3

• business adds extra shifts to increase factory capacity
  
  • like: suppliers-more orders, shareholders-more profit
  • dislike: employees-more work, local community-more pollution
• business introduces new machinery to replace manual work
  
  • like: customer-better quality and faster, shareholders-more profit and reduced cost
  • dislike: employees-made redundant, shareholder-big investment cost
• business increases selling price significantly to improve profit margins
  
  • like: managers-can potentially get a rise, shareholder-more profit, reduce break-even level
  • dislike: customers-higher prices

Question 4

What are the possible positive effects on stakeholders?

Answer 4

• shareholders receive a return on their investments
• employees and managers receive income, rewards, financial security and status
• customers receive high-quality products at reasonable prices with excellent service
• the local community may benefit from development and investment in the local area
• the government collects income tax and corporation tax

Question 5

What are the possible negative effects on stakeholders?

Answer 5

• the local community can suffer because4 pollution in the local environment
• the government needs to monitor and regulate business activity that is unfair, anti-competitive or illegal
• employees may lose their jobs and income or face job uncertainty
• employees work under poor conditions
• shareholders lose their investment
• pressure groups protest against unethical business activity and damage the business’s reputation

Question 6

What are some example of shareholders influencing business activities?

Answer 6

> Negotiation-suppliers may try to negotiate better terms and conditions
Voting-shareho0lders may be invited to vote on business decisions
Refuse to co-operate-employees may refuse to cooperate and work to rule if they are not happy with suggested changes