2. Stakeholders Flashcards
What is a stakeholder?
A stakeholder is any person or group of
people who have an interest (or stake)
in the success of the business.
Stakeholders can be classified as either internal or external. Internal stakeholders are those who are members of the company or organisation, whereas external stakeholders are those who are not members but who have an interest in the business and its activities.
How do shareholders have a stake in the business?
Shareholders clearly have a stake in the business since the value of their shares and the dividend payments associated with those shares will depend upon the success of the business. (Internal stakeholder)
How do managers have a stake in the business?
The managers will also have an interest in the success of the business since their jobs and salaries depend on the business being successful. (Internal stakeholder)
How do employees have a stake in the business?
Employees will also be stakeholders since their wages depend on the firm remaining in business. If the business is not a success, then the employees may find themselves unemployed as the business sheds workers to reduce costs. (Internal stakeholder)
How do competitors have a stake in the business?
Competitors can also be considered as stakeholders since they will have a keen interest in the relative price and quality of the business’s product as well as being
concerned about the impact the business will have on their customers.
How do suppliers have a stake in the business?
Those who supply the business with raw
materials or essential services will also
have an interest in the performance of
the business. If the business is a success,
then they are likely to get more orders or
business from them as a result.
How do consumers have a stake in the business?
Customers will also have a stake in the business since they will be interested in the price of the product, the quality of the product and the standard of service received.
