2.3 Stakeholders- Understanding Business

Question 1

What is a stakeholder?

Answer 1

They are individuals or groups of people who have an interest in or are affected by, the success of an organisation. Stakeholders benefit from the businesses success.

Question 2

Conflicting aims/interests of stakeholders

Answer 2

Shareholders are interested in receiving profits and increased share values, this can conflict with managers desire to reinvest profits to grow the business, and employees want pay rises.
Managers may seek promotion, owners aim for higher profit, and employees aim for pay increases.
Employees aim for higher pay and better working conditions and owner/ managers aim for profitability and a efficient use of resources.
Suppliers aim for regular order, a fair price and prompt payments and managers aim to reduce running costs.

Question 3

Interdependence of stakeholders

Answer 3

Owners rely on skills and ability of the management team to achieve their objectives, the managers rely on the owners for job security, salary and support.
Employees rely of managers to provide leadership, managers rely on employees to achieve their targets and meet deadlines.
Business owners are reliant on customers to buy their goods/ services to generate revenue, and customers which are employees of businesses rely on their salary to generate income.

Question 4

Social enterprises

Answer 4

Independent business that has been set up specifically for a social and/or environmental purpose.

Question 5

Advantages of social enterprises

Answer 5

Provide support to disadvantaged groups in society.

They provide solutions to social and environmental problems.

Question 6

Disadvantages of social enterprises

Answer 6

They cannot always take advantage of all business opportunities as their trading practices have to fit with the ethics of the business.