2.3 Understanding the role and importance of stakeholders

Question 1

Stakeholder

Answer 1

A stakeholder is any individual or group who has an interest in the activities and performance of a business.

Question 2

Various stakeholders and their interests

Answer 2

• Employees: job security, good working conditions, pay
• Customers: good customer service, value for money
• Shareholders: capital growth, dividends
• Suppliers: regular orders, on-time payment
• Local communities: avoidance of pollution and congestion, employment
• Government: employment, payment of taxes

Question 3

Mendelow’s stakeholder mapping

Answer 3

High power of stakeholders, Low interest of stakeholders
- Meet their needs

High power of stakeholders, High interest of stakeholders
- Key player

Low power of stakeholders, Low interest of stakeholders
- Least Important

Low power of stakeholders, High interest of stakeholders
- Show consideration

Question 4

Stakeholder needs and possible overlap/ conflict

Answer 4

Relocating overseas:
- Overlap: shareholders - lower costs, management - achieve objectives in terms of costs and profit
- Conflict: government - less tax, employees - lost jobs

Increase price
- Overlap: shareholders - potential profit increase, management - improved performance
- Conflict: customers - cost more

Cut costs
- Overlap: shareholders - potential profit, management - achieve objectives
- Conflict: employees - potential job loss, customers - quality might be affected, suppliers - pressure on prices

Question 5

Influences on the relationship with stakeholders

Answer 5

• Leadership styles
• Business objectives
• Government
• State of the economy

Question 6

How to manage the relationship with different stakeholders

Answer 6

Stakeholder mapping gives identification of how conflict can be managed. Stakeholder mapping: recognises stakeholders with the greatest levels of power and interest.