2.3 Understanding the role and importance of stakeholders

Question 1

What are stakeholders

Answer 1

groups or individuals affected by a business and its decisions

Question 2

Employees are an internal stakeholder, what are they affected by

Answer 2

• decisions made in terms of salaries/ wages, recruitment policies and job security

Question 3

External stakeholders and what affects them

Answer 3

• suppliers = decisions in terms of order quantities and payment terms
• communities = decisions in terms of local jobs, traffic congestion in residential areas because of deliveries, noise pollution etc
• customers = decisions in terms of products and services sold and prices charged

Question 4

How can businesses manager their relationship with stakeholders

Answer 4

Through communication and consultation
communication = between business and stakeholders to share info, through methods such as email and newsletters so stakeholders can remain informed of developments within the business
consultation = used to investigate the views and feeling of stakeholders so that they feel involved in any decisions made by the business, though the power of stakeholders to change decisions made is still limited as the business defines the stakeholder’s influence

Question 5

The power of stakeholders

Answer 5

• diff levels of power and interest - business must consider this when deciding how to manager their relationship
• the business may wish to ensure that certain stakeholder groups remain satisfied and this may require consultation instead of communication

Question 6

Stakeholder map
Low Interest, Low Influence

Answer 6

Monitor

Question 7

Stakeholder map
Low Interest, High Influence

Answer 7

Keep satisfied

Question 8

Stakeholder map
High Interest, Low Influence

Answer 8

Consult

Question 9

Stakeholder map
High interest, High influence

Answer 9

Manage closely

Question 10

Stakeholder map, Manage closely means

Answer 10

Consultation may be appropriate for these individuals and groups

Question 11

Stakeholder map, keep satisfied means

Answer 11

they have the power to influence the business if they become dissatisfied

Question 12

Stakeholder map, monitor means

Answer 12

they lack influence and interest in many business decisions

Question 13

Stakeholder map, keep informed means

Answer 13

consultation may be appropriate

Question 14

What can affect the relation with stakeholders

Answer 14

• Power and influence
• Expertise and skill level of staff as an employer may wish to consult with staff if they are able to contribute their expertise to a decision being made
• The business’ performance, poor financial performance may require the business to build a stronger relationship with customers and suppliers so that more favourable payment terms can be negotiated