3.2.3 - Understanding the role and importance of stakeholders

Question 1

What is a stakeholder?

Answer 1

Any person or group that has a vested interest in or influence over the activities of the business.

Question 2

What is the difference between a primary and secondary stakeholder?

Answer 2

A primary stakeholder is someone that directly affected by a particular business activity whereas a secondary stakeholder is someone that does not have a direct functional or financial relationship with the business.

Question 3

What are the possible stakeholder needs of a shareholder?

Answer 3

• Share price to be stable or higher
• Maximum profits to achieve the best possible dividend.

Question 4

What are the possible stakeholder needs of an employee?

Answer 4

• Job security
• Good working conditions
• Income provided on time and in full/ the highest possible pay
• rewards for work.

Question 5

What are the possible stakeholder needs of a customer?

Answer 5

• Good range of products
• High quality of products
• Fairly priced products.

Question 6

What are the possible stakeholder needs of a supplier?

Answer 6

• Good communication
• Regular orders
• Payment provided on time.

Question 7

What are the possible stakeholder needs businesses from payables (creditors)?

Answer 7

• low interest on any loans taken out
• as long time as possible between the time of taking out the loan and repaying the loan.

Question 8

What are the possible stakeholder needs of the local community?

Answer 8

• Good environmental factors, limited pollution and footfall
• Clear social and ethical objectives.

Question 9

If a stakeholder has high stakeholder power but low stakeholder interest, what group are they in on the stakeholder map?

Answer 9

Keep satisfied

Question 10

If a stakeholder has high stakeholder power and high stakeholder interest, what group are they in on the stakeholder map?

Answer 10

Manage closely

Question 11

If a stakeholder has low stakeholder power and low stakeholder interest, what group are they in on the stakeholder map?

Answer 11

Monitor (minimum effort)

Question 12

If a stakeholder has low stakeholder power and high stakeholder interest, what group are they in on the stakeholder map?

Answer 12

Keep informed

Question 13

What are some internal influences on a businesses relationship with its stakeholders?

Answer 13

• Business objectives
• Management and leadership styles
• The size and ownership of the business

Question 14

What are some external influences on a businesses relationship with its stakeholders?

Answer 14

• Market conditions
• The power of the stakeholder groups
• Government policies

Question 15

What is a stakeholder map?

Answer 15

A model used to assess the relative power and influence of different stakeholders and how to best manage them.

Question 16

What is communication?

Answer 16

The process by which a message or information is exchanged from a sender to a receiver.

Question 17

What is consultation?

Answer 17

Taking into account the views of employees further down the hierarchy.

Question 18

Why is internal communication important in business?

Answer 18

This links together all the different activities involved in a business and ensures all employees are working towards a common goal.

Question 19

Why is external communication important in business?

Answer 19

Where the business communicates with people and organisations outside of the business.

Question 20

What is stakeholder conflict?

Answer 20

Where different stakeholders have different and often opposing objectives and goals.

Question 21

Give an example of stakeholder conflict.

Answer 21

Cutting jobs to reduce costs would be supported by shareholders and consumers but opposed by employees as they may lose their jobs.