3.4 Shareholders vs stakeholders Flashcards
Stakeholder
Individuals or groups that are affected by or affect the actions of a business.
Internal stakeholders
Individuals or groups inside the business.
Examples of Internal stakeholders
Employees
Managers and directors
Business Owners
External stakeholders
Individuals or groups outside of a business.
Examples of External stakeholders
Customers
Shareholders
Suppliers
Owner objective
Wants profit and for business to succeed.
Employees objective
Job security and to be compensated fairly.
Management objective
Meet company’s goals and objectives and maximise profits while minimising costs.
Customers objective
Recieve high quality products or services at fair prices.
Shareholders objective
Maximise a high return on investment.
Suppliers objective
For businesses to pay what they owe and establish long term arrangements.
Stakeholder approach
Focuses on interdependencies between stakeholders and ensure benefits and drawbacks of operation are shared equally.
Stakeholder approach problem
Decrease profits as competing stakeholders needs will increase costs.
Shareholder approach
Focused on meeting the needs of shareholders.
How can a business meet the needs of a shareholder
Maximising profits to increase dividends and improve share price.
How can it harm employees if a business faces financial difficulties?
Employees may face job losses or pay cuts.
How can it impact shareholders if a business is profitable?
Shareholders may benefit from increased dividends.
what can customers be affected by?
Product availability
How can customers influence pricing?
Through purchasing decisions and feedback.
How can employees impact business activity?
Through their productivity
How do shareholders impact businesses?
Through investment decisions
Conflict between shareholders and employees
Employees want higher wages which reduces profits.
Shareholders aim to maximise profit to get highest return.
Conflict between shareholders and customers
Customers aim for fairer prices.
Shareholders demand profits so businesses increase profits.
Conflict between shareholders and management
Management may retain profit instead of giving it to shareholders.
Conflict between shareholders and government
Government wants businesses to create good quality jobs.
Shareholders dont care about job creation and focus on profits.
