3.4.3 Shareholders vs Stakeholders (1/3) Flashcards
Stakeholder
A person, group or organisation who can affect or be affected by the organisations actions, objectives and policies.It is also those who have an interest in the activities of a business.
Who are the stakeholders in a business?
MECCLOGSS
(8)
M - Managers E - Employees C - Customers C - Creditors L - Local Government O - Owners S - Suppliers S - Shareholders
Internal stakeholders
Groups inside a business with an interest in its activities, survival and well-being
4 examples of internal stakeholders
1) - owners
2) - Managers + directors
3) - Employees
How are owners internal stakeholders
The business is their property.Owners are stakeholders because they gain/lose financially from the performance of a business
How are employees internal stakeholders
Because they work for the business.Employees depend on the business for their livelihood.
Linking to employees who else can become stakeholders
If employees are represented at work by trade unions then they also become stakeholders
How are Managers/ directors internal stakeholders
In large businesses, key decisions relating to policy + strategy are made by the board of directors
It is then the responsibility of those managers to ensure that those policies + strategies are implemented
How are managers internal stakeholders?
They are responsible for a variety of things in the business
e. g
- Resposnible for different departments
- Controlling resources
- Making key decisons
- Motivating workers
External stakeholders
Groups outside businesses with an interest in it’s activities.
External stakeholders examples
1) -Shareholders
2) -Customers
3) - Creditors
4) - Suppliers
5) - The government
6) the local community
How are shareholders external stakeholders
- They are investors + have purely financial interest.They invest their money in hopes to get a financial return.
- They can sell their shares of a business
-They are entitled to vote at the AGM of Plc (meaning they vote to re-elect / dismiss current board of directors)
How are customers external stakeholders
They buy the goods + services a business sells which provides the revenue + profits for a business that it needs to survive.
Customers need businesses because they supply the goods + services that they may want (‘consumers’)
How are creditors external stakeholders?
Creditors may be banks, individuals + private investors.
- They lend money to a business and have an interest in the business as they hopes for it to succeed.They expect their interest payments to be met and their money returned at the end of the loan period.
- They also want clear communication with the business
How are suppliers external stakeholders?
They provide raw materials, components, commercial services + utilities to businesses.
- Relationships between the 2 need to be good as they rely on each other.
- Businesses want good quality resources at reasonable prices and prompt delivery and trade credits.
- Suppliers want prompt payment + regular orders in return
