3.4.3. Shareholders Vs Stakeholders

Question 1

Stakeholders

Answer 1

Groups that are influenced by and influence the operations of a business. Dealt with by businesses on a daily:
-Customers, suppliers, staff (affected by and have an effect on business)
-Meet needs of stakeholders to achieve +ve relationship with business

Question 2

Shareholders

Answer 2

Owners of limited company.Sole responsibility business has is to its shareholders

Question 3

Shareholder approach

Answer 3

Places increasing shareholder value above all other responsibilities through increased profit and share price.
Meeting short term maximisation needs if shareholders to provide healthy dividends.
Primary aim is to maximise returns on their investments

Question 4

Internal stakeholders

Answer 4

Emoloyees
Managers
Owners

Question 5

External stakeholders

Answer 5

Suppliers
Society
Government
Customers
Creditors
Shareholders

Question 6

Stakeholder objectives

Answer 6

-Staff:Growth(organic), new tech, new products, rise profits
-Managers: Growth(organic or inorganic), new products and processes, rise profits
-Shareholders: Rise profits in short and long term
-Suppliers:Growth
-Customers:Quality of products/services, innovative new products
-Bankers: stable profits
-Local residents:Clean, green production with few deliveries or dispatches

Question 7

Stakeholder and shareholder influence

Answer 7

-Treating all stakeholders well benefits entire business and its owners with committed suppliers, loyal customers, motivated staff and positive local residents= long term sustained profitability.

-However, where shareholder influence dominates, businesses may be forced into actions that prioritise short term needs of shareholders for businesses long term success. May be by treating suppliers poorly to boost cash flow or profitability.

Question 8

Conflict between shareholders and stakeholder objectives

Answer 8

Different priorities with what they want from the business.
1.Shareholders- profits, shareholder returns, increasing share price and dividends
2. Stakeholders- considers everyone in its business decisions and objectives.