3.4.3 - Stakeholder Vs Shareholder

Question 1

Define Stakeholder and Shareholder

Answer 1

Stakeholder - anyone who Has an Interest in the Business, or May be Affected By the Activities of the Business

Shareholder - person, business or organisation that Owns at Least One Share of a Company

Question 2

State the 3 Internal Stakeholders who May be Affected by Corporate Decision Making

Answer 2

• Employees
• Managers
• Owners

Question 3

State the 5 External Stakeholders who May be Affected by Corporate Decision Making

Answer 3

• Customers
• Competitors
• Suppliers
• Community
• Union

Question 4

Explain the Stakeholder Objective - Shareholders

Answer 4

• want Business to Maximise SHareholder Value - measure that Takes into Account the Size of Dividends and Share Price - Overtime Shareholders Want This to Grow
• may Sell Shares if Unsatisfied

Question 5

Explain the Stakeholder Objective - Employee

Answer 5

• want Business To Prosper.
• If Growing and Profitable, Employees are Likely to Get Higher Wages, more Perks and Binus
• Feel More Job Secre
• Herzberg Theory - expect Good Pay and Comfortable Working Conditions

Question 6

Explain the Stakeholder Objective - Customers

Answer 6

• Want Good-Quality Products at Fair Price
• also want Clear and Accurate Info about Products and High-Quality Customer Service
• may want Choice, Innovative Products and Flexibility
• Safety in Products

Question 7

Explain the Stakeholder Approach

Answer 7

Corporations should :
- Recognise Interests of Other Stakeholders and Take their Views into Account when Running the Business and Making Decisions
- Maintain Open Communication Channels with Other Stakeholders and Consult Before Making Radical Decisions
Approach is Taken due to Increasing Pressure From Stakeholders , Media

Question 8

Explain the Shareholder Approach

Answer 8

• Focus on Growth and Profit
• Directors and Mangers are Employed By Shareholders and should Therefore Serve Their Interests -> they should Make as Much Money Possible For Owners
• Maximise Shareholder Returns -> Dividends

Question 9

Explain Stakeholder Conflict between - Shareholders and Customers

Answer 9

• If Prices are Too High
• Higher Prices will help Boost Shareholder Returns and Profits but Reduce Purchasing Power of Customers

Question 10

Explain Stakeholder Conflict between - Shareholders and Employees

Answer 10

• Meeting Objectives of Employees : Higher Wages, Better Conditions, More Bonuses -> is Costly
• If Employee Needs are Met , it can Negatively Impact Profits and Dividends
• Conflict Arises if Shareholders Prioritse Profits
• Employees may Put Pressure -> Strikes