5. Stakeholders Flashcards
What are stakeholders?
People or groups of people that are affected by and therefore have an interest in any action by an organisation
Who are the stakeholders?
- Customers
- Suppliers
- Employees
- Local community
- Government
- Managers/Owners
What is the role of customers?
Purchase goods and services => provide revenues for the business
What are the rights of customers?
- To receive goods and services that meet laws regarding health and safety, design and performance
- To be offered replacements, repairs and compensation in the event of failure of the product or service
What are the responsibilities of customers?
- To be honest and pay for goods bought or services received
- Not to steal
- Not to make false claims about poor service or product
What is the role of the supplier?
Supply goods and services to allow the business to offer its products to its own customers
What are the rights of the supplier?
- To be paid on time (either laid down by law or service agreement)
- To be treated fairly (not to have lower prices forced on it)
What are the responsibilities of the supplier?
To supply goods and services in the time and condition as laid down by the purchase contract
What is the role of employees?
Provide manual and other labour services to the business to allow goods and services to be provided to customers
What are the rights of the employees?
- To be treated within the minimum limits as established by the national law
- To be treated and paid in the ways described in the employment contract
- To be allowed to join the trade union
What are the responsibilities of employees?
- To be honest
- To meet the conditions and requirements of the employment contract
- To cooperate with managers
- To observe ethical code of conduct
What is the role of the local community?
Provides local services and infrastructure to the business to allow it to operate, produce, sell within legal limits
What are the rights of the local community?
- To be consulted about major changes that affect it
- Not to have the community badly affected by the business’ activities
What are the responsibilities of the local community?
- To cooperate with the business, on where to built on, expansions and other plans
- To meet reasonable requests from business for local services. e.g. public transport
What is the role of the government?
- Passes laws that restrain aspects of business activity
- Provides law and order to allow legal business activity to take place
What are the rights of the government?
Businesses have the duty to meet all legal constraints such as producing legal goods and pay taxes on time
What are the responsibilities of the government?
- To treat businesses equally under the law
- To prevent unfair competition that could damage business survival chances
- To establish good trading links with other countries to allow international trade
What are the possible business decision that might affect the stakeholders?
- Large expansion of the business. e.g. building new office or factory
- Take over of a competing firm
- Significant application of IT into production methods
What are the possible impacts on employees of large expansion of business?
- More jobs and career opportunities
- Disruption during building and more complex lines of communication after expansion
What are the possible impacts on the local community of large expansion of business?
- More jobs for locals
- Wipe out local businesses
- Disruption caused by increased traffic and loss of greenfield sites, pollution
What are the possible impacts on the customers of large expansion of business?
- Better service might be provided due to an increase in size and staff
- Larger business could be less personal and therefore offer inferior customer service
What are the possible impacts on the employees of horizontal integration (take over a competing firm)?
- Larger business may be more secure and offer career promotion and opportunities
- Rationalisation may occur to avoid waste and cut costs => jobs might be lost
What are the possible impacts on the local community of horizontal integration (take over a competing firm)?
- Expansion leads to increase in employment
- Rationalisation of duplicated offices or factories might lead to some closures of job losses
- Wipe out local businesses
What are the possible impacts on the customers of horizontal integration (take over a competing firm)?
- Larger business mean that they might benefit from economies of scale => costs of products are cheaper
- Reduced competition => less customer choice => higher prices
What are the possible impacts on the employees of changing the production methods using technology?
- Training and promotion opportunities might be offered
- Automation => redundancy
What are the possible impacts on the customers of changing the production methods using technology?
- Standardisation of products, no human errors => improve quality and may offer more product variety
Benefits of accepting responsibilities to customers
- Customer loyalty
- Repeated purchases
- Word of mouth
Benefits of accepting responsibilities to suppliers
- Supplier loyalty
- Requests for special orders
- Reasonable credit terms more likely to be offered
Benefits of accepting responsibilities to local community
- More likely to give planning permission
- More likely to accept negative effects
Benefits of accepting responsibilities to government
- Receiving planning permission
- Receive valuable government contracts
- Requests for subsidies
