Business 1.4 Flashcards
Stakeholders
People who can be affected by and therefore have interest or stake in actions of the business
e.g. shareholder, employees, suppliers, customers, competition, government/state, pressure groups, etc.
Stakeholder Concept – priority to stakeholders rather than shareholders
Interests of internal stakeholders vs. interests of external stakeholders
Internal
Employees
Employment security, wage levels, conditions of employment, participation in the business
Managers
Employment security, salary and benefits offered, responsibilities given
Shareholders
Owners of shares in the company, have decision-making power, receive dividends (share of profit)
Annual dividends, share price, security of investment
External
Suppliers
Speed of payment, level and regularity of orders, fairness of treatment
Customers
Value for money, product quality, quality of service
Government
Job creation, tax payments, value for output produced, impact on wider society/economy
Special Interest groups (SIGs)
Banks, creditors, pressure groups, local community, trade/labor union
Care about individual interests: payment of debts, environment, etc.
Competitors
Fairness of competitive prices, strategic plans of the business
Stakeholder conflict
Not possible to satisfy all stakeholders all the time
Conflict will always arise from new developments, business activities, etc.
Stakeholder conflict resolution
Arbitration
workforce participation
profit-sharing scheme
share ownership scheme
Stakeholder map
A tool to analyze which stakeholders to prioritize for a given issue, mapped in a grid classifying stakeholders in terms of interest and power
A. Low interest, low power. This group requires minimum effort. Usually local community is in this group. They don’t really care about businesses as long as there are employment opportunitiesand the environment is safe.
B. High interest, low power. This group should be keep informed. Usually customers are in this group. They do care a lot about the products but they don’t have much direct influence on business decision-making. Keeping them informed of the business practices and decisions usually prevents stakeholder conflicts.
C. Low interest, high power. This group should be kept satisfied. Usually government is in this group. Individual businesses are not really in their sphere of interest but they do have a lot of power that impacts business decision-making.
D. High interest, high power. This group requires maximum effort. Usually shareholders are in this group. They have direct interest in business and they are the key decision-makers on strategic level.
