Chapter 4 Flashcards
What is a Stakeholder?
An individual or group which has an interest in and is affected by the activities of a business.
What are the two main groups of Stakeholders?
Internal stakeholders and External stakeholders.
Who are Internal Stakeholders?
Stakeholders who have a direct interest in the business. These are the people who are employed in the business or who own it. They rely on the business for their income.
Who are External Stakeholders?
People or other businesses that have a less direct stake in a business than internal stakeholders but still have an interest in how it is doing.
Classify Employees as Internal or External and explain their interest.
Internal stakeholders: Their income will be affected by the performance of the business.
Classify Suppliers as Internal or External and explain their interest.
External stakeholders: They do not have internal interest, but they supply goods/services and rely on the business for payment.
Classify Owners as Internal or External and explain their interest.
Internal stakeholders: They earn profits and want the business to perform well.
Classify Customers as Internal or External and explain their interest.
External stakeholders: They have an interest in the quality of services/products provided by the business.
Classify Managers as Internal or External and explain their interest.
Internal stakeholders: They ensure the business performs well and may receive bonuses.
Classify Unions as Internal or External and explain their interest.
External stakeholders: They represent the interests of employees in negotiations with the business.
Classify Banks/Lenders as Internal or External and explain their interest.
External stakeholders: They provide finance to the business and expect timely repayment.
Classify The Local Community as Internal or External and explain their interest.
External stakeholders: They may rely on the business for job opportunities and access to products/services.
Classify Shareholders as Internal or External and explain their interest.
External stakeholders: Some shareholders work within the company while others invest externally; they are interested in returns on their investment.
Classify The Media as Internal or External and explain their interest.
External stakeholders: They monitor and report on the business’s activities, affecting public perception.
Classify Pressure Groups as Internal or External and explain their interest.
External stakeholders: These are special interest groups advocating for specific objectives or causes related to the business.
What is the difference between Shareholders and Stakeholders?
All shareholders are stakeholders, but not all stakeholders are shareholders. Shareholders invest in the company and own shares, while stakeholders have an interest in the company but do not necessarily own shares.
What are the interests of Shareholders?
They have a stake in the company, having invested in it, and are interested in its profitability.
What are the interests of Employees?
They rely on the business as their income source.
What are the interests of Lenders?
They provide the business with finance and require payback with interest.
What are the interests of the Local Community?
They benefit from job offers, products, and services provided by the business.
What are the interests of Suppliers?
They supply the business with raw materials in exchange for payment.
What are the interests of the Government?
They rely on businesses for tax revenue, tourism, and the business’s impact on the external environment.
Why do conflicts arise among stakeholders?
Conflicts arise because a business cannot simultaneously meet the needs of all stakeholders.
What are some examples of stakeholder conflicts?
Shareholders may be unhappy with business performance, employees may disagree with management, suppliers may fail to deliver goods on time, customers may be dissatisfied, or the local community may object to noise pollution.
