Chapter 5 - Stakeholders in a business Flashcards
What are the main stakeholders of a business?
- Owners (shareholders in a limited company)
- Customers
- Suppliers
- Employees, including managers and their families
- Local communities
- Government and government agencies
- Special interest groups, such as pressure groups
- Lenders
What is the definition of a stakeholder?
Stakeholders are individuals or groups who can be affected by, and have interest in, any action taken by an organisation
What is the definition of an external stakeholder?
External stakeholders are individuals or groups of individuals who are separate from the business but are affected by or interested in its operations
What is the definition of an internal stakeholder?
Internal stakeholders are individuals or groups who work within the business, or own it, and are affected by the operations of the business
What are the roles of customers?
- To purchase goods and services
- To provide revenue from sales which allows the business to function and expand
What are the roles of suppliers?
- To supply goods and services to allow the business to offer its products to its own customers
What are the roles of employees?
- To provide manual and other labour services to the business, in accordance with the employment contract, to allow goods and services to be provided to customers
What are the roles of the local community?
- To provide the labour services required by a business
What are the roles of the local government?
- To provide local services and infrastructure to the business to allow it to operate, produce and sell within legal limits
What are the roles of the government?
- To pass laws that restrain many aspects of business activity
- To provide law and order and economic stability to allow business activity to take place
What are the roles of lenders?
- To provide finance to the business in different forms
What are the roles of managers?
- To control, command and direct resources
What are the roles of owners and shareholders?
- To provide finance
What are the rights of customers?
- To receive goods and services that meet local laws regarding health and safety, design and performance
- To be offered replacements, repairs or compensation in the event of failure of the product or service to at least the minimum levels laid down by the law
What are the rights of suppliers?
- To be paid on time as stated in the service agreement between the business and suppliers
- To be treated fairly and not to be exploited by the customer business
What are the rights of employees?
- To be offered employment contracts that meet legal standards, e.g. minimum wage rate
- To be treated and paid in the ways described in the contract
- To be allowed to join a trade union if desired
What are the rights of the local community?
- To be consulted about major changes that affect it, e.g. expansion plans or changing methods of production
What are the rights of the local government?
- Not to have the community’s lives badly affected by the business’s activities
What are the rights of the government?
- To expect the business to meet all legal constraints, such as producing only legal goods and to pay taxes on time
What are the rights of lenders?
- To be repaid on the agreed date
- To be paid finance charged, e.g. interest on loans
What are the rights of managers?
- To have a contract of employment
- To have sufficient authority to fulfil roles
What are the rights of owners and shareholders?
- To receive a share of the profits
- To receive accurate reports on business performance
What are the responsibilities of customers?
- To be honest; to pay for goods bought or services received when requested
- Not to steal
- Not to make claims about poor services, underperforming goods or failed items
What are the responsibilities of suppliers?
- To supply goods and services ordered by the business in the time and condition laid down by the purchase contract or the supplier’s service agreements
What are the responsibilities of employees?
- To be honest
- To meet the conditions and requirements of the employment contract
- To cooperate with management in all reasonable requests
- To observe the ethical code of conduct
What are the responsibilities of the local community?
- To cooperate with the business, where reasonable to do so, on expansion and other plans
What are the responsibilities of the local government?
- To meet reasonable requests from the business for local services such as public transport for employees and waste disposal
What are the responsibilities of the government?
- To treat businesses equally under the law
- To prevent unfair competition that could damage changes of business survival
- To establish good trading links with other counties to allow international trade
What are the responsibilities of lenders?
- To provide the agreed amount of finance on the agreed date and for the agreed time period
What are the responsibilities of managers?
- To report to stakeholders
- To act legally and ethically
What are the responsibilities of owners and shareholders?
- To set targes for managers
- Give manager adequate time and resources to meet targets
What is the definition of a trade union?
A trade union is an organisation of working people with the objective of improving the pay and working conditions of its members and proving them with support and legal services
What is the definition of the stakeholder concept?
The stakeholder concept is the view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders. This is also known as the stakeholder theory
What are some of a businesses responsibilities to customers?
- Satisfy customers demand in order to stay in business in the long term
- Quality, design, durable products that perform as intended at a reasonable price
- Consumer protection and accurate advertising
- Avoid taking advantage of vulnerable customers
- Avoid using high-pressure selling tactics
What are some of a businesses responsibilities to suppliers?
- Prompt payment
- Regular orders
- Long-term contracts
What are some of a businesses responsibilities to employees?
- Providing training opportunities and job security
- Paying rates above minimum wage
- Offering good working conditions
- Involving employees in some decision-making
What are some of a businesses responsibilities to the local community?
- Offering secure employment
- Using local suppliers
- Reducing the transport impact of the business
- Keeping adverse environmental effects to a minimum
What are some of a businesses responsibilities to the government?
- Follow all legal responsibilities
- Pay taxes on time
- Complete government statistical forms
- Seek export markets
