Chapter 5 - Stakeholders in a Business Flashcards
State the main stakeholders in a business (8)
- Owners/ shareholders
- Customers
- Suppliers
- Employees
- Local communities
- Government and government agencies
- Special interest groups such as pressure groups
- Lenders
Explain the roles, rights and responsibilities of customers to a business (2) (2) (3)
Roles:
1. Purchase goods
2. Provide revenue from sales which allow function and expand
Rights:
1. To receive goods and services that meet local laws regarding health and safety, design and performance.
2. To be offered replacements, repairs or compensation in event of failure of product or service to at least minimum levels laid down by law.
Responsibility:
1. To be honest. To pay for goods/services
2. Not to steal
3. Not to make false claims about poor service, underperforming goods, or failed items.
Explain the roles, rights and responsibilities of suppliers to a business (1) (2) (1)
Role:
1. to supply goods and services that will allow business to offer its products to its own customers
Right:
1. To be paid on time as stated in service agreement
2. To be treated fairly, not exploited by customer business
Responsibility:
1. To supply goods and services ordered by the business in the time and condition laid down by purchase contract / service agreement
Explain the roles, rights and responsibilities of employees to a business (1) (3) (4)
Roles:
1. to provide manual or other labour service to a business in accordance with employment contract, to allow g/s to be provided to customers.
Rights:
1. To be offered an employment contract that meets legal standards
2. To be treated and paid in ways descried in the employment contract.
3. to be allowed to join a trade union if desired
Responsibilities:
1. To be honest
2. To meet conditions and requirements of employment contract
3. To cooperate with management in all reasonable requests
4. To observe the ethical code of conduct
Explain the roles, rights and responsibilities of the local community to a business (1) (1) (1)
Role:
1. to provide labour services required by business
Right:
1. to be consulted about major changes that affect it
Responsibility:
1. To cooperate with business where reasonable to do so, on expansion and other plans.
Explain the roles, rights and responsibilities of the local government to a business. (1) (1) (1)
Role:
1. To provide local services and infrastructure to allow business to operate, produce and sell within legal limits.
Right:
1. Not to have communities lives badly affected by business activity
Responsibility:
1. To meet reasonable requests from the business for local services such as public transport for employees and waste disposal.
Explain the roles, rights and responsibilities of the government to a business. (1) (1) (3)
Roles:
1. To pass laws that restrain many aspects of business activity taking place
Rights:
1. To expect the business to meet all legal constraints such as producing only legal goods / paying tax on time.
Responsibilities:
1. to treat businesses equally under law
2. to prevent unfair competition that could damage chances of business survival
3. to establish good trading links with other countries to allow international trade.
Explain the roles, rights and responsibilities of lenders to a business. (1) (2) (1)
Roles:
1. To provide finance to business in different forms
Rights:
1. To be repaid on agreed date
2. To be paid finance charges e.g. interest
Responsibility:
1. To provide agreed amount of finance, on agreed date for an agreed time.
Explain the roles, rights and responsibilities of managers to a business. (1) (1) (1)
Role:
1. To control, command and direct resources
Rights:
1. To have a contract of employment and sufficient authority to fulfil roles
Responsibilities:
1. To report to stakeholders, to act legally and ethically.
Explain the roles, rights and responsibilities owners/shareholders to a business. (1) (1) (1)
Roles:
1. To provide finance
Rights:
1. To receive a share of profits; to receive accurate reports on business performance
Responsibilities:
1. To set targets for managers and give managers adequate time and resources to meet targets.
Explain the “stakeholder concept”
The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders.
Explain a business’s responsibility to customers and benefits (4) of accepting responsibilities.
Essential to satisfy customers need.
Decisions about quality, design, durability and customer service should consider customers aims for well-made attractive goods that perform as intended, at reasonable prices.
Not to break law concerning consumer protection and accurate advertising.
Avoiding taking advantage of vulnerable customers and not using high pressure selling tactics.
Benefits:
1. Customer loyalty
2. Repeat purchases
3. Good publicity, word of mouth
4. Good customer feedback, help improve g/s
Explain a business’s responsibility to suppliers and benefits (3) of accepting responsibilities.
Good reliable suppliers must be found and given guidance on what is required. In return, purchasing department takes decisions that satisfy supplier’s aims and requirements such as prompt payment, the placing of regular orders and offer of long-term contracts.
Benefits:
1. Supplier loyalty
2. Likelihood of securing reasonable credit terms
3. Suppliers preparedness to meet deadlines and special-order request.
Explain a business’s responsibility to employees and benefits (5) of accepting responsibilities.
Business decisions that reflect aims of employees include providing training opportunities and job security, paying rates above minimum age, offering good working conditions and involving employees in some decision making.
Benefits:
1. employee loyalty and low labour turnover
2. ease of recruiting good workers
3. employee suggestions for improving efficiency and customer service
4. Improved motivation
5. Effective communication
Explain a business’s responsibility to the local community and benefits (3) of accepting responsibilities.
Failing to meet responsibilities, business may experience opposition to plans or changes to use of premises. Offering secure employment so less local fear of job losses, using local suppliers where possible to generate more income, reducing transport impact of a business and keeping other adverse environmental effects to a minimum.
Benefits:
1. local councils more likely to give planning permission to expand the business.
2. Giving contracts to businesses with record of community involvement
3. More likely to accept some negative effects caused by operations if business providing financial support for community groups and projects.
Explain a business’s responsibility to the government and benefits (4) of accepting responsibilities.
All businesses should meet legal responsibilities as defined by government legislation. Business should pay taxes on time, complete government statistical and other forms accurately and where possible seek export markets as foreign currency helps pay for imports.
Benefits:
1. developing good relations, planning permission for future projects more likely granted
2. more likely to receive valuable government contracts
3. Requests for subsidies to expand more likely to win gov. approval.
4. Licences to set up new operations more likely awarded to businesses who meet responsibilities to gov. and wider society.
Explain an example of a conflict between stakeholder objectives
A conflict can arise when a company plans to build a new chemical plant near a housing estate to save on land costs. However, local residents are concerned about safety and environmental risks and want the plant moved to a more industrial area. While the company wants to keep costs low, relocating the plant would be more expensive. This creates a conflict between the company’s goal of minimizing costs and the residents’ priority of protecting their community.
