Stakeholders

Question 1

What is a stakeholder?

Answer 1

A stakeholder is an individual or group of people who have an interest in the success of an organisation

Question 2

What are the two types of stakeholders?

Answer 2

• internal stakeholders

- external stakeholders

Question 3

What are internal stakeholders and examples of them?

Answer 3

-internal stakeholders are from within the organisation such as owners (or shareholders) managers and employees

Question 4

What are external stakeholders and examples?

Answer 4

-external stakeholders in from outside organisations such as government, banks, customers, suppliers and local community

Question 5

Owner (shareholder)
Internet,
And influence?

Answer 5

• Owners and shareholders are the same. Shareholders are part-owners in the business.
• Some owners appoint managers to run their businesses and to make profits for them. Other owners like to get involved in the day-to-day running of the firm. This can sometimes lead to disagreements between owners and managers.

Internet

• profits in order to see a return on their investment
• receive high dividends

Influence

• can invest more money
• can make important decisions

Question 6

Manager,
Interest,
Influence?

Answer 6

• Managers are entrusted by owners with the day-to-day running of their businesses. Managers have to motivate employees to be productive and to offer excellent customer service. Managers also have to report to the owners.
• Managers live by their results. Poorly performing managers do not last long in post.

Interest

• get promoted
• win bonuses
• have job security

Influence

• hiring and firing
• creating company policies
• making day-to-day decisions and long term decisions

Question 7

Employees,
Interest,
Influence?

Answer 7

• Employees are often the front line of the business. They are the people who make the product or provide the service to the customers.
• Employees have a massive effect on the outcome of the business.

Interest

• job security
• higher pay
• improved working condition

Influence

• increasing or decreasing productivity
• providing good or bad customer service
• in extreme cases, withdrawing their labour and going on strike

Question 8

Customers,
Interest,
Influence?

Answer 8

• Customers are the people who purchase the product or use the service. They are the stakeholders who decide whether the business will be a success or not.
• Customers will show loyalty to a business they like. However if a firm does not satisfy customers’ needs continuously, the customers will simply take their business elsewhere. This will have disastrous results for the business.

Interest

• quality products and services
• low prices
• value for money

Influence

• deciding whether or not to purchase the product or use the service
• affecting an organisation’s reputation by word of mouth

Question 9

Suppliers,
Interest,
Conflict?

Answer 9

-Suppliers build their reputation on the quality of the goods or materials they provide. If the quality is good, delivered on time and in the quantity required suppliers will win repeat orders and secure future business.

Interest

• regular orders from their customers (the other businesses)
• prompt payment

Influence

• raising or lowering prices of goods
• changing credit terms
• changing delivery times
• increasing or decreasing the quality of their goods/materials

Question 10

Banks,
Interest,
Conflict?

Answer 10

-Banks are organisations that lend finance to other organisations. They offer loans and mortgages, which are paid back in full, and with interest.

Interest
-the organisation can pay their loans in full and on time

Influence

• permitting or denying loan requests
• changing interest rates on loans offered
• changing repayment lengths

Question 11

Government,
Interest,
Influence?

Answer 11

-Government is formed by politicians who run the country for the benefit of the population.

Governments try to encourage firms to invest and create jobs. The laws they introduce can sometimes help and sometimes hinder firms from doing this. This is because governments need to take into account the employment rights of employees as well as the development opportunities of business.

Interest

• pay corporation tax
• create jobs and wealth for the population
• provide goods and services for the population

Influence

• raising or lowering corporation tax
• introducing or repealing laws that affect businesses
• offering grants to incentivise firms to locate to depressed areas

Question 12

Local community,
Interest,
Influence?

Answer 12

-The local community is made up of the people who live in the area where the business is located. Though not necessarily customers of the business they are all neighbours to the business.

They are concerned with the local environment,infrastructure and the impact the business has on jobs and prosperity on the local area.

Interest

• firms to bring jobs to the area
• good, safe environment to live in
• good transport and communication links

Influence
-protesting and petitioning if unhappy at an organisation’s conduct

Question 13

What does it mean by conflict of interest?

Answer 13

Although all stakeholders want a business to succeed, they can often conflict in their individual aims. In other words, two stakeholders both cannot get what they want at the same time.

Question 14

Examples of conflict of interest?

Answer 14

• employees vs owners/managers= employees want a pay rise, whereas owners want to maximise profit. If employees get a pay rise it will lower the amount of profit the owner will receive.
• customers vs owners/managers= customers want low prices and value for money, whereas owners want to raise prices to maximise profits and meet their own objectives. Low prices and high prices can’t both happen! so businesses and customers ‘meet in the middle’ known as equilibrium price.
• suppliers vs owners/managers= suppliers want to be paid as soon as possible ideally in cash, whereas the owner wants trade credit to keep good cash flow in the business. Suppliers and owners can also disagree on the prices of products, discounts, quality of supplies, delivery time and so on.
• government vs owners/suppliers= governments may want to introduce legalisation to improve society; however, owners may disagree with legalisation as it will impact negatively on their business. For example, the government raising the minimum wage will lower the profits of the business as a wage costs will increase.

Question 15

What does it mean by interdependence of stakeholders?

Answer 15

-stakeholders need to work together if the business is to succeed. Some stakeholder groups rely on others to help them achieve their interests.

Question 16

Examples of interdependence of stakeholders

Answer 16

Owners/managers and governments= owners/managers need governments to make good decisions, such as lowering taxes to improve the spending power of customers and therefore sales, while governments need owners to create jobs.

• owners/managers and suppliers= managers need suppliers to provide quality raw materials to improve the quality of the finished product, while suppliers need managers to keep buying from them and keep them in business.
• owners/managers and customers= owners need customers to buy their products and customers need a good quality of product and customer service from the owners of the business
• owners and employees= owners need employees to perform their best to increase sales and profits through work rate or customer service, while employees need owners to make good decisions to keep the business profitable and their jobs safe.
• managers and employees= employees and managers need to work together to help the business to succeed in order to keep their jobs secure.