Stakeholders

Question 1

What are stakeholders

Answer 1

Stakeholders are individuals, groups or organisations that may be affected by and can have an effect on the activities and decision-making of a business

Question 2

What are key stakeholder groups

Answer 2

• owners
  -staff
• suppliers
• customers
• creditors
• lenders
• pressure groups
• local communities
• government

Question 3

What are internal stakeholders

Answer 3

These are groups that are closely connected to the business and their needs are likely to have a strong influence on how the business is run (owners, staff)

Question 4

What are external stakeholders

Answer 4

These are groups that have contractual relationships with a business that can be known as contractual stakeholders

Question 5

What are pressure groups

Answer 5

A pressure group is an organisation that tries to influence government policy or business activity in the interest of a particular cause.

Question 6

What common needs do stakeholder groups have

Answer 6

All stakeholders except its direct competitors have to gain from it being successful for example, if a car manufacturer closes it affects the employees who rely on the security of the business for livelihood but also suppliers relying on providing for a business

Question 7

How do businesses and stakeholders groups make effective use of social media (1)

Answer 7

Social media in business refers to the use of websites and applications that enable communication between stakeholder groups and a business organisation.
Businesses may use podcasts or media campaigns to release information about product innovations potentially increasing consumer awareness of the product and increasing sales revenues .

Owners are interested primarily in the use of social media in order to maintain the positive profile of the business by reviews/ratings while also being able to promote deals or achievements within the business.

Staff can have expertise in social media tools to obtain referrals and build customer networks as well as monitoring brand performance by the amount of engagement within social media and maximise website visits. They also can give feedback to reviews and attempt to allow the business to seem to have expertise in their business by developing a good reputation.

Suppliers can use social media to promote their relationships with key customers through blogs (public testimonials) which can attract additional customers to their product rage and increase market share

Question 8

How do businesses and stakeholders groups make effective use of social media (2)

Answer 8

Customers can use social media to provide the business with positive or negative feedback on products which can be responded to by the business to build a good brand reputation,

Creditors and lenders use social media to communicate with businesses regarding price changes, discounts and special offers. Therefore, allows entrepreneurs to be influenced by the use of social media in making a business decisions. However, they arent permitted to request money or send business payment reminders.

Pressure groups can use social media to publish business activity that lead to high levels of pollution eg not able to dispose of waste correctly. Businesses can respond with press releases through social media to assure stakeholders that they are looking after their carbon footprint therefore, benefitting the environment and creating a favourable business reputation

Local communities can use social media to see that businesses have sponsored or donated to the community for example, Lidl community works donated £228000 to 115 local NI groups in 2017. This allows free publicity as well as benefitting a businesses image.

The government agencies such as HMRC uses websites to contact businesses and collect tax payments. This allows both parties to electronically transfer funds quickly and efficiently as well as allowing the government to receive tax payments eg VAT and a business to pay its liabilities and manage cash flow

Question 9

What are owners interests or needs

Answer 9

• high profit
• dividends from shareholders
• positive image and long term growth in order to encourage share prices to rise

They have an interest primarily in the amount of profit earned from trading operations and the actual return on the funds invested in the business. Sole traders and partners are interested in the profits earned while shareholders are interested in the amount of dividends received for example, the shareholders of sky LTD received an interim dividend of 13.06p in 2018

Question 10

What are employees interests or needs

Answer 10

• job security
• high wages/salaries
• safe working conditions
• promotion opportunities
• flexible working
• to be consulted about changes that might affect them.

They are interested primarily in the financial stability of a business as this provides a degree of confidence in respect of wages and security. The more profitable a business is the greater the degree of confidence. For example a local credit union may agree to pay a 2% pay rise for its staff in July 2018 for a period of 1 year

Question 11

What are suppliers interests or needs

Answer 11

• fair prices
• regular orders
• larger orders
• prompt payment
• sole-supplier agreement

They’re interested in the financial stability as this provides a degree of confidence in respect of supply chain management and the ability to secure future orders. The greater the financial stability of a business the greater degree of confidence. For example, Tesco PLC are reliant on suppliers such as Mash Direct LTD to provide them with foods to give their customers more choice.

Question 12

What are customers interests or needs

Answer 12

• low prices
• high quality
• safe products
• wide choice of products
• choice of how to buy (online, delivery)
• after sales service and technical support

They’re interested in the product rage a business provides as this generates a degree of confidence in respect of supply chain management and the ability of the business to meet their needs. For example, the introduction of new products from a reputable brand allow them to have a a larger range of choice

Question 13

What are the governments interests or needs

Answer 13

• provide employment And training
• comply with legislation

They’re interested in the prosperity of a business as this provides a degree of confidence in respect of their long-term prospects and ability to secure jobs and generate funds to pay taxes. The government is also responsible in ensuring that businesses uphold their corporate social responsibilities by adhering to various laws eg payment of minimum wage, no discrimination, employment act 2002 resulting in maternity pay and leave, employment tribunal reform

Question 14

What are local communities interests or needs

Answer 14

• local employment opportunities
• socially responsible activities that benefit the local community
• no pollution

They are interested in the prosperity as this provides a degree of confidence in the respect of the long-term prospects of the business and its ability to secure jobs and contribute to the local community. For example, Wrightbus LTD of Ballymena announced during 2019 that they were facing financial difficulties and may close. Local people lobbied politicians and MPs to ensure that financial and non-financial assistance was provided to the new owner. This helped secure employment for local staff

Question 15

What are pressure groups interests or needs

Answer 15

These are usually environmental groups
- business activity to have a neutral or beneficial impact on the environment

They are interested in key aspects of business activities as this provides a degree of confidence that managers can address the needs of specific stakeholder groups. For example, the trade unions representing staff in bombardier INC in Belfast will have ensured that staff had input into the decision-making process during the recent takeover by spirit aero systems INC in order to limit redundancies among the workforce and maintain staff morale

Question 16

What are lenders interests or needs

Answer 16

• full and prompt repayment of loans plus interest

They interested in the financial stability of a business as this allows them to have confidence in their long-term financial positions so they are able to re-pay long-term debts. They’re interested in making sure the business has a sufficient valuable assets base that can be used as financial security and a good credit rating which will ensure that future payments can be made. For example, House of Fraser was almost declared financially insolvent in 2018 and was therefore, unable to repay long term debts. A takeover by sports direct international PLC enabled lenders to be paid at a later date

Question 17

What does social responsibility relate to

Answer 17

This is interrelated with stakeholders and is a philosophy proposing that firms should behave as good citizens and should not only just work within the law but also should avoid pollution, limiting the use of limited resourced and limit the mistreatment of employees or consumers.

Most stakeholders want to achieve social responsibility as it’ll give their business a positive image to help fulfil their overlapping needs of profit, safety and security.

Question 18

How does expanding production effect each stakeholder.

Answer 18

Employees- there are more jobs available with the possibility of promotion and higher pay.

Customers- new products availed, increased production may lead to reduce prices

Shareholders- Investment is needed and may cut short term profits. Share price and long-term profits could increase

Suppliers- possibility of larger or more regular orders. There’s an Expectation of reduced prices

Creditors- Borrowing can increase making repayment more difficult due to interest. But there can be increased profitability.

Question 19

How does cut costs affect each stakeholder

Answer 19

Employees- There is pressure to reduce wages while having longer working hours in less favourable conditions. Jobs may become less secure. More jobs may result if successful

Customers- lower prices can be lower however, the quality of products may be reduced

Shareholders- This may increase profits, dividends and share price. Customers may dislike job loses and reduced quality that can result in less sales, revenue and profit

Suppliers- expectation of reduced prices and they may see a cheaper supplier

Creditors- there’s a reduced need for borrowing from creditors however, they need to borrow short term to finance cost-cutting programme.

Question 20

How do raised prices affect stakeholders

Answer 20

Employees- There’s a possibility of increased wages or improved working conditions however, there could be a sales decline resulting in job losses.

Customers- Less value received and may not find product affordable as well as competitors rising prices.

Shareholders- Profits, dividends and share prices may increase however, sales may decline with adverse publicity if this is an essential product reducing share price.

Suppliers- Possibility of receiving higher prices or orders may fail if price rises reduce demand significantly.

Creditors- increased profit may support prompt repayment of debts. Failing sales may threaten repayments.

Question 21

How does the launch of new products effect stakeholders

Answer 21

Employees- more jobs may occur resulting in higher pay and better working conditions of launch is successful

Customers- Greater choice of products, improved products bringing greater benefits. Prices may increase to cover development costs

Shareholders- Initial costs of launch may reduce profits. Risk of unsuccessful product and damage profits and price share. Increased sales, prices and profits could boost medium term profits and dividends.

Suppliers- increased orders if products successful. New product may require different suppliers resulting in a loss of contract.

Creditors- increased need to borrow funds to finance launch. Rising long-term profits enhances ability to repay loans. May lead to further product launches creating further need for borrowing.

Question 22

How does the use of technology in production effect stakeholders

Answer 22

Employees- job loss as technology plays a larger role. New higher-paid jobs created to manage technology.

Customers- lower prices as technology is more efficient. Service available for longer house. Standardised products or less likely to meet individual needs.

Shareholders- initial investment may reduce profits and dividends. May lead to higher long-term profits and rising share prices. But business image may suffer due to job losses damaging share price

Suppliers- orders received for new supplies or for technology. Increased sales may result in larger orders. Lower production cost may reduce pressure to find cheaper supplier,

Creditors- There’s an increased need for borrowing to finance purchase of technology and if successful there’s an enhanced ability to repay borrowing

Question 23

What are the advantages to using social media.

Answer 23

• increased brand awareness.
• cost effective- it can be cheaper than traditional advertising and promotional activities with the cost of maintaining social media to be minimum
• website traffic- social content can boost traffic to a website for example, location services. Tracking can be set up to determine how many sales are generated by paid social advertising
• customer interaction- a business can deliver improved customer service and respond efficiently to feedback. Positive feedback is public and can persuade other potential customers. Negative feedback to indicate where improvements can be made
• target audience- a business can maintain a presence on particular platforms that are used by their target audience
• brand loyalty- a business can build relationships with customers through social media increasing loyalty.
• monitor competition for example new products, negative reviews in a way to win new customers

Question 24

What are the disadvantages of using social media

Answer 24

• resources- a business will need to commit resources to managing their social media accounts and presence as they must respond to feedback and producing new content. This can include hiring and training staff, investing in paid advertising and paying the costs of creating video or image content
• while it can be easy to quantify the return-on-investment in terms of online sales generated by social media advertising through website visits and questionnaires, there are some less tangible benefits. It can be hard to measure and place a monetary value on the brand awareness and reputation that social media can bring. It’s difficult to know how social media effects sales in-store.
• ineffective use- social media can be used ineffectively for example, using social media to push for sales without engaging with customers or failing to respond to negative feedback can damage a businesses reputation.
• some stakeholders may not use social media.

Question 25

How do businesses make an effective use of social media

Answer 25

They can use podcasts or media campaigns to release information about product innovations, potentially increasing consumer awareness of the product and increasing sales revenues. In the USA in 2015 dominos pizza allowed customers to “tweet-to-order” by tweeting the pizza emoji or tagging #easyorder

Question 26

How do owners can an effective use of social media

Answer 26

Openers can maintain the positive profile of the business for example,

Question 27

How do staff make an effective use of social media

Answer 27

Staff may have expertise in using social media tools to obtain referrals and build customer networks. Additional uses include monitoring brand performance, maximising website visits, generating sales, responding to customer feedback and establishing the business as an industry expert in its field hence developing an excellent reputation eg; Dyson

Question 28

How can suppliers make an effective use of social media

Answer 28

Suppliers use social media to promote their relationships with key customers through the publication of testimonials (blogs) which can have the effect of attracting additional customers to their product range and increasing the market share.

Question 29

How can customers make an effective use of social media

Answer 29

Customers can use social media to provide the business with positive or negative feedback on their product/services. The consequences of this can be positive or negative which can either increase sales or deter others

Question 30

How can creditors/lendersmake an effective use of social media

Answer 30

They can use social media to communicate with suppliers regarding price changes, discounts and special offers. Therefore, younger entrepreneurs who use social media may be influenced by social media in making business decisions. However, they arent permitted to use social media to request payment or send payment reminders