Stakeholders Flashcards
What is a stakeholder?
An individual or a group of people that have an interest in a business.
What are the main stakeholder groups?
1) Owners.
2) Customers.
3) Suppliers.
4) Employees.
5) Local community.
What could the objectives of shareholders be?
This group may want high financial such as high dividend payments or perhaps the satisfaction of managing a growing business.
What could the objectives of customers be?
For products to meet their needs and which represent good value for money, whatever the price charged.
What could the objectives of suppliers be?
Regular orders for goods and services, payments on time and clear communication about future orders.
What could the objectives of employees be?
Most employees would like high earnings as well as interesting, secure jobs and good working conditions.
What could the objectives of local community be?
Could be:
1) Secure employment for locals.
2) Minimal damage to local environment.
How can business activities impact stakeholders?
1) Financial activities. A business can affect its suppliers by delaying payments for the products it has bought from them or by using its power to force prices down. A business may invest its funds in building new factories, offices or shops, creating employment in the local community. The profits businesses earn affects the payment of shareholders.
2) Production activities. An increase in production can lead to more jobs for local people and larger orders placed with suppliers. Production can also be result in pollution and congestion on local roads.
3) Selling activities. The prices businesses choose impact on their consumers - for example, many UK consumers have benefited from low fares for flights. Producing new products can benefit consumers, as well as creating work for employees from local community.
How can stakeholders impact a business?
1) Communication. Consumers are increasingly using social media to let a business know their views on its products and activities. This can be effective as many people can see these comments.
2) Direct action. Employees may go on strike and refuse work - or perhaps just work slowly. Consumers may decide to boycott a business’s products. Suppliers may refuse to sell their products to a business in extreme circumstances.
3) Using their power. Local communities and governments may object to a business receiving planning permission for new buildings. A majority of a business’s shareholders may vote against the others over a particular decision.
Give examples of stakeholder conflict.
1) Employees vs owners:
Giving a pay rise to employees may mean that the business is less profitable. This may mean that the owners of the business receive smaller payments from profits.
2) Customer vs suppliers:
A business may negotiate or impose a reduction on the prices it pays to its suppliers to allow it to produce its goods or services more cheaply. Customers may benefit from this in terms of paying lower prices.
3) Local community vs owners:
The owners of a factory may decide to operate it for24hours a day, seven days a week, to increase profits. This may lead to the community suffering more noise from manufacturing or vehicle deliveries and more air pollution.
