Stakeholders Flashcards
define stakeholders
individual/group affected by the business and so has interest in it’s activities. not unusual for stakeholders to conflict over business activities and objectives
what are the 8 stakeholders and their main interests
business - in limited company the business is it’s own legal entity , wants repeat sales, customer loyalty , market growth , increased revenue and profits
shareholders - owners of limited companies, share objective of sustained long-term growth giving capital gain and increasing income
directors and managers - focus efforts on achieving long-term objectives, use resources under their control to maximise benefits and gain most from assets they manage
employees - from middle management down receive wages, possible fringe benefits such as pensions
customers - satisfying needs profitably lead to financial success, provide efficient service , quality product , competitive price
suppliers - mutually dependent on businesses for their sales, want a fair price for their products but businesses wish to minimise costs
government - increased tax revenues , higher employment - lower benefit payments
local community - employment , increased regional wealth , improved facilities and infrastructure , may depend on one large employer which can support a range of other businesses , may be involved with local charities.
what are the conflicts of these main interests?
business - cost of long-term growth strategies may reduce profits in short run, if unsuccessful then costs outweigh the benefits
shareholders - institutional (investment and pension funds) shareholders require high dividends and strategies to achieve short - term growth from the businesses they’ve invested in, however these strategies may be at odds with achieving long-term growth through reinvestment of profits and investing in brand value which may be what the individual long -term investor may be looking for.
directors and managers - for some their only concern is to maintain and protect their position , self-preservation can be a motivator for middle managers resulting in a hierarchy, senior managers may attempt to maximise their salaries and benefits while cutting costs through redundancies and rationalisations.
employees - concerned with job security whilst many businesses seek to incorporate technology and reduce the size of the workforce
customers - the short-term nature of businesses means achieving immediate profit which comes from long-term customer satisfaction, customers like to feel needed and respected, maintaining good public relations
suppliers - power in the market rests in the buyer and situation is worse when supplier is in developing countries when the original producer receives a tiny proportion of the final sale value, fair trade goods try to maintain a balanced supplier-buyer relationship
government - economic success also means increased pollution, traffic and loss of greenfield sites through development, due to environmental awareness, government limits growth and encourages development of brownfield sites. imposes taxes on businesses increasing business costs, reduce competitiveness, increase unemployment , government has to balance business and economic growth against external costs of business activity
local community - conflicts can arise such as pollution, environmental damage, loss of open space, heavy transport moving, these can all affect peace and quiet of a community
