Stakeholders and Decision Making Flashcards
What are 3 examples of internal stakeholders?
Owners
Shareholders
Employees
What are internal stakeholders?
People inside the business
Why are the owners a stakeholder?
Because they make a profit if the business is successful and decide what happens to the business.
Why are the shareholders a stakeholder?
Because if the business is a limited company, then the shareholders are the owners and want high dividends.
Why are the employees a stakeholder?
Because they are interested in their job security and also want to earn a decent wage.
What are external stakeholders?
People outside the business
What are 3 examples of external stakeholders?
Customers
Suppliers
Government
Why are customers a stakeholder?
Because they want high quality and services at low prices
Why are suppliers a stakeholder?
Because the business provides them with an income
Why is the government a stakeholder?
They get more in taxes when business makes good profits
What do businesses need to do with their stakeholders?
Keep them happy
Why is profit important for stakeholders?
Because it means employees are paid well, suppliers have reliable business and shareholders can expect dividend payments
What may the business choose to do to increase profit?
Cut Labour costs
What can cutting Labour costs do to 3 types to stakeholders?
Make them unhappy - employees, suppliers and local community
What does stakeholder mapping consider?
Power and interest
What is a stakeholder map?
A map that helps a business decide how to best manage its stakeholders
Who in a stakeholder map needs to be managed most closely?
Stakeholders with high levels of power and interest
How can a recession influence a business’s relationship with stakeholders?
The business is focusing on not going bankrupt so may have to cut wages and not pay dividends
If a business focuses on satisfying one stakeholder at the expense of another, what could happen?
Could result in staff leaving or going on strike
How can businesses manage relationships with stakeholders?
Consult key stakeholders before making any major decisions
