stakeholders in a business chapter 5 Flashcards
main stakeholders of a business (8)
owners (shareholders in a limited company).
Customers.
Suppliers.
employees, including managers and their families.
local communities.
government and government agencies .
special interest groups, such as pressure groups.
lenders.
stakeholders (1)
individuals or groups who can be affected by, and have an interest in, any action taken by an organisation.
external stakeholders (1)
individuals or groups who are separate from the business but are affected by or interested in its operations.
internal stakeholders (1)
individuals or groups who work within the business, or own it, and are affected by the operations of the business.
Customers roles (2)
to purchase goods and services.
to provide revenue from sales, which allows the business to function and expand
Customers Rights (2)
to receive goods and services that meet local laws regarding health and safety, design and performance.
to be offered replacements, repairs or compensation in the event of failure of the product or service to at least the minimum levels laid down by law
Customers Responsibilities (not necessarily legally binding) (3)
to be honest-to pay for goods bought or services received when requested.
not to steal.
not to make false claims about poor service, underperforming goods or failed items
suppliers roles (1)
to supply goods and services to allow the business to offer its products to its own customers
suppliers Rights (2)
to be paid on time as stated in the service agreement between the business and suppliers.
to be treated fairly and not to be exploited by the customer business
suppliers Responsibilities (not necessarily legally binding) (1)
to supply goods and services ordered by the business in the time and condition laid down by the purchase contract or supplier’s service agreements
employees roles (2)
to provide manual and other labor services to the business, in accordance with the employment contract
to allow goods and services to be provided to customers
employees Rights (3)
to be offered employment contracts that meet legal standards, e.g. minimum wage rate.
to be treated and paid in the ways described in the employment contract in most countries.
to be allowed to join a trade union if desired
employees Responsibilities (not necessarily legally binding) (4)
to be honest.
to meet the conditions and requirements of the employment contract.
to cooperate with management in all reasonable requests.
to observe the ethical code of conduct
local communities roles (1)
to provide the labor services required by the business
local communities Rights (1)
to be consulted about major changes that affect it
local communities Responsibilities (not necessarily legally binding) (1)
to cooperate with the business, where reasonable to do so
local government roles (2)
to provide local services and infrastructure to the business
to allow it to operate, produce and sell within legal limits
local government Rights (1)
not to have the community’s lives badly affected by the business’s activities
local government Responsibilities (not necessarily legally binding)(1)
to meet reasonable requests from the business for local services
government roles (3)
to pass laws that restrain many aspects of business activity
to provide law and order and economic stability
to allow business activity to take place
responsibilities towards the government (1)
to meet all legal constraints
government Responsibilities (not necessarily legally binding) (3)
to treat businesses equally under the law.
to prevent unfair competition that could damage chances of business survival.
to establish good trading links with other countries to allow international trade
lenders roles (1)
to provide finance to the business in different forms
lenders Rights (2)
to be repaid on the agreed date.
to be paid finance charges, e.g. interest on loans
lenders Responsibilities (not necessarily legally binding)(1)
to provide the agreed amount of finance on the agreed date for the agreed time period
managers roles (1)
to control, command and direct resources
managers Rights (2)
to have contract of employment
to have sufficient authority to fulfil roles
managers Responsibilities (not necessarily legally binding)(2)
to report to stakeholders
to act legally and ethically
owners/shareholders roles (1)
to provide finance
owners/shareholders Rights (2)
to receive a share of profits
to receive accurate reports on business performance
owners/shareholders Responsibilities (not necessarily legally binding)(2)
to set targets for managers
give managers adequate time and resources to meet targets
trade union (2)
organisation of working people with the objective of improving the pay and working conditions of its members and providing them with support and legal services.
stakeholder concept (2)
the view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders
responsibilities to customers (4)
essential to satisfy customers’ demands in order to stay in business in the long term.
customers aims for well made, attractive goods that perform as intended, all at intended prices.
not to break the law concerning consumer protection and accurate advertising.
avoid taking advantages of vulnerable customers and nor using high pressure selling tactics.
benefits of accepting responsibilities to customers (3)
consumer loyalty; repeat purchases
good publicity when customers give word of mouth recommendations to others
good customer feedback, which helps to improve further goods and services.
responsibilities of suppliers (3)
if suppliers do not supply on time or supply low quality goods it does not satisfy customer requirements.
Good, reliable suppliers must be found and given clear guidance on what is required.
In return, the purchasing department should take decisions that satisfy suppliers’ aims and requirements,
benefits of accepting responsibilities to suppliers (4)
supplier loyalty
securing reasonable credit terms
preparedness to meet deadlines
special order requests.
responsibilities to employees (4)
laws regrading business responsibilities to workers should be upheld.
providing training opportunities and job security.
paying above minimum wage.
offering good working conditions and involving employees in some of the decision making.
benefits of accepting responsibilities to employees (4)
employee loyalty and low labor turnover
ease of recruiting good workers
employee suggestions for improving efficiency and customer service
improved motivation and more effective communication.
why businesses have to meet their responsibilities to local community (2)
Businesses that fail to meet responsibilities to the local community may experience serious problems with opposition to plans or changes to the use of premises
The stakeholder concept assumes that businesses will meet responsibilities to the local community.
benefits of accepting responsibilities to local community (2)
local councils being more likely to give planning permission to expand the business and giving contracts only to businesses with a record of community involvement.
Also, local communities will be more likely to accept some of the negative effects caused by business operations if they provide financial support for community groups and projects,
responsibilities to government (5)
meet their legal responsibilities
pay taxes on time
complete government statistical and other forms accurately
if possible, seek export markets
foreign currency earned by exports allows a country to pay for important imports
benefits of accepting responsibilities to government (3)
developing good relations with government.
more likely to receive valuable government contracts requests for subsidies to expand businesses
licenses to set up new operations more likely to be awarded to businesses that meet their responsibilities to the government and the wider society.
how do businesses deal with conflicts of stakeholder aims (2)
compromise.
there should be priorities set in these situations by senior management.
impact on stakeholders of changing business objectives (2)
the dynamic business environment often means that directors or senior managers might be forced to change corporate objectives.
different stakeholders groups will be affected in different ways by changes in objectives
