Topic 2 Stakeholders

Question 1

What is a stakeholder.

Answer 1

A stakeholder is an individual, group or organistaion that has an interest or concern in the activities or performance of an organisation. Stakeholders can affect, or be affected, either positively or negatively, by the organisation

Question 2

List as many stakeholders as you can.

Answer 2

Employees, customers, suppliers, investors, workers/employees, suppliers, owners, shareholders…

Question 3

Who are the internal stakeholders of a business?

Answer 3

Owner, shareholders, managers, employees

Question 4

What are the interest of the owner?

Answer 4

Profit focus - maximum return. Livelihood. Success. Reputation

Question 5

What are the interests of the shareholders?

Answer 5

Part owners of a limited company. Investment – shares – dividend. Do not take part in the management of a business but attend the Annual General Meeting (AGM) and vote of the Board of Directors

Question 6

What are the interests of the managers and employees?

Answer 6

Fair wage/salary. Good working conditions. Job security. Training and development. Career progression

Question 7

Give an example of a conflict of interests between the internal stakeholders

Answer 7

Owners/Shareholders are profit focused, the more they have to pay their employees/managers the less profit they will make.

Question 8

What is a share?

Answer 8

One of the equal parts into which a company’s capital is divided, entitling the holder to a proportion of the profits

Question 9

What is a dividend?

Answer 9

A sum of money paid regularly (typically annually) by a company to its shareholders out of its profit

Question 10

Who are the external stakeholders?

Answer 10

Competitors, suppliers, consumers, financial institutions, trade unions and the local communities

Question 11

What are the interests of competitors?

Answer 11

Price. Products. Quality. Service. Growth

Question 12

What are the interests of suppliers?

Answer 12

Financial stability.
Prompt payment.
Continued regular orders.
Fair deal

Question 13

What are the interests of consumers?

Answer 13

Competitive prices.
Good range of products.
Quality.
Customer service.
Good reputation

Question 14

What are the interests of financial institutions?

Answer 14

Financial stability.
Ability to meet repayments.
Sound business plans

Question 15

What are the interests of trade unions?

Answer 15

Fair treatment of workers.
Negotiate a wage/salary at least in line with inflation. Good working conditions.
Job security

Question 16

What are the interests of the local communities?

Answer 16

Corporate social responsibility.
Noise reduction.
Traffic Congestion.
Opening hours.
Care for the environment.
Community involvement

Question 17

Explain why the following conflicts between stakeholders might exist: Job creation/job losses

Answer 17

Owners/board of directors will need to make decisions about creating/axing jobs depending on the market demand for their product in order to ensure the profitability of their business.

Question 18

Explain why the following conflicts between stakeholders might exist: changes to working conditions

Answer 18

Unions/Government/Employess may want changes in working conditions that might take away from profitability of a company.

Question 19

Explain why the following conflicts between stakeholders might exist: profit distribution

Answer 19

The profit of company may need to be invested back into a company for one reason or another which reduces the amount of money that a owner/stakeholder receives.

Question 20

Explain why the following conflicts between stakeholders might exist: new government legislation

Answer 20

Government may e.g. restrict trading hours which would then limit the hours a business can trade/employees can work/consumers can make purchases!

Question 21

Explain why the following conflicts between stakeholders might exist: environmental threats

Answer 21

To make a site for a business land may need to be cleared. Business may create more traffic increasing pollution. Waste disposal may be an issue depending on the business

Question 22

Why are consumers stake holders?

Answer 22

Consumers will support it if it supplies goods/services at suitable prices. They also have an interest in seeing that a business succeeds because they have a greater number of firms to deal with which improves the competition and the variety of goods/services on offer.

Question 23

Why are producers/suppliers stake holders?

Answer 23

Producers/suppliers do not want to lose any of their customers but want to ensure that they are prosperous and able to pay their accounts. Producers are rewarded by high levels of sales which add to the profits of their own businesses.

Question 24

What are trade unions?

Answer 24

Organisation which represents the interests of the workers of a business and negotiates with management on their behalf. They ensure the safety of its member’s jobs. If the business loses profits or fails altogether, it will have to make workers redundant. Those workers would then depend on the trade union to try to save their jobs or find them work elsewhere.

Question 25

Why is the government an ‘indirect stakeholder’?

Answer 25

Taxpayers have an indirect stake holding and therefore wish to see general prosperity of a business. Everyone pays tax in some way. Those who are earning pay income tax and we all have to pay value added tax (VAT) on most purchases.