Understanding the Role and Importance of Stakeholders Flashcards
What is a stakeholder?
A stakeholder is an individual, group or other institution with a direct interest in the activities and performance of an organisation or in a project to be undertaken by that organisation.
What are internal stakeholders?
These are closely connected and their needs are likely to have a strong influence on how the organisation is run
What are external stakeholders?
They have diverse and varying levels of influence on an organisations ability to meet its objectives (competitors, pressure groups, government agencies). This group includes those who have contracts with the organisation - such as customers, suppliers and investors - these are known as ‘connected stakeholders’.
What are examples of internal stakeholders?
owners/ shareholders, employees, managers, volunteers, players
What are examples of external stakeholders?
customers, suppliers, government, local communities, pressure groups, competitors
What are primary stakeholders?
Those who are directly involved and affected, either positively or negatively by an organisation’s actions. Have power to influence and shape decisions (primary stakeholders both internal and external).
What are secondary stakeholders?
Person/s who are indirectly affected by an organisation’s actions (internal or external)
What do key stakeholders have?
They have significant influence or importance within an organisation
What are the role of stakeholders?
Owners/ shareholders provide capital, expect returns (profits, dividends).
Employees work to achieve business goals, expect fair wages and job security.
Customers purchase products/ services, expect quality and value.
Suppliers provide resources, expect timely payments and good relationships.
Government enforces law/regulations, expects compliance and taxes.
Stakeholders may have different objectives, leading to conflicts. What are examples of conflicts?
- Shareholders may want higher profits, while employees seek higher wages.
- Customers want lower prices, but supplier may need higher prices for sustainability.
- Local communities may prioritise environmental protection, while business focus on cost reduction.
Why is stakeholder engagement important?
- builds trust and improves reputation
- helps in managing conflicts effectively
- leads to better decision - making by considering diverse
perspectives - ensures long term sustainability and success
- reduces risks associated with ignoring stakeholder concerns
What influence do stakeholders have on business success?
Shareholders - expect returns on investment, influence strategy
Employees - impact quality and service through involvement
Customers - key to long-term success, loyalty and retention
Communities - Corporate and Social Responsibility improves brand images and business ethics
Managing Stakeholder Relationships
Communication channels: regular updates, meetings, reports
Balancing Interests: stakeholders may have different goals
Corporate and Social Responsibility (CSR): ensures community and interest groups are included in decision-making
What did Professor Menedelow use to analyse the key stakeholders?
In 1991 Professor Menedelow devised a way of analysing the key stakeholders for a specific business. He used as simple matrix to measure stakeholder interest against the stakeholder power.
What were the four stakeholder categories Professor Menedelow within his theory?
- High power, high interest: key players in the project - inform, consult and collaborate to engage with them
- High power, low interest: individuals/ groups to keep satisfied - inform and consult with them
- Low power, high interest: individuals/ groups to keep informed - inform and consult with them
- Low power, low interest: individuals/ groups that require minimal effort - keep them informed to monitor them (could also include compliance with these stakeholders)
