Understanding the role and importance of stakeholders

Question 1

what are stakeholders?

Answer 1

anyone with an interest in/influence on a business.

Question 2

name some examples of internal stakeholders

Answer 2

• employees
• owner
• shareholders
• managers

Question 3

name some examples of external stakeholders

Answer 3

• customers
• suppliers
• competitors
• investors
• bank
• local government / national

Question 4

describe stakeholders in quadrant A

examples

Answer 4

• not powerful
• not much concern about them
• update using genera communications e.g. website
• little effort required
• low-value material supplier, small purchase customer

Question 5

describe stakeholders in quadrant B

examples

Answer 5

• not huge mount of power
• interested in business activities
• managers should keep them informed on area of interest
• may choose to consult about specific low-risk matters
• residents close to manufacturing business concerned about how operations will affect them

Question 6

describe stakeholders in quadrant C

examples

Answer 6

• powerful groups
• don’t have great interest in company’s activities
• important for managers to engage and consult with this group - possible aim to increase their level of interest
• investors who only interested in high financial returns

Question 7

describe stakeholders in quadrant D

examples

Answer 7

• most powerful
• major influence on management decisions
• managers need to keep this group happy
• possibly involve this group in decision making process
• customer who purchases high quantity of products, and only wants to deal with reliable and ethical suppliers

Question 8

define primary stakeholders

Answer 8

have a direct relationship with the business

Question 9

define secondary stakeholders

Answer 9

although affected by the actions of the business, aren’t directly related to the business

Question 10

why do businesses use stakeholder mapping?

Answer 10

identify power of each stakeholder, helps inform manager on their importance

Question 11

name the internal factors that influence stakeholder relationships

Answer 11

• business objectives
• management and leadership styles
• size and ownership of business

Question 12

define business objectives as an influence on stakeholder relationships

Answer 12

• may have strongest influence on relationship with stakeholders
• depending on their objective will depend on relationship with each stakeholder

Question 13

define management and leadership styles as an influence on stakeholder relationships

Answer 13

• managers who take autocratic approach, likely to focus less on objectives & needs of employees
• style will influence stakeholder relationship in long-term and short-term

Question 14

define size and ownership of the business as an influence on stakeholder relationships

Answer 14

• smaller business - closer relationships will be

- stakeholders have more of. say in smaller businesses as there is less shareholders to share input with

Question 15

name the external factors that influence stakeholder relationships

Answer 15

• market conditions
• the power of stakeholder groups
• government policies

Question 16

define market conditions as an influence on stakeholder relationships

Answer 16

• business with lot of competition will want close and strong relationship with stakeholders to maintain good reputation

Question 17

define the power of stakeholder groups pas an influence on stakeholder relationships

Answer 17

• more power stakeholder has, better maintained relationship and satisfaction, better rep.

Question 18

define government policies as an influence on stakeholder relationships

Answer 18

• laws help relationships between stakeholders

Question 19

define communication when MANAGING stakeholder relationships

Answer 19

• keep informed
• two ways as well as one way
• involve third parties e.g. trade unions, pressure groups, experts

Question 20

define consultation when MANAGING stakeholder relationships

Answer 20

share proposals and seek opinions early in the decision making process

Question 21

name all the different approaches to stakeholder management (top down of pyramid)

Answer 21

partnership 
participation 
consultation 
"push" communication 
"pull" communication

Question 22

define ‘partnership’

Answer 22

high power, high interest (quadrant D), joint decision making, shared responsibilities, lots of 2 way communication

Question 23

define ‘participation’

Answer 23

high-low interest, still take part & be element of decision making, (best suited to his power but low level of interest (quadrant C)).

Question 24

define ‘consultation’

Answer 24

Low power high interest (quadrant B), finding out views of relevant stakeholders, limited power or influence

Question 25

define ‘push communication’

Answer 25

low power, one way communication, (usually emails or posters) (quadrant B/A)

Question 26

define ‘pull communication’

Answer 26

low interest stakeholder, communicates with stakeholder but only if they wish to engage. (quadrant B/A)

Question 27

describe the shareholder concept

Answer 27

management teams should only aim to meet their responsibilities to shareholders, best through maximising the business profit

Question 28

what does increased profit mean?

Answer 28

higher dividend prices and higher share prices

Question 29

what are other stakeholder needs in comparison to shareholders?

Answer 29

of secondary importance

Question 30

describe the implications of the shareholder concept

Answer 30

short termism in decision making, risks taken to achieve profit maximisation, possibly unethical?

Question 31

describe the stakeholder concept

Answer 31

business should take into account the obligations the business running may have to society in general, taking ALL stakeholders into account and not just shareholders has importance in corporate social reporting