stakeholders in a business chapter 5

Question 1

main stakeholders of a business (8)

Answer 1

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.

Question 2

stakeholders (1)

Answer 2

individuals or groups who can be affected by, and have an interest in, any action taken by an organisation.

Question 3

external stakeholders (1)

Answer 3

individuals or groups who are separate from the business but are affected by or interested in its operations.

Question 4

internal stakeholders (1)

Answer 4

individuals or groups who work within the business, or own it, and are affected by the operations of the business.

Question 5

Customers roles (2)

Answer 5

to purchase goods and services.

to provide revenue from sales, which allows the business to function and expand

Question 6

Customers Rights (2)

Answer 6

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

Question 7

Customers Responsibilities (not necessarily legally binding) (3)

Answer 7

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

Question 8

suppliers roles (1)

Answer 8

to supply goods and services to allow the business to offer its products to its own customers

Question 9

suppliers Rights (2)

Answer 9

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

Question 10

suppliers Responsibilities (not necessarily legally binding) (1)

Answer 10

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

Question 11

employees roles (2)

Answer 11

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

Question 12

employees Rights (3)

Answer 12

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

Question 13

employees Responsibilities (not necessarily legally binding) (4)

Answer 13

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

Question 14

local communities roles (1)

Answer 14

to provide the labor services required by the business

Question 15

local communities Rights (1)

Answer 15

to be consulted about major changes that affect it

Question 16

local communities Responsibilities (not necessarily legally binding) (1)

Answer 16

to cooperate with the business, where reasonable to do so

Question 17

local government roles (2)

Answer 17

to provide local services and infrastructure to the business

to allow it to operate, produce and sell within legal limits

Question 18

local government Rights (1)

Answer 18

not to have the community’s lives badly affected by the business’s activities

Question 19

local government Responsibilities (not necessarily legally binding)(1)

Answer 19

to meet reasonable requests from the business for local services

Question 20

government roles (3)

Answer 20

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

Question 21

responsibilities towards the government (1)

Answer 21

to meet all legal constraints

Question 22

government Responsibilities (not necessarily legally binding) (3)

Answer 22

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

Question 23

lenders roles (1)

Answer 23

to provide finance to the business in different forms

Question 24

lenders Rights (2)

Answer 24

to be repaid on the agreed date.

to be paid finance charges, e.g. interest on loans

Question 25

lenders Responsibilities (not necessarily legally binding)(1)

Answer 25

to provide the agreed amount of finance on the agreed date for the agreed time period

Question 26

managers roles (1)

Answer 26

to control, command and direct resources

Question 27

managers Rights (2)

Answer 27

to have contract of employment

to have sufficient authority to fulfil roles

Question 28

managers Responsibilities (not necessarily legally binding)(2)

Answer 28

to report to stakeholders

to act legally and ethically

Question 29

owners/shareholders roles (1)

Answer 29

to provide finance

Question 30

owners/shareholders Rights (2)

Answer 30

to receive a share of profits

to receive accurate reports on business performance

Question 31

owners/shareholders Responsibilities (not necessarily legally binding)(2)

Answer 31

to set targets for managers

give managers adequate time and resources to meet targets

Question 32

trade union (2)

Answer 32

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.

Question 33

stakeholder concept (2)

Answer 33

the view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders

Question 34

responsibilities to customers (4)

Answer 34

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.

Question 35

benefits of accepting responsibilities to customers (3)

Answer 35

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.

Question 36

responsibilities of suppliers (3)

Answer 36

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,

Question 37

benefits of accepting responsibilities to suppliers (4)

Answer 37

supplier loyalty

securing reasonable credit terms

preparedness to meet deadlines

special order requests.

Question 38

responsibilities to employees (4)

Answer 38

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.

Question 39

benefits of accepting responsibilities to employees (4)

Answer 39

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.

Question 40

why businesses have to meet their responsibilities to local community (2)

Answer 40

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.

Question 41

benefits of accepting responsibilities to local community (2)

Answer 41

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,

Question 42

responsibilities to government (5)

Answer 42

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

Question 43

benefits of accepting responsibilities to government (3)

Answer 43

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.

Question 44

how do businesses deal with conflicts of stakeholder aims (2)

Answer 44

compromise.

there should be priorities set in these situations by senior management.

Question 45

impact on stakeholders of changing business objectives (2)

Answer 45

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