1.5 Stakeholders in a business Flashcards Preview

Business studies > 1.5 Stakeholders in a business > Flashcards

Flashcards in 1.5 Stakeholders in a business Deck (11)
1

Stakeholder

People or groups of people who can be affected by, and therefore have an interest in any action by an organisation

2

Stakeholder concept

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

3

Groups of stakeholder

Customers, suppliers, employees, local community, government, pressure groups

4

Responsibilities to customers

- Quality, design, durability and customer service should be in line with customer's objectives at a reasonable price
- Not to break the law concerning consumer protection and accurate advertising
- Avoid taking + of vulnerable customers
+ Customer loyalty, great purchases, good publicity (word of mouth), good feedback

5

Responsibilities to suppliers

- Pay promptly
- Regular orders
- Long term contracts
+ Suppliers loyalty (meet deadlines, except request for special orders)
+ Credit terms more likely to be offered

6

Responsibilities to employees

- Not breaking the workers' rights and contracts
- Provide training opportunities, job security, good working conditions and wages, involving staff in decision making
+ Easy to recruit good staff
+ Improved motivation
+ effective communication
+ Low labour turnover

7

Responsibilities to local community

- Offer secure employment -> less local fear of job losses
- Local supplies to build good relationships
+ Gain permission to expand business
+ Likely to accept some of the negative effects the business has on the surroundings
+ Reduce transportation costs
+ Reduce adverse working environment

8

Responsibilities to government

- meet legal responsibilities as defined by gov legislation
- pay taxes on time
- complete gov statistical and other forms accurately
+ Receive valuable gov contracts
+ Request for subsidies may be approved
+ Licences to set up new operations are more likely to be awarded

9

CSR evaluation

- Small scale business -> should focus on growth/ survival = core objectives
- Costly because sustainable tencho -> more costs -> less profit
- Distracts from the key role of business activity -> econ resources not used efficiently
- "Window-dressing" to mask unscrupulous activities by the business
+ Cost saving as in no preservative, no fancy packaging
+ Innovation ( Unilever invents hair conditioner that consumes less water)
+ Long term = build up image of the company OR if they invest in infrastructure -> improve the country -> possible foreign investments -> Discerning views

10

How conflict might arise from stakeholders having different aims

- Customers want good-quality products at low prices. Higher profits will be desired by shareholders -> higher dividends.
- Shareholders want to have large profits, employees want to be paid higher wages. (increase cost, reduce profit)
- Government aims to have lower unemployment, business wants to increase its use of machinery. However, business more profitable, more tax.
- Suppliers charge higher prices, business increased costs, reduce profits and dividends paid to shareholders.

11

Changing business objectives affect its stakeholders

1. Profit maximisation -> increase market share
- Satisfy the needs of shareholders to receive dividends paid out of profit.
- Change:
+ Reduction in profit due to more money being spent on building image/ uniqu selling point (USP)
+ Gain stronger position
2. Survival to growth
- Give some security to employees
- Produce larger profit that can be paid to shareholders in form of dividends.