3.4.3 Shareholders vs stakeholder Flashcards
Shareholders vs stake holders
A stakeholder is any individual or organisation who has a vested interest in the actives and decision making of a business
Shareholders -
Own the business
May also work in the business
Mainly interested in growing the value of their shareholding
Stakeholders -
Have an interest in the business but do not own it
May work for or otherwise transact with the business
Examples of stake holders
Managers Employees Banks Trade unions Gov Competitors Customers Shareholders
Stakeholders can be grouped:
Internal - employees, shareholders
Connected - by relationship based on contract - customers, suppliers, creditors
External - relationship not based on legal contract - competitors, gov, society
What are stakeholders interested in
Shareholders/ owners:
Return on investment - profits and dividends
Success and growth of business
Proper running of the business
What are stakeholders interested in
Managers and employees:
Rewards, including basic pay and other financial incentives
Job security and working conditions
Promotion opportunities and job satisfaction and status - motivation, roles, responsibility
What are stakeholders interested
Customers
Value for money
Product quality and customer service
What are stakeholders interested in
Suppliers
Continued, profitable trade with the business
Financial stability - can the business pay its bills?
What are stakeholders interested in
Banks and other finance
Can business repay amounts loaned or invested
Profitability and cash flow of the business
Growth in profits and value of the business
What are stakeholders interested in
Government
THe correct collection and repayment of taxes
Helping the business to grow - creating jobs
Compliance with the business legislation
What are stakeholders interested in
Local. community
Success of the business - particularly creating and retaining jobs
Compliance with local laws and regulations (e.g noise, pollution)
Potential conflicts between stakehp;ders
Cutting jobs to reduce costs add extra shifts to increase factory capacity
Likely to be supported by
Stakholders and banks
Possibly opposed by
Employees and local community
