CH5 - Stake/Shareholders Flashcards
(21 cards)
What is a Stakeholder?
Stakeholders have an interest in the business
Internal - employees
External - consumers
Stakeholder Concept?
Business and managers must have awareness of their actions on wide rage of group of people not just shareholders.
Shareholder Concept?
Puts owners and investors first objective to maximise shareholder value
Stakeholders in Business
Owners
Employees (Managers)
Consumers
Local Community
Suppliers
Lenders (Banks)
Government
Conflicting Shareholders
Hard to please all stakeholder equally
Decide which are key to success and give priority
What could be said about the local community interest?
It allows business to take place , provides goods and services to the main business ( accountancy, logistics )
Business must no do any activities which are harmful to the environment and/or residents of the area
Allows the business to exist, promotes it , provides infostructure
What could be said about lenders interest?
Banks etc.. Provide finance , have right to earn profits from investments, provide information, support and advice
Offer additional support such as overdraft loans
What could be said about suppliers interest?
Provide goods and services
Expect payment on time within the agreed time / agreement
Supply goods on time , keep stock as described must be as per standard agreed / legal and safe
( Consumer law )
What could be said of the Government interest?
Create legal framework in which business can operate
Manage the economy of the country therefore influence economic environment the business exist in
Expect all business in operating to abide by the laws of the land and to be honest in record keeping (Employment law , consumer law)
What can be said of stakeholder importance?
Stakeholder importance is reliant upon the situation the business is in or evaluating which therefore means there is no correct way to order them. We can however priorities them using levels of interest and powers. [Not needed to know]
The responsibility a business has to its customers
Safe good, design and quality
Legal
Effect:
Feedback , loyalty, payment , repeated business
The responsibility a business has to its suppliers
Place regular orders , pay on time
Purchase agreed amount
Effect:
On time delivery and of agreed quality. Discount loyalty
The responsibility a business has to its employees
Adhere to employment laws, provided training security
Safe working environment, wages
Effect:
Loyalty, hardworking, low staff turnover
Efficiency
The responsibility a business has to the goverment
Comply with law , pay taxes on time complete all gov documents
Effect:
Awards, grants , planning , subsiders , licences - more likely
The responsibility a business has to its owners/shareholders
Run the business so it satisfies all objectives from owner
Effect:
Continued loyalty and investment
The responsibility a business has to the local community
Offer jobs , spend moment locally , invest in firms , reduce
Environmental impact
Effect:
Planning restrictions, relationship between business and schools
Charites
Example of Stakeholder conflict
(Employees vs Employer)
- 2020 British Airways cut 12,000 jobs and reduced pay & benefits for remaining staff due to COVID-19 Impacts. [Met with protests and legal challenges from unions - Unfairly targeting its workers]
What would you classify/priorities a stakeholder with Low interest but have a high degree of power?
Someone to keep “satisfied” - ensure they are happy but don’t need the same attention as Key Players (High interest & high power )
Definition of Stakeholder (BOOK)
Any individual or group who have an interest in the activities of a business, internal or external
What is an internal stakeholder? (BOOK)
Work or own the business – affected by its operations
What is an external stakeholder? (BOOK)
Affected by its operations - Suppliers, employees (and families) and customers. Local community, public, government, pressure groups, lenders.
