Unit 1 KA7- Stakeholders Flashcards
What is a stakeholder?
Stakeholders are people who have an interest (positive or negative) in a business and who can have an influence in it
What are internal and external stakeholders?
Internal stakeholders are part of the business
External stakeholders are outwith the business
Give examples of internal stakeholders
Owners/Shareholders
Managers
Employees
Give examples of external stakeholders
Local community
Customers
Suppliers
Bank
Government
Pressure groups
Explain stakeholder (what interest and power over the business do they have) - Owners/Shareholders
Owners have an interest in a business doing well so that they:
Make a profit
Receive high dividends
Owners can influence how a business operates by:
Investing or withdrawingequity into the business
Changing management (at AGM)
Explain stakeholder (what interest and power over the business do they have) - Managers
Managers have an interest in a business doing well so that they:
Get promoted
Win bonuses
Have job security
Managers can influence how a business operates by:
Hiring and firing
Creating company policies
Making day-to-day decisions and long term decisions
Explain stakeholder (what interest and power over the business do they have) - Employees
Employees have an interest in a business doing well so that they can benefit from:
Job security
Higher pay
Improved working conditions
Employees can influence how a business operates by:
Increasing or decreasing productivity
Providing good or bad customer service
In extreme cases, withdrawing their labour and going on strike
Explain stakeholder (what interest and power over the business do they have) - Customers
Customers have an interest in a business doing well because they want the following:
Quality products and services
Low prices
Value for money
Customers can influence how a business operates by:
Deciding whether or not to purchase the product or use the service
Affecting an organisation’s reputation by word of mouth
Explain stakeholder (what interest and power over the business do they have) - Banks
Banks have an interest in a business doing well so that:
The organisation can pay their loans in full and on time
Banks can influence how a business operates by:
Permitting or denying loan requests
Changing interest rates on loans offered
Changing repayment lengths
Explain stakeholder (what interest and power over the business do they have) - Governments
Governments have an interest in a business doing well because they want firms to:
Pay corporation tax
Create jobs and wealth for the population
Provide goods and services for the population
Governments can influence how a business operates by:
Raising or lowering corporation tax
Introducing or repealing laws that affect businesses
Offering grants to incentivise firms to locate to depressed areas
Explain stakeholder (what interest and power over the business do they have) - Suppliers
Suppliers have an interest in a business doing well because they want:
Regular orders from their customers (the other businesses)
Prompt payment
Suppliers can influence how a business operates by:
Raising or lowering prices of goods
Changing credit terms
Changing delivery times
Increasing or decreasing the quality of their goods/materials
Explain stakeholder (what interest and power over the business do they have) - Local Community
Local communities have an interest in a business doing well because they want the following:
Firms to bring jobs to the area
Good, safe environment to live in
Good transport and communication links
Local communities can influence how a business operates by:
Protesting and petitioning if unhappy with an organisation’s conduct
Explain conflicting interests of stakeholders
Different stakeholders have different objectives. The interests of different stakeholder groups can differ which can cause unrest/ discord in the business.
Give examples of conflicting interests of stakeholders
Owners generally seek high profits and so may be reluctant to see the business pay high wages to staff
A business decision to move production overseas may reduce staff costs. It will therefore benefit owners but work against the interests of existing staff who will lose their jobs. Customers also suffer if they receive a poorer service
Managers may want to pay for goods later to improve cash flow whereas the suppliers will want their payment as soon as possible
Managers want the highest profit possible on sales whereas customers want low prices for high quality goods
Explain stakeholder interdependence
A stakeholder is someone who has an interest in the success of the business. All stakeholders want the business to succeed and are dependent on each other to make this happen.
