Unit 1: Stakeholders In a business Flashcards
individuals or groups interested in the activities of business, e.g. owners/shareholders, managers, employees, customers, suppliers, lenders, government and the local community.
Refers to individuals or groups interested in the activities of the business. Stakeholders are interested in a business for various reasons and will be directly affected by its decision or by its performance. Examples of stakeholders include owners( shareholders); managers; employees; customers; suppliers; lenders; government; local community and special interest groups( pressure groups). Stakeholders use a variety of
information for decision making purposes, and the information that is available to stakeholders will depend on whether the stakeholder is an internal or external stakeholder.
Internal Stakeholders
Are those that are directly affected by the business’s performance. They are also known as primary stakeholders. They have a large influence on how the company is run. For example the company’s owners will take part in important business decisions. Managers and employees also influence the company’s day to day operations by various business decisions that they make.
External Stakeholders
Are individuals or groups that are not directly affected by the business’s performance. These parties are not directly involved in decision making and other business affairs and, therefore, may or may not be affected by the company’s decision or operations. External stakeholders include the government entities, the general public, competitors, customer, pressure groups politicians, analysts, stock brokers, potential investors etc For example, government entities such as internal revenue will use business’s information for assessing tax payments; potential investors will use the information to make investment choices, media will use them for public awareness purposes, and analysts and stockbrokers will use them to advice clients or potential investors.
roles, rights, and responsibilities of stakeholders.
Table
impact of business decisions/actions on stakeholders, and their reactions.
Table
how and why a business needs to be accountable to its stakeholders.
The business will benefit from customer loyalty
The business will enjoy good publicity when customers give word of mouth recommendations to
others
Good customer feedback which helps to improve further goods and services
NB: customer focus: customers should be the business’s top priority. Paying a lip service to customers’ concerns may lead to loss of good image and even legal action
Way in which a business can become responsible to customers
Business must offer quality goods
Businesses to offer well designed and durable goods
To sell goods at reasonable prices
Businesses not to take advantages of vulnerable customers e.g high-pressure selling tactics
Benefits to the business for being responsible to suppliers
Benefits from supplier loyalty
Suppliers may be willing to open credit lines
Suppliers will be prepared to meet deadlines and requests for special orders
Way in which a business can become responsible to suppliers
Prompt payments to suppliers
Giving suppliers clear guidance on what is required
Offering suppliers long-term contracts
Buy stock regularly
Benefits to the business for being responsible to employees
There is employee loyalty
Low labour turnover
The business can easily attract highly qualified staff’
Employees will be motivated and their productivity will increase
Way in which a business can become responsible to employees
Business to provide training opportunities
To give employees fair wages
Involve employees in decision making
Give employees fringe benefits e.g company house, company car etc
Benefits to the business for being responsible to community
Local communities are more likely to accept some of the negative effects caused by business operations
Local councils often give contracts to business with a record of good behaviour towards the community and its environment
Way in which a business can become responsible to community
Offer secure employment
Avoid adverse environment effects such as pollution
Employing local people
Benefits to the business for being responsible to the government
Business may receive valuable government contracts
Business may benefit from government subsidies
Licences to set up new operations are more likely to be awarded to business that meet their
responsibilities
Way in which a business can become responsible to government
Obeying government laws
Paying taxes in time
Declare all incomes to the government generated by exporting businesses
how conflict might arise from stakeholders having different aims.
Table
how changing business objectives might affect its stakeholders.
Table
