1.

4 Stakeholders
1.4.1 Internal and external Stakeholders
Stakeholder: a person or organization that affects or is affected by a business. Stakeholders are often
classified as internal versus external, market versus non-market, or primary versus secondary.

1. Internal stakeholder: a stakeholder who is internal to (inside] the business, such as an employee, a
manager, or shareholders

2. External stakeholder: a stakeholder who is external to (outside] the business or organization, such
as suppliers, customers, government, media, or the community

Interest of Shareholder CEO  Senior Middle Supervisors ->

Internal  returns of coordinating managers  managers  Tactical objectives
investment business and Strategic Tactical and applying Op
deliver profits objectives objectives
objectives.
and returns (Keep their (Keep their job)
job)
Employers -> Wages,
rights, and good
working conditions

Interest of Financing Government Suppliers  Local Pressure groups 

External entities   How stable community  Business has an
returns of business relationships impact of the impact on are of
investment operates in a with similar business in the concern PACMA
business ethics local area
environment Media Focuses 
Customers  Business new stories
best products
that meets their
needs

1.4.2 Conflict between stakeholders’ interests

Business may also have differences of opinion. This situation makes sense: although all stakeholders
have a "stake" in the business, their focuses are different.

Ex Pay rise for employees.

 Shareholders: may object to the idea as it could reduce profits reduce return on investment.

 Employees: in favour pay rises higher standard of living. In between these two positions there
will be various stakeholders who will have different opinions.

 The CEO and senior managers probably support higher wages employees happier. However,
THEY are responsible for ensuring profit targets and return on investment worried pay
rises reduce profits.
  Managers may also be concerned that by reinforcing the use of extrinsic motivating factors1, a
pay rise might undermine their efforts to foster a culture of intrinsic motivation2. Often the use
of extrinsic motivating strategies weakens intrinsic motivation.

 local community would in principle favour higher wages for employees, as it would mean that
employees would have more money to spend in the local community - at restaurants and
shops, for example.

1.4.3 Stakeholder Analysis

Large business or business that have a complicated stakeholder interest perform Stakeholder analysis
Stakeholder analysis: prioritize / rank the interest of various stakeholders

Decision-makers try to
satisfy those stakeholders
closest to the centre.

Owners and Managers are

central to decision-making

further removed are

suppliers, employees,
financiers, and consumers

Government, Pressure
groups, media, and local community least.

Stakeholder Mapping
Group A. These stakeholders, who have
minimal interest in the business and
have limited power over it, are rarely a
problem for the business.

Group B. For owners and managers,

make this group feel included is
important. Sense of belonging is
important.

1
Extrinsic motivating factors are types of external rewards, such as pay increases or
bonuses
2
Intrinsic motivation occurs when people do things because they find that doing so is
rewarding.
Group C. This stakeholder’s group must be kept satisfied. They have the power to influence other
groups. The business must find ways to flatter the self-esteem of members of this group to make them
feel important.

Group D. most important stakeholders. The business must not merely communicate with them; consult
any major decisions that are made. Involve and satisfy these stakeholders