TOPIC 1 : BUSINESS AND ENVIRONMENT

1.4 Stakeholders
Stakeholders
 Stakeholders
• Business activity creates jobs, prosperity and wealth. Who benefits from this?
• A Stakeholder is a person, or party, with a interest (or a ‘STAKE’) in the success of
a business
• On a basic level, stakeholders want to see a business succeed because they will
benefit from this success
• However….in theory, all stakeholders should / would / could benefit from the
success of a business – but not all will or equally for that matter.
 Internal Stakeholders : Employees, Shareholders / Owners, Managers
WHAT ARE THE OBJECTIVES FOR EACH STAKEHOLDER?
Employees :
•Want a high wage, job security, holidays, sick pay, legal protection
•Want interesting, challenging work, while having opportunities to advance and to improve their jobs skills
through work experiences and added training
Shareholders / Owners :
•A business can have one owner if it’s a sole trader, several in a partnership or thousands of shareholders if
it’s a PLC : but what the common thread is for all owners is the best possible return on their investment
from the business
•Shareholders and owners don’t necessarily want just short-term profit . Instead they might be looking for
long-term, sustainable returns that control a large percentage of the respective market(s) with a loyal
customer following
Managers :
•Almost a liaison between both the employees and the owners, the managers want the best of both
worlds : interesting, challenging work, high wages, job security, added training and skill advancement
WHILE wanting the company to have as much return on its investment as possible
External Stakeholders : Suppliers, Customers, Special Interest Groups,
Competitors
WHAT ARE THE OBJECTIVES FOR EACH STAKEHOLDER?
Suppliers :
•If a business ceases trading, its suppliers lose a source of income. Therefore the suppliers want to see the
business have a large customer base (whom return and are not ‘one-off’s’) and the supplier would like to be
paid as quickly and promptly as possible
•The supplier who is treated like a ‘stakeholder’ – one with a vested, long term interest in the business – will
be more loyal and more committed to the long term success of a business. Those suppliers who are short
term and temporary will not necessarily care about the business. Therefore building up a long-term
committed relationship between the business and the supplier is beneficial for both stakeholders
Customers :
•Want the best-quality product(s) and service(s) at the lowest possible price

•They want the products to be safe, to be innovative and want to ‘feel’ ethical about associating with that
company and its products / services
•If consumers are fundamentally dissatisfied with quality, price, service or ethical behaviour – they will
simply stop buying from the business.
External Stakeholders : Suppliers, Customers, Special Interest Groups,
Competitors cont’d…..
WHAT ARE THE OBJECTIVES FOR EACH STAKEHOLDER?
Special Interest Groups (SIGs):
•Is a community with an interest in advancing a specific area of knowledge, learning or
technology where members cooperate to affect or to produce solutions within their particular
field, and may communicate, meet, and organize conferences
•SIGs want their concerns to be heard and recognized, while the business – or government – will
establish and implement change
Competitors :
•Yes (!) they are stakeholders. Every company can, directly or indirectly, affect the performance
of its competitors. Often a marketing plan is designed to capture market share from a particular
rival or reinforce customer loyalty in the face of competition from a new up-and-comer.
•Therefore, a competitor is another stakeholder in the business as they are affected by the
actions of an organisation that they are in competition with
 Stakeholder Conflict
The issues and conflicts are numerous. Some which might include :
•Higher expenditures on CSR or community building will provide less dividend and return to owners /
shareholders with a percentage of profit not necessarily high
•Higher expenditures on employee improvement (higher wages, more training) will provide less dividend
and return on investment to owners / shareholders
•If less attention is paid to customer service (ie automated phone systems) customers might feel neglected

•If a company is accused of unethical business practices, customers will feel less loyal to the company and
the brand
•The closure a ‘non green’ factory or plant will improve community relations, however employees will lose
their jobs and there potentially is less profit for the company

A BALANCE NEEDS TO BE CONSCIOUSLY MAINTAINED AND

PRO-ACTIVELY UPHELD FOR ALL STAKEHOLDERS TO HAVE THEIR
OBJECTIVES MET AND SATISFIED (as much as possible)