Backnotes

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Stakeholders in a Business

  • Stakeholders 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
    • special interest groups (pressure groups).

STAKEHOLDERS THEORY/ STAKEHOLDERS CONCEPT

  • An idea that business should not only focus on shareholders’ interest but should consider interest of all stakeholders e.g managers, suppliers, customers, employees, government, and pressure groups
table explaining all the stakeholders, their roles, rights, and responsibilities
table explaining all the stakeholders, their roles, rights, and responsibilities continued
table explaining all the stakeholders, their roles, rights, and responsibilities continued
table explaining all the stakeholders, their roles, rights, and responsibilities continued

HOW AND WHY A BUSINESS NEEDS TO BE ACCOUNTABLE TO ITS STAKEHOLDERS

  • Benefits to the business for being responsible to customers
    • 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
  • 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