Stakeholders In A Business: Business Stakeholders (Copy)

1.5.1 Business Stakeholders

Individuals Or Groups With An Interest In The Activities Of A Business

• Definition: A stakeholder is any person, group, or organisation that has an interest in, or is affected by, the decisions and activities of a business.
• Why Stakeholders Matter:
  • They provide resources (capital, labour, land, ideas).
  • They influence decision-making through their demands and expectations.
  • Their satisfaction often determines the survival and growth of the business.
• Examples:
  • Shareholders, employees, customers, suppliers, government, community, trade unions, competitors.

Internal Stakeholders And External Stakeholders

• Internal Stakeholders (those directly involved within the organisation):
  • Owners/Shareholders:
    • Provide capital and expect return on investment.
    • Their objective is usually profit maximisation and share value growth.
  • Managers:
    • Make decisions on operations and strategy.
    • Interested in bonuses, job security, and career development.
  • Employees:
    • Contribute labour and skills.
    • Interested in fair wages, safe working conditions, job satisfaction, and career growth.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change AS Level Business Full Scale Course

• External Stakeholders (outside groups affected by or able to affect the business):
  • Customers:
    • Expect quality goods/services at fair prices.
    • Care about after-sales service and ethical practices.
  • Suppliers:
    • Provide raw materials and components.
    • Interested in timely payments, long-term contracts.
  • Government:
    • Interested in tax revenue, employment generation, compliance with laws.
  • Local Communities:
    • Care about jobs, environmental impact, community support.
  • Banks/Financiers:
    • Provide loans and credit facilities.
    • Concerned about repayment and financial stability of the business.
  • Pressure Groups/NGOs:
    • Seek influence over environmental and social practices.

The Roles, Rights And Responsibilities Of Stakeholders

• Owners/Shareholders
  • Roles: Provide capital, influence major decisions (voting rights).
  • Rights: Share in profits (dividends), right to vote at AGM, information on performance.
  • Responsibilities: Ensure adequate funding, exercise rights responsibly.
• Managers
  • Roles: Plan, organise, lead, and control business operations.
  • Rights: Receive pay, authority to make decisions, recognition.
  • Responsibilities: Act in the best interest of shareholders, ethical leadership, achieve targets.
• Employees
  • Roles: Carry out day-to-day tasks, contribute productivity and skills.
  • Rights: Fair wages, safe working conditions, respect, training opportunities.
  • Responsibilities: Work efficiently, maintain confidentiality, follow company policies.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change AS Level Business Full Scale Course

• Customers
  • Roles: Provide revenue, feedback, and brand loyalty.
  • Rights: Safe, reliable products, fair treatment, truthful information.
  • Responsibilities: Pay for products/services, respect terms of sale, provide honest feedback.
• Suppliers
  • Roles: Ensure steady supply of inputs.
  • Rights: Timely payment, fair contract terms, ongoing relationship.
  • Responsibilities: Provide quality goods, maintain supply reliability, ethical practices.
• Government
  • Roles: Regulate industries, enforce laws, collect taxes.
  • Rights: To expect compliance with laws, payment of taxes, social responsibility.
  • Responsibilities: Provide infrastructure, maintain stable business environment, support fair competition.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change AS Level Business Full Scale Course

• Local Communities
  • Roles: Provide workforce, act as consumers, host business facilities.
  • Rights: To expect environmental protection, job opportunities, community investment.
  • Responsibilities: Support businesses, provide local resources, maintain good relations.
• Banks/Financiers
  • Roles: Provide funding for expansion and working capital.
  • Rights: To receive repayment with interest, access to financial information.
  • Responsibilities: Offer fair credit terms, maintain confidentiality.
• Pressure Groups/NGOs
  • Roles: Influence businesses towards ethical practices.
  • Rights: Freedom of expression, lobbying for change.
  • Responsibilities: Provide accurate information, advocate responsibly without damaging reputations unfairly.

Summary Note

• Stakeholders have different and sometimes conflicting interests.
  • Example: Shareholders may want high dividends, while employees demand higher wages.
• Effective stakeholder management is crucial to avoid conflict and ensure sustainable business growth.
• Balancing interests leads to stronger reputation, long-term profitability, and social approval.

Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change AS Level Business Full Scale Course