Business Management [IB] 1.4 Stakeholders

Internal stakeholders

Members of the organization; the employees, managers, directors and shareholders of the organization.

Stakeholder

Any person or organization with a direct interest in, and is affected by , the activities and performance of a business.

Managers and directors

Managers are the people who oversee the daily operations of a business.

Stakeholder mapping

A model that assesses the relative interest of stakeholder and their relative power or influence on businesses.

Pressure groups

Consist of individuals with a common interest who seek to place demands on organizations to act in a particular way or to influence a change in their behaviour. Actions taken by pressure groups: Boycotting - Refusal to buy products from a certain business as a sign of protest. Lobbying - Using the power of pressure groups to influence key issues with employers, legal representatives and the government.' Public relations (PR) - Getting positive publicity about a specific opinion or cause Direct action - Takes action to achieve its cause; staging mass protests or taking legal action against firms that may have acted illegally.

External stakeholders

Do not form part of the business but have a direct interest or involvement in the organization. Examples: customers, suppliers, pressure groups, competitors and the government.

Government

Government is an important external stakeholder as it can have significant influence on business activity, including assurances that: - Unfair business practices are avoided - The correct amount of corporate tax is paid from net profits - Health and safety standards at work are met - Compliance with employment legislation occurs - Consumer protection laws are upheld

Stakeholder conflict

How to deal with conflicting stakeholder needs, leader need to look at three key issues: - The type of organization in question - The aims and objectives of the business - The source and degree of power (influence) of each stakeholder group

Shareholders (stockholders)

Limited liability companies are owned by shareholders. Stockholders are a powerful stakeholder group as they have voting rights and a say in how the company is run. Shareholders have two main objectives: To maximise dividends (a proportion of the company's profits distributed to shareholders) To achieve a capital gain in the value of shares.

Competitors

Rival businesses of an organization. Interested in the activities of a business for several reasons: - Business might benefit from competition as rivalry can create an incentive to be innovative and/or to produce new products. - To remain competitive, business need to be aware of and respond to the practices of their rivals. - To benchmark performance, i.e. to compare key indicators against its main rivals such as sales turnover, profit and market share figures.

Employees

Staff of a business will have an interest in the organization they work for. They will strive to improve their pay, etc. Charles Handy argue that employees are an organizations best assets. Sir Richard Branson agrees and is famous for putting his employees first, customers second and shareholders third.