1.4 Stakeholders

Government

(External Stakeholder) Important external stakeholder, they have significant influence on business activities. - Might also have a financial stake in a business - Regulates and ensures that businesses are practicing fair business activities - Corporate tax is paid from net worth - Health and safety standards are met - Employee regulations are met - Consumers protection laws are followed - Lower interest rates/taxes and subsidies rent and tax concessions

Competitors

(External Stakeholder) Rival businesses of an organization. - Businesses might benefit from the competition as an incentive to become innovative and create new products - Awareness and responding to practices of their rivals - Comparing their own performance with other brands

Customers

(External stakeholders) Customers are important for all aspects of business operations. Businesses must pay attention to the needs and opinions of their customers (They depend on them for the survival of the business). Businesses use market research to find out the wants of customers.

Pressure groups

(External stakeholders) Individuals with a common concern who seek to place demands on organizations to act in a particular way or to influence a change in their behavior. Actions taken by pressure groups: Boycotting, lobbying, public relations, and direct action.

Suppliers

(External stakeholders) Suppliers provide a business with stocks of raw materials, component parts, and finished goods used in production. Business establish a good relationship with supplier to receive quality stocks on time and at a reasonable price.

Managers and directors

(Internal Stakeholders) Managers are people who oversee the daily operations of a business. Directors are senior executives who have been elected by the company's shareholders to direct business operations on behalf of their owners.

Employees

(Internal Stakeholders) Staff of a business who produce goods and services for sale, and communicate with the customers. They are likely to strive to improve their financial benefits.

Shareholders (stockholders)

(Internal stakeholders) A powerful stakeholder group that invests money in a company by purchasing its shares. They have voting rights and a "say" in how the company is run. Objectives: To maximize dividends (profit distributed to the shareholders) and to achieve a capital gain in the value of the shares.

Ways to avoid Stakeholder conflict

- Recognizing the type of organization - Acknowledging the aims and objectives of the business - Source and degree of power (influence) of each stakeholder group

Common causes of stakeholder conflict

- Remuneration (pay and benefits) of the company directors -> There should be a fairer distribution of profits to shareholders and staff - Stakeholders having more than one role or set of interests in an organization

Stakeholders and the CUEGIS concepts

Conflict resolution is an important aspect of business strategy - Change: driving and restraining forces that create a change in the business in order for them to move forward and remain competitive - Culture: norms of an organization or its surroundings in where it operates - Ethics: socially accepted moral principles that guide decision making, based on what is believed to be right or wrong - Globalization: worldwide movement toward economic, financial, trade and communications integration - Innovation: Changing or creating more effective processes, products, and ideas, and can increase the likelihood of a business succeeding - Strategy: Devising plans to achieve the long-term goals of an organization

Stakeholders

Individuals or organizations with a direct interest (known as stake) in the activities and performance of a business. Example: shareholders, employees, customers, and suppliers.

Internal Stakeholders

Members of the organization, e.g. the employees, managers, directors and shareholders of the organization.

Stakeholder mapping

Model that assess the relative interest of stakeholders and their relative power (or influence) on businesses. - Lets managers assess how to deal with changing and conflicting stakeholder objectives - Managers can prioritize their actions by using this model - Quadrant A: Minimum effort / Don't receive much attention from decision-makers - Quadrant B: Need to be kept informed - Quadrant C: Need to be kept satisfied through consulting on strategic decisions - Quadrant D: Maximum effort / Receives most attention are are key stakeholders of an organization

Shareholders (or stockholders)

Owners of a limited liability company. Shares in a company can be held by individuals and other organizations.

Conflict

Refers to situations where stakeholders have disagreements on certain matters due to differences on opinions. This can lead to arguments and tension between various stakeholder groups.

Stakeholder Conflict

The inability for an organization to meet all of its stakeholder's objectives simultaneously - Different stakeholder groups having varying interests = Arise of conflicts - Business can't meet the needs of all its stakeholders - Managers deal with stakeholder conflict in different ways depending on their leadership style and the organizational culture

Mutual benefits of stakeholders' interests

There are mutual benefits in simultaneously meeting the competing needs of different stakeholders - Addressing the needs of employees and managers can lead to a highly motivated and productive workforce - Having more individuals with same interest can improve customer relations, corporate image, market share, and profits = Shareholders will be pleased - Enforces the organization to make greater outputs = more employment

External Stakeholders

individuals and organizations, not part of the organization, but have a direct interest in its activities and performance. Examples: customers, suppliers, pressure groups, and the government

Factors of stakeholder conflict

o Difference in the needs and wants of all its stakeholder groups o Disagreements due to difference in their opinions o Disagreements due to differences in their objective/expectations o Stakeholders having more than one role or interest in an organization