1.4 Stakeholders
Give an example of an individual/group being both an internal and external stakeholder.
Consults to a business brought in because of their expertise in a particular area (ex. a financial planner) are external to do the business. However once they are hired, they have an internal position.
What is the interest of the CEO/managing director?
Coordinating the business strategy and delivering profits and returns that satisfy the shareholders.
Are shareholders internal or external stakeholders?
Depends- even if small shareholders own a tiny fraction of a large publicly traded company, they are still internal stakeholders. Someone who owns a small stake, such as 100 shares, of a large publicly traded company has no ability to influence the business and is generally external to the business.
What is the interest of pressure groups?
How the business has impact on their area of concern.
What is the interest of the government?
How the business operates in the business environment.
Give an example situation of stakeholders being in mixed mind.
In theory, the CEO and senior managers would support paying higher wages to make employees happier, but pay rises may lower profits, and this is crucial since CEOs and senior managers have responsibility for meeting profit targets and returning investment ratios.
Give an example situation of stakeholders being in mixed mind.
In theory, those in the local community would favour higher wages for employees, since it means they would have more money to spend in the local community (restaurants, shops etc.) However, if pay rises in a way that threatens the existence of the business, the community would not favour this idea.
External stakeholders.
Individuals or groups that are outside the business.
What are internal stakeholders?
Individuals or groups that work within in the business.
Give an example of an individual/group being both an internal and external stakeholder.
an employee of a business can also be resident of the community that the business is a part of, therefore being an employee and part of the local community
Explain why it is easier to manage and fulfill the interests of each stakeholder the smaller it is.
ex. -small business: stakeholders are the sole trader, employees, suppliers, government, local community etc. ;; because of the business's size and legal structure- only sole trader, employees & customers really influence the business ∴ less stakeholders to manage
Explain why it is harder to manage and fulfill the interests of each stakeholder the larger a business is.
ex. a factory business operating in small city/town;; may be the most important employer in the area -
Identify a tool that large businesses (or those that have complicated/conflicting stakeholder interests) can use to manage their stakeholder interests.
stakeholder mapping
What is the interest of suppliers?
Maintaining a stable relationship with the business.
Give an example situation of stakeholders being in mixed mind.
Managers be concerned that, by reinforcing the use of extrinsic motivating factors, a pay rise might undermine their efforts to foster a culture of intrinsic motivation.
Are competitors stakeholders?
No. The competition does not have anything directly at stake with the business itself (the competitor would want the business to fail, so they don't have an interest in it). However, the business may have an indirect impact on competitors through its actions in the marketplace.
What is the interest of foremen and supervisors?
Organising tactical objectives and formulating operational objectives.
Give an example of conflict between stakeholders' interest.
Pay rise- this is advantageous for the employees since more more = a higher standard of living. However, this may decrease profits of the business, thus decreasing the return (dividends) of investments for the shareholders.
Describe step 1 of the stakeholder analysis:
Prioritise/rank the interests of various stakeholders. - determine how "close" each stakeholder is to decision making in the business -owners and managers are central to decision making, suppliers, employees, financiers, consumers are further ---governments, pressure groups, the media, local community are the furthest -decision makers aim to first satisfy those closer
What is the interest of employees and their unions?
Protecting their rights and working conditions.
Define stakeholder.
Stakeholders are any individual or groups of individuals who have direct interest/concern in a business because the actions of the business will affect them directly.
What is the interest of customers and consumers?
The best product that meets their needs.
Describe the relationship between the size of the business and the level of difficulty of managing stakeholders.
The bigger the business, the harder it is to manage and fulfill each stakeholders' interest in the business.
What is the interest of the media?
The impact of the business in terms of news stories.
What is the interest of people in the local community?
The impact of the business in the local area.
What's one feature of a successful business, with regards to stakeholders?
The interest of stakeholders are sufficiently satisfied most of the time.
What is the interest of senior managers?
The strategic objectives for their functional areas.
What is the interest of middle managers?
The tactical objectives for their functional areas.
What is the interest of financiers?
They focus on getting the returns on their investments.
What is the interest of shareholders?
They focus on returns on their investments (their dividends).
Can an individual/group be both an internal and external stakeholder?
Yes
Identify what can help large businesses (or those that have complicated/conflicting stakeholder interests)
a stakeholder analysis