Chapter 5 - Stakeholders in a Business (AS LEVEL BUSINESS STUDIES)
Study Notes: Chapter 5: Stakeholders in a Business (AS LEVEL BUSINESS STUDIES) (frequentprocrastinator.blogspot.com)
Definitions to Remember:

Stakeholders: people or groups of people who can be affected by - and
therefore have an interest in - any action by an organisation

Stakeholder concept: the view that businesses and their managers have
responsibilities to a wide range of groups, not just shareholders

Corporate Social Responsibility: the concept that accepts that businesses
should consider the interest of society in their activities and decisions, beyond the
legal obligations that they have
Notes:
Responsibilities to Stakeholders - and Impact on Business Decisions
Customers:

It is essential to satisfy customers' demands in order to stay in business in the
long term
o
Decisions about quality, design, durability and customer service
should consider the customers' objectives for attractive goods that perform as
intended, all at a reasonable price.

Businesses also have responsibilities to customers not to break the law
concerning consumer protection and accurate advertising
o
Avoiding taking advantage of vulnerable customers and not using
high-pressure selling tactics are other policies of responsible businesses
Benefits of accepting these responsibilities:

Consumer Loyalty; Repeat Purchases

Good publicity when customers give word of mouth recommendations to
others

Good customer feedback, which helps to improve further goods and services
Suppliers:

Good reliable suppliers must be found and given clear guidance on what is
required

In return, the purchasing business should pay promptly, place regular orders
and offer long-term contracts
Benefits of accepting these responsibilities

Supplier loyalty - prepared to meet deadlines and requests for special orders

Reasonable credit terms more likely to be offered
Employees:

Providing training opportunities, job security, paying more than minimum
wages when these are very low, offering good working conditions, involving staff in
some decision-making
Benefits of accepting these responsibilities

Employee loyalty and low labour turnover

Easier to recruit good staff

Employee suggestions for improving efficiency and customer service

Improved motivation and more effective communication
Local Community

Offer secure employment so that there is less local fear of job losses

Spend as much as possible on local supplies to generate more income

Reduce the transport impact of business activity as much as possible

Keep the adverse environmental effects to a minimum
Benefits of accepting these responsibilities

Local councils will be more likely to give planning permission to expand the
business

Local communities are more likely to accept some of the negative effects
caused by business operations if they provide financial support for community
groups and projects such as children's playgrounds

Local councils often only give contracts to businesses with a record of
community involvement
Government

All businesses should meet their legal responsibilities as defined by
government legislation

Business should pay taxes on time

Complete government statistical and other forms accurately

Seek export markets
o
the foreign currency earned by exports allows a country to pay for
important imports of food, materials, new technology and so on
Benefits of accepting these responsibilities

Good relations with government might lead to success with expansion
projects receiving planning permission

Businesses are more likely to receive valuable government contracts

Requests for subsidies to expand businesses are more likely to be approved
by the government

Licences to set up new operations are more likely to be awarded to
businesses that meet their responsibilities to the government and the wider society
An Evaluation of Corporate Social Responsibility

There could be opportunities for businesses adopting such policies to
become more profitable because they are socially responsible

By spending money on CSR projects, it is suggested that businesses have
less to invest for expansion and less to pay out to owners, who took the risk to
originally invest in them

CSR is just a form of 'window dressing' to make businesses appear society
friendly when they are really damaging the interests of society by some of their
activities

It is stated that CSR is an attempt to get governments to get governments to
impose fewer controls and restrictions on powerful multinational firms

Meeting social responsibilities can be expensive and might reduce profits in
the short run (for example: giving employees better working conditions than other
firms)

However, over a longer period of time, the marketing, public relations and
employee motivation benefits of CSR policies might pay for themselves and even
generate higher profits.
Impacts on Stakeholders of Changing Business Objectives
Different stakeholder groups will be affected in different ways by these changes in
objectives - employees' jobs will be lost and customers will have less choice, for example.
However, owners' returns might be safeguarded in the future by the decisions taken above and lenders might be reassured that action is being taken to stem losses that should mean
they are repaid the loans the have given.
Posted by the frequent procrastinator at 11:00 PM