Stakeholders in business
➔ Anyone interested or affected by a project or
business.
External Stakeholders:
Stakeholder
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Customers
Suppliers
Employees, including managers and their families
Local communities
Government and government agencies
Special interest groups (pressure groups)
Lenders
Internal Stakeholders
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Owners (shareholders in a limited company)
managers
other employees
Stakeholder Vs Shareholder
[Table 5.1]
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Importance and
influence of
stakeholders on
business
activities
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Shareholder concept - to increase value for the
shareholders
Stakeholder concept ○
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many people are affected by company’s actions
So stakeholders should also be considered
[Table 5.2]
Business accountability to stakeholders and how
stakeholder aims impact business decision
Aim: To increase CSR
Responsibility to:
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Customers
Suppliers
Employees
local community
government
Responsibilities to customers:
Business
accountability to
stakeholders and how
stakeholder aims
impact business
decision
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Customer satisfaction is crucial
Product quality and design
Reasonable prices
Follow laws
Fair treatment
Benefits of responsibility
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Customer loyalty
Repeat purchases
Good publicity
Valuable feedback
Responsibilities to suppliers
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Importance of supplier quality
Reliability matters
Clear communication
Mutual satisfaction
Long-term contracts
Benefits
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Supplier loyalty
Better credit terms
Meeting deadlines
Responsibilities to employees
Business
accountability to
stakeholders and how
stakeholder aims
impact business
decision
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Meeting legal obligations
Additional responsibilities
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Training opportunities
Job security
Fair pay
Good working conditions
Involvement in decision-making
Benefits
Employee loyalty
Low turnover
Recruiting good workers
Efficiency improvements
Motivation boost
Effective communication
Responsibilities to local community
Business
accountability to
stakeholders and how
stakeholder aims
impact business
decision
● Importance of meeting community
responsibilities
● Examples of community-focused
decisions
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Offering secure employment
Using local suppliers
Reducing environmental impact
● Benefits
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Approval for business expansion
Contracts with community-involved
businesses
Acceptance of negative effects
Financial support for community
Responsibilities to government
Business
accountability to
stakeholders and how
stakeholder aims
impact business
decision
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Meeting legal responsibilities
Paying taxes on time
Accurate completion of forms
Seeking export markets
Benefits
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Good relations with government
Valuable government contracts
Approval for subsidies
Award of licences
Conflicts of stakeholder aims:
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Conflicts arising
from different
stakeholder aims
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Shareholder concept prioritizes shareholder
interests over others.
Stakeholder approach seeks to balance
interests for long-term shareholder benefit.
Dealing with conflicts:
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Compromise often necessary to address
conflicting stakeholder demands.
Examples include gradual factory closures and
adjusting plans for community protection.
Establishing priorities:
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Senior management decides which
stakeholders are most crucial in each situation.
Considerations include extra costs, potential
revenue loss, and overall impact on the
business.
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Changing corporate objectives:
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Impact on
stakeholders of
changing business
objectives
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Examples:
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Directors or senior managers may need to alter company
goals due to the evolving business environment.
Impact on stakeholders can be significant.
Volkswagen's transition:
Initially aimed to lead in diesel engines but faced
'Dieselgate' scandal.
Shifted focus to electric cars, requiring heavy investment
and closure of diesel factories.
The Body Shop's adjustment:
Emphasized social and environmental change but faced
tough trading conditions.
Shifted focus to cost-cutting by closing some shops for
survival and profitability, contradicting original objectives.
Stakeholder impacts:
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Employees: Job losses due to changes in objectives.
Customers: Reduced choice or availability of
products/services.
Owners: Potential safeguarding of returns in the future.
Lenders: Reassurance of action to prevent losses or
improve reputation, ensuring loan repayment.
Other Examples:
Impact on
stakeholders of
changing business
objectives
McDonald's Health Initiative:
Previous Objective: McDonald's primarily focused
on offering fast food items with minimal emphasis on
health.
Change in Objective: Responding to increasing
health concerns and changing consumer
preferences, McDonald's introduced healthier menu
options like salads, wraps, and fruit options.
Impact on Stakeholders:
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Customers: Improved health outcomes.
Community: Positive impact on local
economies