Chapter 5 - Stakeholders
Stakeholders
★ A stakeholder is any person or group with an interest in a business’s success.
★ Stakeholders benefit when the business succeeds.
★ Stakeholders can be internal (owners, managers, employees) or external
(customers, suppliers, lenders, community).
★ The stakeholder concept helps analyse business objectives, decisions and
strategy.
★ The relationship is two-way: businesses affect stakeholders and stakeholders
influence businesses.
Key Stakeholder Issues:
★ Which stakeholders are most powerful or important.
★ How stakeholder objectives affect business decisions.
★ How stakeholder views may change over time.
★ Whether stakeholders see the business as successful.
Stakeholder Objectives
Owners:
★ Want high returns on investment.
★ Want business growth to increase profits.
★ May accept lower short-term profits for long-term growth.
Employees:
★ Want good wages, bonuses and job security.
★ Want good working conditions and job satisfaction.
★ Value training and promotion opportunities.
Customers:
★ Want high-quality products at low prices.
★ Expect good customer service and innovation.
★ Increasingly concerned about ethical behaviour.
★ Can influence businesses through pressure groups or boycotts.
Suppliers:
★ Want regular orders and prompt payment.
★ Prefer long-term relationships rather than one-off deals.
★ Loyal suppliers are more supportive in the long run.
Lenders:
★ Want repayment on time and in full.
★ See business stability as essential.
The Community:
★ Benefits from jobs, higher incomes and local investment.
★ These are known as external benefits.
★ May suffer external costs such as pollution, noise and congestion.
★ Property prices may rise or fall due to business activity.
Social Costs and Benefits:
★ Social benefits = private benefits + external benefits.
★ Social costs = private costs + external costs.
★ Judgements should consider both, not just business profits.
The Government:
★ Interested in business success due to higher tax revenue.
★ Lower unemployment reduces welfare spending.
★ Exports improve the country’s trading position.
