Stakeholders and Their Interests (5.2)
Chapter 5 - Stakeholders in Business
Lesson Objective: To understand what are stakeholders and what are their interests towards the business
Stakeholders are any individual or group who are impacted or can impact a business activities/decisions.
Stakeholders can be internal or external:
Each stakeholders group have their own interests regarding the business and its activities. Let's look over some of these stakeholders and what are they interested in the most:
Customers are looking for quality, durability, price, customer service, and the business longevity (spare parts).
They can influence businesses by not buying its products or writing bad reviews.
Suppliers are interested in timely payments, regular orders, and bigger contracts.
They can influence businesses by changing prices, and by giving more or less time for payments.
Lenders are just worried about getting their loans paid on time as well as by receiving interest.
They can influence business by:
Offering loans or not;
Charging more or less interest;
Request existing debts to be repaid.
Governments want businesses to pay taxes, grow, and provide jobs to the population.
They can influence businesses by:
Giving (or not) financial support;
Introduce or remove laws;
Increase or decrease taxation.
The local community/society is interested in:
Employment opportunities;
Investment in local events (e.g. sponsor events);
Lower negative impacts on the community such as pollution, noise, and traffic.
They can influence businesses by:
Protesting against business actions;
Lobbying the government to change regulations.
When it comes to internal stakeholders, we have three:
Employees who are interested in:
Better working conditions;
Higher pay;
Job security;
Opportunities for promotion.
They can influence the business by:
Affecting quality and quantity of output;
Leaving / quiting their jobs, leaving the business without human resources.
Owners are concerned with the returns they will receive from inesting in a business. They are also interested in the value of the business increasing overtime (capital gains).
For obvious reasons, owners have a great degree of impact on businesses:
They may decide to close the business;
They can remove their investments;
Or they can increase their investments in the business.
Similarly to employees, managers are looking for promotions, better pay and status, as well job security.
At the same time, managers heavily influence businesses since they have control over decisions:
They can impact the level and quality of output through their decisions;
They organize, control, and command other workers.
As you can see, many stakeholders have their own interests from the business. A lot of times, those interests may conflict with one another. For example:
Shareholders want higher profits, which may include an increase in prices (shareholders vs. customers);
Suppliers want the business to increase orders but managers are looking for larger discounts for placing larger orders (EoS) - suppliers vs. managers;
Check Figure 5.9
Activity 5.4
To-Do-List
Chapter 5 - Stakeholders in Business
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