Chapter 5 - Stakeholders in Business
Lesson Objective: To understand what are stakeholders and what are their interests towards the business
It may seem weird to you but there is a type of business out there which objectives are to benefit the society more than anything else - they are called social enterprises:
As you can see, social enterprises also target profit! However, the intention of making profit is different than most businesses: instead of distributing it to shareholders and owners social enterprises reinvest the profit to be able to yield even more economic, social, and environmental good.
One good example of a social enterprise is TOMS:
Another great example is Trinity Oaks:
Case study (p. 61)
Test yourself (p. 62)
The environment and the society are two of the many stakeholders a business has:
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).
Suppliers are interested in timely payments, regular orders, and long-term contracts. The success (or lack of) reflects on the success of the supplying business itself.
Employees are also interested in the business performance, but for different reasons: job security, better pay, opportunities for promotion.
The local community/society is interested in: employment opportunities, investment in local supplies to boost local economy, reduction in transport impact of business activities, and lower environmental impacts of business activity (e.g. pollution)
Companies able to match these enjoy of benefits such as:
Governments, on the other hand, are looking for companies that meet their legal responsibilities and pay their taxes. They also benefit from the employment opportunities generated by the business.
Lenders are just worried about getting their loans paid with interest and therefore are interested in the business performance. Does the business have many loans? Is it able to pay its loans? Does it have collaterals?
Remember: public sector organizations have very different objectives and aims, which are mostly related to:
Accessibility to everyone regardless of location and income;
Affordability: cheaper than private sector and even free in some cases;
Open to all: income, class, ethnicity, culture, religion, and others should not be considered.
To-Do-List
Activity 5.3
Activity 5.4
Chapter 5 - Stakeholders in Business
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