Chapter 5 - Stakeholders in Business
Learning Objective: To understand the several stakeholders and their various interests
New Airport Near World Heritage Site (p.62)
Who are stakeholders? These are the people or groups of people who are impacted or can impact an organization - one way or another.
Therefore, stakeholder groups are interested in the business actions - these interests may differ from stakeholder to stakeholder:
Consider the following:
Businesses, therefore, should understand their accountability to stakeholders and how stakeholder aims impact business decisions. Businesses have several responsibilities to various stakeholder groups:
Customers are looking for quality, design, durability, price, customer service. Satisfied customers result in customer loyalty, repeat purchases, good publicity (WOM), and good and insightful customer feedback.
Suppliers are important for their quality and reliability. They are interested in timely payments, regular orders, and long-term contracts.
When satisfied, this stakeholder group offers: supplier loyalty, ability to meet tight deadlines and special requests, and even offer reasonable credit terms.
Employees are looking interested in training, opportunities, job security, better salaries, good working conditions, decision-making power.
Companies able to match these requests enjoy of:
Employee loyalty, low labor turnover, more recruitment opportunities, valuable suggestions/feedback, improved motivation, better communication.
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.
Companies able to match these enjoy of benefits such as:
Local organizations being more likely to support business expansion and the community being more accepting of some negative business' activity effects.
Governments are looking for companies that meet their legal responsibilities, tax income, and exports to generate foreign currency.
Companies able to match these enjoy of:
Easier access to expansion permits, government contracts, subsidies, and licenses for doing business.
Shareholder Concept vs. Stakeholder Concept
Remember that for a long time businesses would follow the shareholder concept where the owners interests would be in the forefront of business decision-making. Keeping shareholders happy will always be important: managers and directors usually owe their positions to them.
Recently, the stakeholder concept has become more prominent: decision-making is now bond to other stakeholders' interests to avoid backlash. Examples:
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Chapter 5 - Stakeholders in Business
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