STAKEHOLDERS

PEOPLE WHO HAVE A KEY INTEREST IN THE BUSINESS

STAKEHOLDERS

May be broken down into internal and external stakeholders

Shareholders/ownersmanagersemployees

suppliers

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community

Other stakeholders

There a large number of people and organisations who could be considered stakeholders

• Banks and other lending institutions• Local authority• Inland revenue• National Government• Tax payers• Customs and excise• Investors

CONTROL AND INFLUENCE

• Stakeholders can exert control or influence decisions.

• The degree of the influence or the level of control will vary depending on how much they are involved or interested in the company.

Aims of Stakeholders

Different groups of stakeholders will have different aims regarding an organisation

• Shareholders – will be interested in healthy profits so they will receive a high dividend and a high value of their shares

• Managers – will want promotion and growth to ensure their own job security

• Employees – will be concerned about pay levels, working conditions and job security

• Suppliers – will want to get regular orders with prompt payment after a brief period of credit

• Customers – will want low prices, high quality and good after sales service

Aims of stakeholders• Banks – will want the firm to able to meet its loan and

interest repayments on time• The Government – will want to ensure the organisation

complies with the law, pays the correct taxes and provides employment for the population

• The community as a whole (society) – will want organisations to be socially responsible, not to harm the environment, to treat employees fairly and not to exploit consumers

• Taxpayers – because some of the taxes the firm pays may be used to help businesses (start-up loans and grants)

• The local community – if the firm is in their area it will provide employment and may sponsor local events. Their existence may influence the provision of services like schools and hospitals and may affect the local environment.

• Local government – because they will provide services such as refuse collection and road building and maintenance

Influence of Stakeholders on Organisations

• Shareholders – have voting rights at AGM’s of limited companies

• Managers – have day to day decision making powers

• Employees – may take industrial action or strike to persuade the firm to do what they want

• Suppliers – can vary the credit period and level of discounts offered to the firm

• Customers – influence firms by buying, refusing to buy their goods or services.

• Banks – have the power to grant or withhold loans and to set the level of interest to be paid back

• The Government – can introduce laws to make firms carry out its wishes (Sex Discrimination Act, Rehabilitation of Offenders Act, Minimum Wage

Influence of Stakeholders on OrganisationsInfluence of Stakeholders on Organisations• The community as a whole and Pressure Groups– can

persuade firms to do as it wants through protest movements such as Green peace and animal rights organisations

• Taxpayers – usually prefer to pay less tax than more. If less taxes are paid then their will be less money available

to provide assistance to businesses

• The local community – can influence how businesses in their area behave through the local papers (by writing letters for or against things the business has done). Through support or opposition to the business’s decisions such as protests against the closure of a factory

• Local government – can influence firms through planning and other legislation for which local government are responsible. They can also provide help through the creation of suitable sites for businesses such as business parks.

Stakeholder Conflict

• Different stakeholders may have different aims for the organisation.– Customers want high quality products

and low prices whereas shareholders want regular high dividends in return for their investment.