Notesale: Turn your study into money

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Stakeholders
Definition
A stakeholder is any individual, group, or organisation with a direct interest in, and is
affected by the activities and performance of a business
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Employees
Employees are a very important stakeholder group, as they are the ones who make a
business possible, and some even argue that they may be the most important one
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They aim to:
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Maximise own benefits (perks, bonuses, etc
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Shareholders

Limited liability companies are owned by shareholders, and invest money in a
business by purchasing shares
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They aim to:
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Maximise Dividends
To achieve a capital gain in the value of shares/ a rise in the share price

External Stakeholders
Stakeholders that are not part of the business, but have a direct interest or
involvement in the organisation

Customers
This is quite obviously very important as without customers to buy the product, there
would be no business at all
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It is important to keep them happy as they can offer
credit if cash is not immediately available, and preference over other businesses
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This in itself shows the power they hold, as they could protest against certain
practices of a business, therefore they should be kept happy
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Government
They are important as they can have significant influence on business activity such as:
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Unfair business practices are avoided
Correct amount of taxes are paid
Health and safety standards are met
Compliance with employment legislation occurs
Consumer protection laws are upheld

Their ultimate aim is to ensure that a business acts in the public’s interests
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Stakeholder Conflict
It refers to the inability of an organisation to meet all of its stakeholder objectives
simultaneously, due to differences in varying needs of all its stakeholder groups
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Another example is the conflict between businesses (managers) and suppliers, as the
latter would want to receive the full price of the transaction to improve their cash
flow, while businesses expect discounts and other benefits for ordering regularly and
buying in bulk
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Other
issues to look at when dealing with conflicts are:
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The type of organisation in question
The aims and objectives of the business
The source and degree of power



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