Stakeholders

International Institute of Planning & Management

Stake Holders

Stake Holders w A stakeholder is any individual or organization that is affected by the activities of a business. They may have a direct or indirect interest in the business, and may be in contact with the business on a daily basis, or may just occasionally.

Types of Stakeholder w w w w w w w w

Owners (I) Shareholders (I) Managers (I) Staff or employees (I) Customers (E) Suppliers (E) Community (E) Government (E)

w I = Internal w E = External

Stakeholders versus Shareholders w Shareholders hold shares in the company – that is they own part of it.

w Stakeholders have an interest in the company but do not own it.

Responsibility of the Business Towards The Stake Holder

w Social Responsibility w Ethics

Social Responsibility

Ethics w Ethics refers to the moral rights and wrongs of any decision a business makes. w Some examples of ethical policies are: w Reduce pollution by using non-fossil fuels. w Disposal of waste safely and in an environmentally friendly manner. w Sponsoring local charity events. w Trading fairly with developing countries.

Characteristics of Stakeholders 1. Owners and Shareholders w The number of owners and the roles they carry out differ according to the size of the firm w In small businesses there may be only one owner (sole trader) or perhaps a small number of partners (partnership) w In large firms there are often thousands of shareholders, who each own a small part of the business

Characteristics of Stakeholders 2. Managers:

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w w w w w

Organize Make decisions Plan Control Are accountable to the owner(s)

Characteristics of Stakeholders 3. Employees or Staff: w A business needs staff or employees to carry out its activities w Employees agree to work a certain number of hours in return for a wage or salary w Pay levels vary with skills, qualifications, age, location, types of work and industry and other factors

Characteristics of Stakeholders 4. Customers: w Customers buy the goods or services produced by firms w They may be individuals or other businesses w Firms must understand and meet the needs of their customers, otherwise they will fail to make a profit or, indeed, survive

Characteristics of Stakeholders 5. Suppliers: w Firms get the resources they need to produce goods and services from suppliers w Businesses should have effective relationships with their suppliers in order to get quality resources at reasonable prices w This is a two-way process, as suppliers depend on the firms they supply

Characteristics of Stakeholders 6. Community: w Firms and the communities they exist in are also in a two-way relationship w The local community may often provide many of the firm’s staff and customers w The business often supplies goods and services vital to the local area w But at times the community can feel aggrieved by some aspects of what a firm does

Characteristics of Stakeholders 7. Government: w Economic policies affect firms’ costs (through taxation and interest rates) w Legislation regulates what business can do in areas such as the environment and occupational safety and health w Successful firms are good for governments as they create wealth and employment

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