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Chapter 5 - Stakeholders in a business - Coggle Diagram
Chapter 5 - Stakeholders in a business
Business stakeholders
A stakeholder is any individuall or group of individuals with an interest in activities of a business
People involved in business activity could be: employees, managers, owners, customers, local community, suppliers, government, lenders
Roles, rights and responsibility of the stakeholders
Employees use skill and expertise within the business, expect to be paid fairly, responsibility to work efficiently
Managers organise the resources in a business to acheive objectives, ensuring thre is relevent resources, expect the access to resources, and responsibility to manage efficiently
Owners provide finance tot he business, receive dividends on profit, use voting power for the best people on the board
Customers justify existence of business, expect to receive a good product, pay on time for the goods, not making false claims
Local community allows activity to take place, provides goods and services, expect peaceful existence
Lenders provide finance, expect repayments, only loan reasonable amounts
Suppliers provide goods and services to a business, paid for all goods within time limit, expected to have a required standard
Governments create legal framework, manage economy, abide by the laws made
Importance and influence of stakeholders on business activities
Impact of business decisions/actions on stakeholders and their reactions
Employees: could resist change due to fear of job loss, opportunity to use new equipment, gaining skills and equipment
Managers resist change due to job loss, or wage reduction
Owners/shareholders: profit put into projects rather than paid to them, reduced dividends could lead to larger profits later
Customers: increased choice, increased costs
Local community: betrayal of location support system breaks down
Lenders: ability to pay loans jeopardised by growth, debts remaining unpaid
Suppliers: losing customers, substantial hardship
Government: increase in employees, reduced unemployment, more profit
How and why a business needs to be accountable to its stakeholders
Businesses must meet the needs to stakeholders if they want their support
Employees will leave if there isn't fair treatment
Managers will look for employment elsewhere if there isn't flexibility
Owners and shareholders selling shares and purchasing others
Customers might cease purchasing if expectations arnt met
Local community might be less tolerant of activities if the impact of actions arnt considered
Lenders may refuse loans, and demand money repayment
Suppliers may be more willing to supply goods at short notice if the business pays on time and orders regularly
Governments might restrict activities if they dont comply with framework
How conflict might arise from stakeholders having different aims
Customers want good quality products at low prices, but if higher profit is to be gained prices must be higher
Owners/Shareholders want the business to have large profits, but it might conflict with employees who want higher wages
Government wants low unemployment, but in conflict with people who want to increase machinery use
Suppliers charge higher for goods, businesses have to increase costs, so reduced profits
How changing business objectives might affect stakeholders
From profit maximisation to increasing market share
Aim of profit maximisation would satisfy the needs of shareholders to receive dividends paid out of profit
A change in objectives to increase market share would result in a reduction of profit due to more money spent on the USP
Firms may have to decrease prices to attract customers from the competition, reducing profit
From Survival to growth
In the early stages of a new business, survival might be its only goal
As a business becomes more established, it might change its aim to business growth
This gives security to the employees, and produces a larger profit which can be paid to shareholders
The change of the objective may also be beneficial to suppliers, as they might expect and increase in size of orders as the business grows