OCR (9-1) - Business - 1.5 Stakeholders

External stakeholders include 

• Customers 
• Shareholders 
• Employees 
• Directors 

Define what is meant by a stakeholder

• A stakeholder is anyone with an interest in a business. Stakeholders are individuals, groups or organisations that are affected by the activity of the business. 
• A person who sets up a business or businesses, taking on financial risks in the hope of profit.

These stakeholders are considered to be 'internal'

• Customers, suppliers, local community, pressure groups, government and financiers
• Owners/shareholders and employees

These stakeholders are considered to be 'external'

• Customers, suppliers, local community, pressure groups, government and financiers
• Owners/shareholders and employees

What is the role and objectives of an owner (internal shareholder)?

• Role - To start and run a business to make a profit.  Objectives - to survive, make a profit.
• Role - To work work in a business in return for wages.  Objectives - Job satisfaction, job security and job promotion.

What is the role and objectives of an employee (internal shareholder)?

• Role - To start and run a business to make a profit.  Objectives - to survive, make a profit.
• Role - To work in a business in return for wages.  Objectives - Job satisfaction, job security and job promotion.

Which of the following is likely to cause conflict between an employee and employer?

• Employees want a pay rise, employees don't want this as profit is reduced.  If there's no agreement trade unions intervene to negotiate.
• Supplier wants a to sell their raw materials at a higher price but the business wants to buy them at a low price.
• Employers want to use profit to expand the business.  Shareholders want to all of the profits in the form of dividends.
• The council decides to allow a business to build an incinerator in residential area.

Which of the following is likely to cause conflict between a supplier and a business?

• Employees want a pay rise, employees don't want this as profit is reduced.  If there's no agreement trade unions intervene to negotiate.
• Supplier wants a to sell their raw materials at a higher price but the business wants to buy them at a low price.
• Employers want to use profit to expand the business.  Shareholders want to all of the profits in the form of dividends.
• The council decides to allow a business to build an incinerator in residential area.

Employees have the following interests:

• Pay, Working Hours, Working Conditions, Training, Job Satisfaction, Promotions, Bonuses, Incentives, Discounts.
• Increase profits, Attention to the income and expenditure of the business. Competition. Keeping costs down – like staff pay and reducing waste. Cheapest suppliers
• To gain good dividend payments at the end of the financial year. Buy shares at a low price with the hope to sell for higher at a later stage.
• Quality of products/service, Range/choice, Customer service, After sales service, Price and value, Payment options, Stock levels

What could happen if you ignored your employees interests:

• Unhappy workforce – motivation drops, Efficiency levels drops, Poor customer service, poor quality of goods, Increased staff turnover, Increased staff absenteeism.
• Business is not how they want it – not their vision. No clear aim or mission. Reduced motivation from the top – follows down to the bottom. Lack of passion - lower profit margins. Business fails.
• They leave the company by selling their shares. The business gets a bad rep – potential shareholders are driven away. Share prices drop.
• Bad rep, Poor customer loyalty, Lack of business, Bad word-of-mouth, Reduced revenue and profit, Business fails.