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Stake Holder

The document defines stakeholders as any individual or organization affected by a business's activities, whether directly or indirectly. It lists the main stakeholders as shareholders, management/employees, customers, suppliers, banks/financial organizations, government, trade unions, and pressure groups. It distinguishes stakeholders from shareholders by noting that stakeholders have an interest in the business but do not own it, unlike shareholders. The aims of stakeholders and shareholders can conflict, as shareholders want short-term profits while stakeholders' desires tend to cost money and reduce profits. Businesses have social responsibilities to various stakeholders like providing fair pay/conditions to employees and a fair price/safe product to customers. Ethics refers to the moral rights and wrongs of business decisions, which can differ

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Stuti Shukla
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49 views

Stake Holder

The document defines stakeholders as any individual or organization affected by a business's activities, whether directly or indirectly. It lists the main stakeholders as shareholders, management/employees, customers, suppliers, banks/financial organizations, government, trade unions, and pressure groups. It distinguishes stakeholders from shareholders by noting that stakeholders have an interest in the business but do not own it, unlike shareholders. The aims of stakeholders and shareholders can conflict, as shareholders want short-term profits while stakeholders' desires tend to cost money and reduce profits. Businesses have social responsibilities to various stakeholders like providing fair pay/conditions to employees and a fair price/safe product to customers. Ethics refers to the moral rights and wrongs of business decisions, which can differ

Uploaded by

Stuti Shukla
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ntroduction

A stakeholder is any individual or organisation 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.

The main stakeholders are:

Shareholders (not for a sole trader or partnership though) – they will be interested in their dividends
and capital growth of their shares.

Management and employees – they may also be shareholders – they will be interested in their job
security, prospects and pay.

Customers and suppliers.

Banks and other financial organisations lending money to the business.

Government – especially the Inland Revenue and the Customs and Excise who will be collecting tax
from them.

Trade Unions – who will represent the interests of the workers.

Pressure Groups – who are interested in whether the business is acting appropriately towards their
area of interest.

Stakeholders versus Shareholders

It is important to distinguish between a STAKEHOLDER and a SHAREHOLDER. They sound the same –


but the difference is crucial!

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

Stakeholders have an interest in the company but do not own it (unless they are shareholders).

Often the aims and objectives of the stakeholders are not the same as shareholders and they come into
conflict.

The conflict often arises because while shareholders want short-term profits, the other stakeholders’
desires tend to cost money and reduce profits. The owners often have to balance their own wishes
against those of the other stakeholders or risk losing their ability to generate future profits (e.g. the
workers may go on strike or the customers refuse to buy the company’s products).

Social Responsibility

Social responsibility is the duty and obligation of a business to other stakeholders.

Stakeholder Example of responsibility to that stakeholder


Shareholder Good return on investment
Employee Fair pay and working conditions
Supplier Regular business and prompt payment
Customer Fair price and safe product
Local community Jobs and minimum disruption
Government Employment for local community
Environment Less pollution
Social responsibility for one group can conflict with other groups, especially between shareholders and
stakeholders.

Ethics

Ethics refers to the moral rights and wrongs of any decision a business makes. It is a value
judgement that may differ in importance and meaning between different individuals.

Businesses may adopt ethical policies because they believe in them or they believe that by showing
they are ethical, they improve their sales.

Two good examples of businesses that have strong ethical policies are The Body Shop and Co-Op.

Some examples of ethical policies are:

 Reduce pollution by using non-fossil fuels.


 Disposal of waste safely and in an environmentally friendly manner.
 Sponsoring local charity events.
 Trading fairly with developing countries

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