1.

4 Stakeholders
On completion of this chapter, you should be able to:

Analyse and apply:

 The interests of internal stakeholders (AO2)

 The interests of external stakeholders (AO2)
 Conflicts between stakeholders. (AO2)

Tasks

 Define ‘stakeholders’
Stakeholders are parties invested in the success of a
business or organization. Many decisions and results
need to be considered from the perspective of various
stakeholders to ensure all investments are honored.
Stakeholders are groups directly affected by decisions
of the company
All stakeholders are directly affected by the performance of the business and, different
stakeholders have different degree of influence on the organization.

 Distinguish between internal and external stakeholders and give

examples of both.

Internal stakeholders:
Parties that either are directly or financially part of the company’s operation.
If company has success, they are more likely to gaina monetary financial
gain.
Examples :
-Employees-directly involved with companie’s operaions and could gain a
potetial raise
-Owners- they have exclusive rights over the firm, as they are the ones
taking the risk of investing/ starting the company

Externals stakeholders
An external stakeholder is somebody who a company recognizes that
produces choices concerning operations. Outside partners have a coordinate affect in
case they buy a item and the relationship they have with a company.

 Customers
 Communities

 Creditors

 Government

 Labor unions

 Competitors

1.4.1 Possible stakeholder objectives (interests)

For each of the following internal stakeholders, describe their interests in the
business (what do they expect) and the benefits to the business of meeting
the needs of the stakeholders.
 Employees

Their interests Benefits to the business

Fair pay and safe working High productivity resulting from
environment motivated workers.
Satisfiying job /meaningful Higher attention for employees

Oppertunitys to grow (promotions Becomes trained personnel to

or payraise) operate the buisness

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 Managers and directors

Workers in leadership positions

Their interests Benefits to the business

Receive wage for their service Manages the company, tells
employees what to do and why
we should do it
 Gain a higher position Becoming competetive and
expressing the best interest to aid
in the management of the
company
In some cases gain monetatry Attempts to Maximize profit
payment if they are also
shareholders
Aids in the production and
development of products
Obtain bonuses

 Shareholders (stockholders)

Define shareholders

People who invested capital in the company and own a certain

percentage of a company
Their interests Benefits to the business
Maximize profit of the company Provides funds to start the
operations
Earn profit from the company Provides insights on the direction
doing well companies to go
(shareholder bonus or raise in
value of shares)
Growth in investment(wants to Raise customer awareness
see value of investents)
Obtain diviends from company Increased brand value
profit

Wants a say/voice in the buisness Company can retain the current

shareholders and being able to
attract more new share holders
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1.4.2 External stakeholders

For each of the following external stakeholders, describe their interests in

the business (what do they expect) and the benefits to the business of
meeting the needs of the stakeholders.

 Customers

Their interests Benefits to the business

Receive high quality product for Receive profit from selling
cheapest price products
Receive customer service Receive Valuable feedback from
customers
Wants company to be sustained if Customer loyalty/publicity
it fits their values or if they need
the service to continue
Warrenty Receive high quality profit

The ability of the good to

meet/satisfify their standards

Assurance on material

Brand reconition
 Suppliers

Their interests Benefits to the business

Earn profit from continuously Save R and D for the company
supplying itself
obtain stable income Save lots of time and money to
start the manifactoring from raw
materials
Colaborative r and D with Supplier loyalty
downstream members

And improvement of quality of Ensure a constant supply

supplies through collaborations

Speed payment(planned cash flow Obtain low price

with set payment dates)

Customer loyalty

Fair price Obtain the right quality and

product through the collaboration
in R and D

Able to get discount or longer

time to pay for the supplies

Get better price

 Pressure groups
 Pressure groups are forms of organisations, which exert pressure on the political
or administrative system of a country to extract benefits out of it and to advance
their own interests.
Groups that attempt to influence how the buisness works , to be in a more ethical,
enviormental friendly or positive way. (eg: more socially responsible)

Their interests Benefits to the business

To aid in their social goals Reform parts to raise customer
satisfaction and employee
satisfaction.
Be heard by the buisness Becomes mor ethical, more
sustainable etc
To maximize benefits to their Help in certain social causes,
goal(eg: workers union after getting pressured
maximizing worker’s benefits)
To take interest of the community Brand image raise
and tell the buisness about it.
Boycotting bad products(from
unethical/ bad doing companies)
al
 Community in which the business is located.

Their interests Benefits to the business

Minimize the polution from the Less polution regulated by the
buisness(wants a healthy local community
enviorment)
 Job oppertunities/high payment
Minimize exploitation of natural To bring more positive impact on
resources society

Preserve the way of life More motivated local workers

and more support in the
community
Infrusture development(eg:
buisness related schools)
Smooth opertation

Raise living standards

High wages

Long term rent of the property

Serious resistence to buisness

changing their way of life

High price for land development

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 Competititors

The interests of competitors Benefits to the business from

competition
Learn the “secrets” and wants Pressure the buisness into rapid R
higher sales than the buisness, and D to create better products
wants to outcompete the buisness
Maximize their own profits Offer inspirations and solutions to
their own produfcts
Learn the source of success Potential collaborations on
complex project
 Cooperation? Joint ventures

Purchase potential assets

Become a monopoly

Fair competition

 Government

Their interests Benefits to the business

Raise gdp Better protection of the buisness
entity
Raise employment rate(wants Promoting industry related laws
buisness to employ local ) such as compensations

Minimize or regulate pollution Government support subsidies

Minimize exploitation Lower corperate tax with

cooperations with government
Avoid monopolies(develop anti Eg: setting up in hardship areas.
trust laws)
Reliable infrustructure:
Balance of payment functioning ports, railways, water
pipes, electricity
Promote local supply chain
\ Wants less coruption
Decrease imports and increase
exports Enviorment that is supportive of
the buisnesses
Pay taxes

Buisnesses operate within the

laws
 Save forein exchange

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1.4.3 Stakeholder conflicts

Stakeholder conflict exists due to the varying needs and priorities of the
various stakeholder groups of a business. Such conflicting interests mean
that it is not possible for a business to meet all of its stakeholder objectives
simultaneously.

Conflicts arise because a business cannot simultaneously satisfy the needs of

all its stakeholders. A business decision or actions will affect different
stakeholders differently. An action may create benefits to some
stakeholders while harming the interest of others.
S

takeholder conict refers to

dierences in the varyin needs and priorities of
the various stakeholder groups of

 Identify potential sources of conflicts arising from varying interests of

different stakeholder groups.

Another source of potential conflict is that some stakeholders have more

than one role or set of interest in an organization. For example, managers are
employees but may also be shareholders or even suppliers of the same
organization. This might cause a conflict of interest.

 Identify potential sources of conflicts arising from a stakeholder

holding different role or set of interests in an organization.
1.4.4 Conflict resolution
 Stakeholders and the concepts

 Why change could bring conflict among stakeholders.

 To what extent can conflicts among stakeholders be resolved by the adoption of a
sustainable practices?
 Is it unethical for a business to give one group of stakeholders priority over the
interests of other stakeholder groups?
BMT: Lewis Force Field Analysis [FFA] HL only

ToK
Is it unethical if a business chooses to ignore the demands (or needs) of one
particular stakeholder groups?
Extension material that can be used in EE

Stakeholder mapping

This is a model that assesses the relative interest of stakeholders and their
relative power (or influence) on a business, as shown below.
How do managers use stakeholder mapping to provide for the interests of
different stakeholder groups?