Chapter 5: stakeholders in the  Suppliers.

in terms of customer protection

 employees and their families. and accurate advertising.
business.
 local communities.
Introduction:  government and government Benefits of accepting these
agencies.
responsibilities:
The shareholders are the owners of the  social interest groups, such as
company and the firm has a legal binding duty
- Customer loyalty.
pressure groups.
to put the needs first- in other words, to take  Lenders.
- repeat purchases.
actions and to make decisions that will - good publicity with customers-
increase shareholder value. Impact of business activities on stakeholders: giving word of mouth
Business activities and business decisions can recommendations to others.
The view of business responsibility has
have both positive and negative effects on - good customer feedback which
extended to include the interest of suppliers,
stakeholders. helps to improve further goods
customers, and employees.
and services.
The stakeholder theory is that there are many Responsibilities to stakeholders -and
other parties involved and interested in impact on business decisions
business activity. The interests of these groups
1. Responsibilities to customers 2. Responsibilities to suppliers
should be considered when making business
It is essential to satisfy customers If a firm is purchasing poor quality
decisions.
demands in order to stay in goods, that is all frequently late,
stakeholders: people or groups of people who then the same problems will apply
business in the long term.
can be affected by any action by the when trying to satisfy their own
organization.
Decisions about quality, design,
durability, and customer service customers. good reliable suppliers
stakeholder concept: the view that businesses should be considered when looking must be found and given clear
and managers have responsibilities to a wide at customer’s objectives. The guidance on what is required.
range of groups, not just shareholders.
products need to be attractive, and in return, the purchasing business
they need to perform as intended- should pay quickly, place orders
Business stakeholders regularly and should offer long
at a reasonable price.
The main stakeholders of a business include: Businesses have the responsibility term contracts.

 Customers. to customers not to break the law-

 Benefits of accepting these - Employees’ suggestions for - Local councils will be more likely
responsibilities: improving efficiency and customer to give planning permission for
- Supplier loyalty, meaning they are service. business expansion.
prepared to meet deadlines and - improved motivation, and more - Local communities are more likely
requests for special orders. efficient communication. to accept some of the negative
- Reasonable credit terms are also effects caused by business
more likely to be offered. 4. Responsibilities to local community operations if they provide
financial support for community
Businesses that fail to meet
3. Responsibilities to employees groups.
responsibilities to the local
- Local councils often only give
All countries have laws that outline community may experience serious contracts to businesses with a
business responsibilities to problems when expanding. They record of community
workers. also will not attract local involvement.
Businesses have responsibilities to customers. Businesses should meet (see table 5.2 pg. 54)
employees, other than those set by the following responsibilities:
the government, these include: Offer secure employment so 5. Responsibilities to government
that there is less local fear of All businesses should meet the
training opportunities, job job losses. legal responsibilities as defined
security, paying more than the spend as much as possible on by government legislation.
minimum wage, offering good
local supplies to generate more Businesses should:
working conditions, and involving
income. pay taxes on time.
staff in the decision-making of the
business.
reduce the transport impact of complete governments
business activity as much as statistical and other
Benefits of accepting these possible and also keep the forms accurately.
responsibilities: adverse environment mental seek export markets.
- Employee loyalty effects to a minimum.
- low labor turnover, making it Benefits of accepting these
easier to recruit staff. Benefits of accepting these responsibilities to
responsibilities:
government:
 - Good relations with governments and employee motivation benefits of CSR The decisions that are made must benefit
might lead to success with expansion policies might pay for themselves and the owners in the long term while assuring
projects when receiving planning even guarantee higher profits. lenders they can still be repaid.
permission.
- businesses would be more likely to Conflicts arising from different
receive valuable government stakeholder objectives.
contracts.
- Requests for subsidies to expand Compromise is often the answer when
businesses on more likely to be dealing with conflicts between different
approved by government. stakeholder objectives.
- Licenses to set up new operations are
more likely to be awarded to Senior management must establish its
businesses that meet their priorities in these situations. They will
responsibilities to the government need to decide which of the stakeholder
and wider society. are the most important- in terms of the
case that they are dealing with.
Corporate social responsibility
and evaluation Impact on stakeholders of changing
business objectives
Corporate social responsibility: the
concept that accepts that businesses Different stakeholder groups will be
should consider the interest of society in affected in different ways by the changes
activities and decisions, beyond legal in objectives.
obligations that they have.
For example, employees’ jobs may be lost,
Meeting social responsibilities can be and customers choice may lesson.
expensive and may reduce profits in the
short term, however, over a longer period
of time, the marketing, public relations