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Business Organisation & Environment Stakeholders

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Presentation on theme: "Business Organisation & Environment Stakeholders"— Presentation transcript:

1 Business Organisation & Environment Stakeholders

2 Stakeholders Person or organization that has a direct interest in and is affected by the performance of a business They include owners, managers, employees, customers, suppliers, investors, competitors, the local community and the government

3 Stakeholders

4 Internal Stakeholders
They are members of the organization i.e. employees, shareholders (owners), managers and directors.

5 Employees They have a stake (an interest) in the organization they work for. They strive to improve on their pay and other financial benefits, working conditions, job security, training, etc. These can only be offered to employees if the business is performing well.

6 Managers and Directors
People who plan, organize and control the daily running of the business. Directors are senior executives who are elected by the company’s shareholders to oversee business operations.

7 Senior managers and directors will aim to maximize their own benefits such as their annual bonuses and other perks, and therefore they are likely to aim for profit maximization for the company.

8 Shareholders (Stockholders)
Owners of the private and public limited companies by purchasing shares in these companies. Shareholders have two main objectives and that is maximize on the share dividend payments and achieve a rise in the value of the share price (known as capital gains).

9 External Stakeholders
They do not form part of the business i.e. customers, suppliers and the government but have a direct interest or involvement in the action of the organization.

10 Customers The key stakeholder group who determines the financial performance of a business. No business can survive without customers, they are the ones who provide a business with revenues. Customers can simply choose to spend their money elsewhere, threatening the survival of a business. So it is vital that business pay attention to the needs of their customers.

11 Suppliers Provide stocks of raw materials, component parts, finished goods and other resources for production. Also provide business services such as maintenance and technical support. Aim for regular contracts with clients at good prices and request that customers pay their outstanding bills on time.

12 Competitors Rival businesses of an organization, interested in the activities of a business for several reasons: Incentive to be innovative and produce new products Remain competitive, respond to rival businesses Benchmark performance, compare performance

13 Government Have a significant influence on business behaviour.
Ensure that there is no unfair business practices, health and safety standards at work are met, correct payment of corporation tax, employment legislation and consumer protection laws are being upheld, etc

14 Pressure Groups Consist of individuals with a common interest who seek to place demands on organization to act in a particular way or to influence a change in their behaviour. Try to achieve their objectives by aiming to influence government policy, such as lobbying for a change in legislation, e.g. include organizations set up to protect the environment, campaigning against smoking, deforestation, etc

15 Local Community Places demands on the businesses that operate in their community e.g. job creation and opportunities, need to be considerate of the local environment, sponsorship of local and fund-raising events, etc. These considerations are paramount to the local community’s acceptance of businesses setting up in the area.

16 Stakeholders’ Conflicts
Different stakeholder groups have varying interests in an organization and therefore conflict will arise. Business cannot necessarily meet the needs of all its stakeholders simultaneously

17 Sources of Conflicts If owners want more profit, may need to cut staff benefits, this will upset employees; If suppliers want payment on time and full price in one transaction, this may harm cashflow of the business, conflict may arise between the business and its suppliers.

18 Other source of potential conflict is that some stakeholders have more than one interest in an organization e.g. managers who are employees of a company, may also be shareholder of the company; a customer is also likely to be a member of the local community

19 Stakeholders and CUEGIS
Most strategies aim for a ‘best fit’ compromise so that the needs of all stakeholder groups are reasonable addressed. The outcome of any negotiation

20 Stakeholders and CUEGIS

21 Stakeholder Mapping Model
Using a stakeholder mapping model (developed by Gerry Johnson and Kevan Scholes), managers of a business can assess how to deal with conflicting stakeholder objectives and prioritize their actions.

22 Assesses the relative interest of stakeholders in a business and their relative power (or influence) on business behaviour. Stakeholder groups would be placed into the grid as follows: Level of interest Level of Power Low High A (min effort) B (keep informed) C (keep satisfied) D (max effort)

23 Analyzing from the stakeholder mapping model, it is likely that stakeholders in:
A will receive least attention from decision-makers. D will receive the most attention. B just need to be kept informed. C must be kept satisfied, perhaps by consulting these stakeholders groups on key decisions.

24 Limitation of the stakeholder mapping model is that it is static as relative power and level of interest of stakeholders is likely to change with time e.g. environmental pressure groups have gain much support in recent times whereas the power and image of many trade unions have deteriorated.

25 Use of Public Relations Firms
Another way to deal with stakeholder conflict is to use public relations (PR), using a good PR firm to handle negative publicity. They will publicize the good work that the business is doing to repair or promote good public relations.


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