Term Paper

On
Stockholders Creditors Investors as
Stakeholders

Business and Society

ALD 1203

Group: Inception

Department of Bachelor of Business Administration

in Marketing
Faculty of Business Studies

Bangladesh University of Professionals

Date of Submission: October 28, 2020

Submitted To:
 Sanjida Amin
Lecturer
Department of Marketing
Bangladesh University of Professionals

Submitted By:
Group: Inception
Group Leader: Kaniz Fatema Mehzabin
Department of Marketing
Section B, Marketing 2020

Group Details

Inception

Name Roll
1 Kaniz Fatema 2025171048
Mehzabin
2 Mahmud Sinan 2025171050
3 Abu Ali Shakik 2025171098
4 MD Rabiul Alam Hridoy 2025171024
5 Kazi Rumman 2025171084

Letter of Transmittal
October 28, 2020

Sanjida Amin
Lecturer
Department of Marketing
Bangladesh University of Professionals

Subject: Submission of Term Paper

Dear Ma’am,
We are pleased to submit the term paper on “Stockholder/Investors/Creditors as
Stakeholders” under the course: Business and Society.

Though we are in the learning curve, this report has enabled us to gain insight into the
core details and analysis of “Stockholder/Investors/Creditors as Stakeholders”. So, it
becomes an extremely challenging and interesting experience. Thank you for your
supportive consideration for formulating an idea. Without your inspiring, this term paper
would have been an incomplete one.

We would like to express our sincere gratitude to you for your kind guidance &
suggestions in this regard. We shall be happy to provide any further explanation
regarding this report if required.

Yours Sincerely,
Kaniz Fatema Mehzabin (2025171048)
Mahmud Sinan (2025171050)
Kazi Rumman (2025171084)
MD Rabiul Alam Hridoy (2025171024)
Abu Ali Shakik (2025171098)

Acknowledgement
Firstly, we would to thank our almighty Allah for enabling us to accomplish this
dedicated task properly.

Through the process of conducting our term paper, it became quite clear to us that no
one can complete a term paper alone. Many people deserve thanks and appreciation
for their valued contribution. As the list of individuals and we wish to thank all but it
cannot be accommodated in this limited space, we therefore would like to thank some
specific ones for their dedicated support.

We would like to express our deepest appreciation to all those who provided us the
opportunity to complete this report. A special gratitude we give to our respected Faculty
Sanjida Amin Ma’am for stimulating suggestions and her encouragement helped us in
writing this term paper.

At the end, our heartfelt gratitude and respect goes to our senior brother Naimur
Rahman, Marketing-2, for helping us to get some useful information. Our gratitude goes
out to all my friends who helped during the difficult times when I felt like work was hard
and ready to give up. They gave us back life, just by being there.

Declaration
We hereby declare that, the term paper entitled “Stockholder/Investors/Creditors as
Stakeholders” is conducted under the supervision of Lecturer Sanjida Amin Ma’am
and instructor of ‘Business and Society’ course at the Marketing Department of
Bangladesh University of Professionals. This term paper is a partial fulfillment of 2 nd
Semester Final Examination, 2020 for the course Business and Society.
(Course Code: ALD 1203). We declare that the information reported in the current
result our work, except where due to reference is made. We have prepared this term
paper by our own self along with collecting the data. Here, we presented the original
information.

We further declare that, the work in this Term Paper has not been previously submitted
in this or any other institute.

Kaniz Fatema Mehzabin

Mahmud Sinan
Abu Ali Shakik
Rabiul Alam Hridoy
Kazi Rumman
Executive Summary

Stakeholders are all the internal and external groups of people who are directly or
indirectly affected by the activities of a company and therefore make demands and have
expectations, and exert an influence on the company. This paper focuses on three
different types of essential stakeholders Stockholder/Creditors/Investors. All three of
these stakeholders have their own function, role, power and substantial importance
in a corporation or organization. This paper gives an in-depth analysis on every
particle of aforementioned stakeholders.
Table of Contents

Introductory & Analysis Part:

1. Stakeholder Introduction of Stockholders/Creditors/Investors

2. Market or Non-Market Segmentation

3. Stockholders/Creditors/Investors Relationship with Other Stakeholders

4. Interest and Power of Stockholders/Creditors/Investors

5. Duties & Activities Performed by Stockholders/Creditors/Investors

6. Public Issues Generally Arose by Stockholders/Creditors/Investors

Implementation & Case Study Part:

7. Case Analysis as Following:

I) Amazon’s Stockholders Public Issue
II) Investors Indulging in Public Issues
III) Creditors Public Issue

Final Part:

8. Conclusion

References
Introductory & Analysis Part:

1. Stakeholder Introductions

A stakeholder is a party that has an interest in a company and can either affect or be

affected by the business. The primary stakeholders in a typical corporation are
its investors, employees, customers, and suppliers. However, with the increasing
attention on corporate social responsibility, the concept has been extended to include
communities, governments, and trade associations.

Stockholder is someone who has shares in a company. Stockholders own a piece of

that company. If someone is a stockholder in the latest, greatest, financially sound new
start-up company, his/her stock is probably worth a lot of money. There can be several
different classes of shareholders and each class has its own rights. Common
shareholders have an equity stake in the business as well as a voting right equal to their
percentage of ownership. Common shareholders elect the board of directors who in turn
appoint the executives to run the company. Preferred shareholders, on the other hand,
don’t typically have voting rights. Instead, they maintain the preferred right to dividends
that are issued.
Creditor is an entity that extends credit, giving another entity permission to borrow
money to be repaid in the future. A business that provides supplies or services and
does not demand immediate payment is also a creditor, as the client owes the business
money for services already rendered. these are businesses such as banks or finance
companies. They have legal contracts with borrowers. In most cases, they are secured
creditors. When a company goes into liquidation, the liquidator tries to settle as many
debts as possible. The people and companies waiting for their money are creditors.
Shareholders are the last people to get their money back. If there is not enough money
for the shareholders, they get nothing.

Investor is someone who provides (or invests) money or resources for an enterprise,
such as a corporation, with the expectation of financial or other gain. Investors rely on
different financial instruments to earn a rate of return and accomplish important financial
objectives like building retirement savings, funding a college education, or merely
accumulating additional wealth over time. Investors can analyze opportunities from
different angles, and generally prefer to minimize risk while maximizing returns.

2. Market or Non-market Segmentation

Market Stakeholders are those who engage in economic transactions with the
company as it carries out its purpose of providing society with goods and services.
Non-market Stakeholders are people and groups who- although they do not engage in
direct economic exchange with the firm- are nonetheless affected by or can affect its
actions.

Stakeholders Market Nonmarket

Stockholders √
Creditors √
Investors √

Stockholders engage in economic transactions with the company as it carries out its
purpose of providing society with goods and services. Stockholders receive a
satisfactory return on their investment. As a result, they are market stakeholder.
Creditors also engage in economic transactions with the company as it carries out its
purpose of providing society with goods and services. They receive repayment of loans.
They collect debts and interest. They call in loans if the payments are not made up.
Creditors are market stakeholders too.
Investors may buy securities directly or indirectly through mutual funds. The investment
community includes individuals, pension funds, venture capitalists and governments.
Stocks are usually suitable for aggressive investors, who can tolerate some market
volatility in return for long-term capital appreciation, while bonds are generally suitable
for conservative investors, who want capital preservation and modest regular income.

3. Relationship with Other Stakeholders

It is crucial to resolve issues that the organization is facing by effective management of

relationship with stakeholders.
We cannot really manage stakeholders rather we can only manage the relationship with
them.
It is the core duty to influence stakeholders’ attitudes, decisions, and action for mutual
benefit. Stakeholders need to gain from the relationship, or they may not be
appropriately encouraged to cooperate.
Stakeholder profiling is very important due to Decision making, Communication,
Understanding etc. After profiling there is a need to build rapport with internal and
external stakeholders. Then using stakeholder planning is important to build the support
that helps to succeed.
Communication with stakeholder is very important, because effective communication
with stakeholders in any project helps in an exchange of information between the
parties. Individuals will be engaged at different stages in the process and any
communication blockages may result in wrong assumptions and decisions.
Stockholders are very vital stakeholders. They technically have their share in the
company and have voting power. They do not interact with customers or employees.
Sometimes they are connected with investors and owners. But they are usually the
party who do not concern themselves with other stakeholders.
Creditors have relationship and connectivity with owners, investors as well as
shareholders/stockholders occasionally. They abide by Government laws to provide
loans. They are usually not concerned with employees and suppliers.
Investors have direct relationship with owners. They are also concerned with creditors
and employees. An investor does research on all sort of company/organization details.
They go through employment history, supplier history, government approval etc.

4. Interest & Power

The people who matter to a system or Organization is its stakeholders and as they
matter, they also hold Power. Power give the access to various decision for the
possible best outcome as Interest lies on it.
Stakeholders have 5 different kinds of power:
Power of Stockholders:
 Make company decisions through voting
 Power to sell stocks at any given type
 When company disperses company owns stockholder’s money for their share.
 Power of enjoying profit percentage.
Power of Creditors:
 Check company history
 Withdraw loan
 Sue the company if it does not align with government approved role
 Get their debts paid off at the dispersion of company
Power of Investors:
 Check all form of data related to company. Like employment history, supplier
relation.
 Withdraw money from company.
 Give their input in organizational decisions.
 Attend board meetings on occasions.

Each individual stakeholder has different Interest. Essentially, stakeholders ‘want

something’ from an organization otherwise why would they be a stakeholder at the first
place. But that does not mean all stakeholders can make an interest out of it. It totally
depends on the power, that means Power and Interest is Complement to each other.
Mendelow provided a great framework to relate Power and Interest. His famous
equation (Influence = Power × Interest) shows us the relation.

Stakeholders with high interest but low power can increase their overall influence by
forming coalitions with other stakeholders in order to exert a greater pressure and
thereby make themselves more powerful.

5. Duties and Activities and How Do They Perform It?

Stockholders: A stockholder doesn’t manage the day to day business of the company
as this is handled by the board of directors.
Duties of Stockholders:
 Changes to the constitution of the company

 Declaring a dividend

 Approving the financial statements of the company

 Winding up of the company by way of voluntary liquidation

Stockholder decisions can be made by resolution or at general meetings, where

stockholders discuss the company’s performance and vote on relevant resolutions.
There are two types of general meetings, annual (AGM), and extraordinary (EGM).
When a stockholder is unable to attend a general meeting, it is possible for them
to appoint a proxy in their place.
Though it is not possible for stockholders to amend decisions made by directors or
interfere with the running of the company, they can convene a general meeting and
raise a motion to remove a director, or the full board, or they can amend the articles to
restrict the director’s powers.

Creditors: A creditor is someone who owed money by a company.

Creditors duties are:
1. Creditors have a credit balance to the firm.

2. Payments for a loan are made to creditors.

3. Creditors are shown as liabilities in the balance sheet under the current liabilities
section.

4. Creditors are an account payable.

5. The term creditor comes from the word ‘creditum’ of Latin which means to loan.

6. Creditors offer discounts to the debtors to whom they extend credit to.

Investors: Investors invest their money on companies and help with financial liquidity
and solvency.
Investors duty are:
 Investors use different financial instruments to earn a rate of return to accomplish
financial goals and objectives.

 Investment securities include stocks, bonds, mutual funds, derivatives,

commodities, and real estate.

 Investors can be distinguished from traders in that investors take long-term

strategic positions in companies or projects.

 Investors build portfolios either with an active orientation that tries to beat the
benchmark index or a passive strategy that attempts to track an index.

 Investors may also be oriented toward either growth or value strategies.

Investors typically generate returns by deploying capital as either equity or debt

investments. Equity investments entail ownership stakes in the form of company stock
that may pay dividends in addition to generating capital gains.
 1. Public Issues Generally Arose

Public Issues Regarding Stockholders/ Creditors/ Investors

A public issue is any issue that is of mutual concern to an organization and one or more
of its stakeholders. (Public issues are sometimes also called social issues or
sociopolitical issues.) They often, but not always, have public policy or legislative
implications.
There are some issues that arises generally are explained below:
 Conflicts of Interest

Avoiding conflicts of interest is vital. For example, a board member of a solar company
who owns a significant amount of stock in an oil company has a conflict of interest
because, while the board he or she serves on represents the development of clean
energy, they have a personal financial stake in the success of the oil industry.
 Oversight Issue

The board protects the interests of the shareholders, acting as a check and balance
against the executive staff. Without this oversight, corporate staff might violate state or
federal law, facing substantial fines from regulatory agencies, and suffering reputational
damage with the public.  
 Accountability

Accountability is necessary for effective corporate governance. From the top-level

executives to lower-tier employees, each level and division of the corporation should
report and be accountable to another as a system of checks and balances
 Transparency

To be transparent, a corporation must accurately report their profits and losses and
make those figures available to those who invest in their company
 Ethics Violation

Members of the executive board have an ethical duty to make decisions based on the
best interests of the stockholders.
 Implementation & Case Study Part:

2. Case Analysis

I) Amazon’s Stockholders Public Issue

Amazon Inc. is an American multinational technology company based in Seattle, Washington,
which focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence.
Founded in 1994, Amazon is not unfamiliar with reaching the peak of all milestones in online
retail business. In 2019, some of Amazon’s major stockholders raised public/social issues
and demanded Amazon to take necessary actions to resolve it. Some of the stockholders were
also employees of Amazon.
In the past, Amazon hasn’t received much pushback from its shareholders. After all, the retail
giant’s stock has increased sixfold in the last five years, making investors plenty of money. That
doesn’t mean the company’s annual shareholder meetings have been controversy-free, but the
wave of criticism Amazon faced in 2019 in the form of shareholder resolutions is
unprecedented. Investors voted on 12 of the proposals Wednesday, and while they all failed to
get a majority vote, they highlight issues that some shareholders believe could jeopardize
Amazon’s business for years to come. The proposals, which would have been nonbinding if
passed, sought changes from Amazon on a range of issues, from sexual harassment to hate
speech.
Shareholder groups originally submitted 14 proposals to be voted on at the 2019 meeting
the most sent to any corporation this year, according to Alliance Advisors. That’s a sharp
increase from previous years: Amazon saw just three proposals each in 2017 and 2018. It also
fits with a broader increase in so-called shareholder activism, where groups of investors submit
resolutions designed to force corporations to address issues concerning things like diversity,
human rights, and the environment.
One of the most prominent issues that was being addressed by concerned stockholders
was the climate change proposal. They asked Amazon to issue a report describing how it will
grapple with disruptions caused by the climate crisis and lower its reliance on fossil fuels. Facial
recognition, too, presents an ongoing challenge for Amazon to navigate. Stockholders as well
as employees raised their concerns over Amazon selling data of facial recognition data to
government or any third party. Also, studies have found facial recognition technology can
be inaccurate and racially biased.
Amazon had deferred addressing these concerns for a long time and it riled up their
stockholders and potential investors.

II) Investors Indulging in Public Issues

In recent times, investors have been seen to be keener on investing their money on
companies who indulge in social issues. Investing in companies with better records on social
issues and good governance pays according to the world’s largest asset manager, with those
investments having proved to be more financially resilient during the coronavirus market crash.
Investment funds tracking the performance of companies with better ratings on environmental,
social and governance (ESG) issues lost less money than those including worse performers in
94% of cases during the crisis, according to analysis by BlackRock.
The coronavirus pandemic and the associated lockdowns of the world’s largest economies
caused chaos on financial markets, costing investors trillions of pounds as stock markets
tumbled.
BlackRock, an American global investment management corporation based in New York City,
has suggested that companies with stronger “social” scores on factors such as better customer
relations and better workforce management did better in the turmoil, as did those whose boards
were judged to be more effective and independent. The data suggests that sustainable
investments can also be financially rewarding for investors contrary to the common perception
that investors in sustainable companies will pay a price for more “moral” investments.
Despite the crisis, investors have poured more money into sustainable investments during
2020. BlackRock also suggested sustainable indices outperformed standard indices in market
downturns in 2015-16 and in 2018. The outperformance also lasted through the market
recovery, with 88% of sustainable funds losing less than their non-sustainable counterparts in
the year to 30 April.
So, for large conglomerates at the moment, keeping investors motivated to invest more a
flamboyant area of work is by addressing social issues.

III) Creditors Public Issue

Recently in Bangladesh, banking sectors and other financial corporations have been suffering
from bad debts. Bad debts mean a sort of debt that is no longer expected to be returned. This
particular issue has crippled the banking sector of Bangladesh. To put more perspective a quick
statistic regarding bad debts in banking sector of Bangladesh, only 20 per cent of the loans
written off by banks in Bangladesh have been recovered in the last 12 years. As well as bad
debt grew faster than credit in the last five years. Figures provided by the central bank revealed
that the defaulted loans stood at Tk22,644 crores at the end of 2011. Six years later, the amount
swelled to Tk74,303 crores.
Now this is a rising public issue and a potential cause of dispute between banks and small
businesses who seek to take loans. Banks, as creditors for the small businesses, are more
wary of giving loans and hence it is hindering their financial solvency. It discourages the
business owners from taking a loan and even if they do banks are extra pre-cautious to refrain
from any possible bad debts.
It is a rising public issue in the Bangladeshi banking context as it discourages both parties. And
there is always substantial risk present for both parties.

Final Part:

3. Conclusion

Stockholders/Creditors/Investors are three very essential stakeholders of any company or

organization. They play vital roles and exercise their powers to fulfill their interests. The in-depth
analysis of these stakeholders makes their type, role, duty, interest and power transparent
as well as public issues concerning them.
References
 https://www.investopedia.com/terms/s/stakeholder.asp
 https://marketbusinessnews.com/financial-glossary/creditor/#:~:text=Creditors
%20may%20be%20suppliers%20or,are%20governments%20(owed%20taxes).
 nvestopedia.com/terms/i/investor.asp
 https://smallbusiness.chron.com/capital-market-stakeholder-examples-
36738.html
 https://www.pearse-trust.ie/blog/roles-responsibilities-of-company-shareholder
 https://chacc.co.uk/blog/creditors-and-debtors-explained/
 https://www.investopedia.com/terms/i/investor.asp
 https://jmuirandassociates.com/corporate-governance-issues/
 https://www.wired.com/story/amazon-shareholder-resolutions-not-going-away/