Business and Management:

1.4 Stakeholders
Lesson 1
Pages 60-62
 1. Focus Questions
• 1. Who are the internal and external
stakeholders within or outside the
company?
• 2. How do these stakeholders have conflict
between each other?
 2. Overview
• What is a
stakeholder?
Owners
• Who makes up
the bulk of the Employees Managers

stakeholders?

Customers Business Government

Suppliers Rivals

Investors
 3a. Categories of Stakeholders
• What are the two categories of stakeholders?

Employees

1. Internal
Stakeholders
Directors (are members of Shareholders
the organization)

Managers
 3b. Categories of Stakeholders
• What are the two categories of stakeholders?

Customers

2. External
Pressure Stakeholders
(do not form Suppliers
Groups
part of the business)

Government
 4a. Internal Stakeholders
• 1. Employees:
Pay – Staff will have a stake
(an interest) in the
organization they work
Training for.
and – They will try to
Employees Working
career improve the following:
improve: Conditions
opportunities


Job
Security
 4b. Internal Stakeholders
• These things can only be offered to the employees if the
company is performing well.
• Are the employees the company’s best assets?
– Many would argue that it is the employees/staff who produce
goods and services for sale.
– It is the staff who communicate with the customers.
– …
“Treat employees like partners,
and they act as partners.”
~ Fred Allen (1894-1956), An American comedian

What do you think of this quote?

Do you think this is true?
Why?
…
 4c. Internal Stakeholders
• Put employees first,
• Customers second, and
• Shareholders third…
– By doing this, customers and shareholders both benefit?
• Do you agree with this? If so, how so?
• What if you have a demoralized staff?
– Will they be willing to produce good quality products or deliver good
customer service for you?
• They might even take industrial action…
– Such as go on strike.
• It is important for managers to meet, the needs of their employees as much
as possible.
• This will ensure that they are motivated.
– …
 4d. Shareholders / Stockholders
• Who are they?
– Are owners of private and public limited companies.
• What do they do?
– They invest their money in a company.
• How do they do this?
– They purchase shares, because they expect or hope they
get a nice return on their investment.
–…
 4e. Shareholders / Stockholders
• A very powerful stakeholder group because they
have what?
– A vote…a say…a voice in how the business is managed.
• Since they are the owners of the company, they are
entitled to a share of the profits.
– They have two main objectives…what are they?
• To maximize share dividend payments
• Capital gains; a rise in share price.

–…
 4f. Shareholders / Stockholders
• As for sole traders and partnerships…
– Profit is a key aim.
• How are profits distributed between a sole trader
and a limited company?

–…
 4g. Managers and Directors

plan

The daily
running
Managers are the
of the organize
people who…
Business.

Control…
 4h. Managers and Directors
Their benefits
(bonuses &
Perks)

growth profit
Directors aim
to maximize…

The long-term
health of a Please shareholders
Company.
Business and Management:

1.4 External Stakeholders

Lesson 2
Pages 62-66
 1. Focus Questions
• Who are the external stakeholders in a
company?
• What do they do?
• …
 2a. The External Stakeholders

Suppliers

Government Customers
External
Stakeholders

Special
Competitors Interests
Groups
 2b. Suppliers
• What do the suppliers do for a company?
– Provide raw materials.
– Parts.
– Finished goods need for production.
– Maintenance and technical support.
• It is extremely important to have an excellent
relationship with your suppliers…why is that?
• …
 2c. Customers
• What is CRM? You will hear this often in retail.
– Customer Relations Management.
• Two rules to CRM:
– 1. The customer is always right.
– 2. If the customer is ever wrong, read rule 1.
• “Right or wrong, the customer is always right.”
– Marshall Field (1834-1906), founder of the Marshall Field Department Stores.
• So, why is the customer ALWAYS right?
– In the end, it is the customer who determines the financial performance of a
business.
• It is vital for businesses to pay attention to their customers’ needs.
– How are businesses able to do this?
• By using market research to find out what the customer wants and then tries
to meet these demands.
– Can use customer satisfaction surveys
• Businesses aim to keep the customer loyal & become repeat-purchasers. …
 2d. Special Interest Groups
• A.K.A. SIG…they advocate certain issues, such as protecting the
environment, animals rights, etc.
• They serve to protect the needs and concerns of their members.
– Several types of SIGs:
• Trade Unions
• Pressure Groups
• Industry Trade Groups
• Local Community.
• Let’s take a look in more detail at these groups.
• …
 2e. SIGs
• Trade Unions:
• Main aim is to uphold and enhance the conditions of work for their
members. Such as:
– Wages and salaries.
– Minimum wage.
– Better working conditions.
• Pressure Groups:
• Have a common interest and seek to place demands on organizations
to act in a certain way or influence change.
• They do this by:
– Influencing government policy.
– Getting support on an international level.
» See box. 1.4a pg. 64
• …
 2f. SIGs
• Industry Trade Groups:
• These groups specialize in public relations.
• They promote the aims of their group through education and advertising.
• For example: anti-piracy.
– Movie, music industry.
– Farmer’s association promoting eating fruits and vegetables.
– Dairy farmer’s promoting drinking milk.

• Finally, Local Communities:

• They will place demands on a business what operate in their community.
– Job creation.
– Environmental responsibility.
– Competitive priced products.
– Sponsorship of local and fund-raising events.
• So how are these SIGs able to succeed? See pg. 65.
• How should a business determine to devote time and resources to the demands of SIGs?
See pg. 65 …
 2g. Competitors & Gov’t
• Competitors:
• Who are they and how are they a stakeholder in your company?
» They are your rivals.
– So why are they interested in the activities of a business?
– To avoid anti-competitive practices.
– A stimulus to innovation and product development.
• Government:
• Will have a larger influence on business behavior.
• They are interested in business activity for several reasons:
» Unfair business practices.
» Health and safety issues.
» Corporate taxes being paid.
» Payment of business rates.
» Protection of consumers.
» Employment laws being followed.
• Overall, the government aims to ensure that businesses act in the public’s interest
and to stimulate business activity.
• How might this be done? See pg. 66.
Business and Management:

1.4 Stakeholder Conflict

Lesson 3
Pages 67-71
 1. Focus Questions
• 1. What are the differences between internal
and external stakeholders?
• 2. What are the aims of stakeholder groups
and how do they conflict with each other?
 Think about it…
• Margaret Thatcher, Prime
Minister of the United
Kingdom from 1979 to 1990 ,
once said that…
“standing in the middle of a
road would get you get hit
by traffic coming from both
sides.”
• What was she suggesting in this
quote?
• You can not please all the
people all the time.
2a. Stakeholder Conflict
• Are all organizations able to meet the needs
of all the stakeholder groups?
– Why not?
– Can you list some examples?
• Owners wanting more profits?
– How can we accommodate them?
– Cut staff benefits? How will the
staff feel about this?
• What about the suppliers? What are
their needs?
– Customers pay on time and full
price?
– How could doing this affect their
customers / businesses?
• Do you see the conflicts here?
2b. Stakeholder Conflict
• What is another major cause of stakeholder
conflict?
– It has been in the news recently.
• The pay and remuneration of the
directors of a company.
– Are these people overpaid?
– Are the top managers “overpaid”?
• Who would argue this and why?
– These shareholders and
employees….why?
» Fairer distribution of profits
to shareholders. In the form
of what?
» DIVIDENDS.
» Staff wants better wages.
2c. Stakeholder Conflict
• Is there a conflict if you are an employee of a
company and also a shareholder?
– What is the conflict here?
– What about your customers and local
community?
• Stakeholder conflict is usually short-term.
• With all this conflict, is it possible to meet
the needs of both employees and managers?
– Can meeting their needs lead to a highly
motivated and productive workforce?
– Explain: Do you think this could lead to
improved…
• customer relations?
• Corporate image?
• Market share?
• Profits?
2d. Is Stakeholder Conflict Beneficial?
Can their needs be met?

3.
Local community
1.
will benefit and support
Greater output
the company.
may lead to…

2.
Higher levels of
Employment in
the local community
 3a. Stakeholders & Business Strategy
• As a manager or leader in business
you will need to decide on how to
best deal with conflicting
stakeholder needs.
• You will need to look at three major issues:
– 1. The type of business organization.
• A partnership will have different aims as opposed to a charity.
• Ltd. will be accountable to the shareholders.
– 2. The aims & objectives of the business.
• If you are expanding your business profits will be used for that instead of
filling the pockets of the owners.
– 3. The source & degree of power of each stakeholder group.
• Customers will have more power if you are selling a substitute product on
mass. Coke vs Pepsi
 3b. Stakeholder vs. Shareholder Concept
• When running or managing a business, should
we give priority to the stakeholder over the
shareholder?
• Some would argue that employees are the
key stakeholder.
» Would you agree with this
statement?
• External stakeholders such as Pressure
groups are effective in influencing
business activity.
» How are you going to deal with
these groups?
• How will you deal with SIGs spreading rumors
or misleading information about your company?
• Issue statements, counter publicity
campaigns, or legal action.