Ch 5 Stakeholders in

Business
Stakeholders: people or groups of
people who can be affected by –
and therefore have an interest in –
any action by an organisation.

Stakeholder concept: the view that

businesses and their managers
have responsibilities to a wide
range of groups, not just
shareholders
 • Customers
• Suppliers
• Employees and their families
Business • Local communities
Stakeholders • Government and government agencies
• Special interest groups – for example
(environmentalist)
• Lenders.
Impact Of
Business Activities
On Stakeholders

Table 5.1 page

53
Roles, Rights And Responsibilities of
Stakeholders towards the Business

Table 5.2 on
page 54
 Responsibilities To Stakeholders – And
Impact On Business Decisions
Stakeholder Responsibility Benefit
Customers - Make attractive product as intended available at reasonable - consumer loyalty
price - good publicity
- consumer protection - good customer feedback
- accurate advertising.
- Avoiding taking advantage of vulnerable customers,
- not using high-pressure selling tactics
Suppliers - Prompt payments - prepared to meet deadlines
- regular orders - requests for special orders
- long-term contracts - reasonable credit terms
Employees - Providing training opportunities - employee loyalty and low labour
- job security turnover
- paying more than minimum wages when these are very low, - easier to recruit good staff
- offering good working conditions - employee suggestions for improving
- involving staff in some decision-making efficiency and customer service;
- improved motivation and more
effective communication
 Responsibilities To Stakeholders – And Impact On Business
Decisions (Continued)

Stakeholder Responsibility Benefit

Local community - secure employment so that there is less local fear
of job losses
- spend as much as possible on local supplies to
generate more income
- Minimum adverse effect on the environment.
- provide financial support for
community groups and projects
such as children’s playgrounds
- Local council contracts
- Permission for expansion

Government - pay taxes on time, - Success with expansion projects

- complete government statistical and other forms (government contracts)
accurately and - Government subsidies for
- seek export markets. expansion
- licences to set up new operations
Corporate Social
Responsibility

the concept that accepts that

businesses should consider
the interests of society
in their activities and decisions,
beyond the legal obligations that they have
 Criticisms

Less to invest for expansion and less to pay out to owners

A form of ‘window dressing’ or public relations spin

Fewer controls and restrictions by the government on

powerful multinational firms
 CSR

Short Run Long Run

Expensive CSR pays for themselves

and and
Decrease profit Increases Profit
Conflicts Arising From Different
Stakeholder Objectives