1.

4 STAKEHOLDER

"Any group or individual who can affect or is affected by the achievement

of the organization's objectives." 
STAKEHOLDER UNIT

• Internal stakeholders (AO2)

• External stakeholders (AO2)
• Conflict between stakeholders (AO2)
STAKEHOLDER IMPACT
INTERNAL STAKEHOLDER

• employees
• managers
• directors (executives), and
• shareholders (the owners of the
business)
EMPLOYEES AND MANAGERS
• Employees are workers within an
organization. They have a vested
interest in the business organization
that they work for. They can have a
major impact on the organization and
are directly affected by the financial
health of the organization. Their level
of motivation and productivity have a
direct impact on the performance and
prosperity of the busines
The interests of managers, irrespective
of their rank or seniority in the
organization, include:
• Striving to improve operational
efficiency, labour productivity and
profits as these are all measure of
management performance.
• Aiming to improve customer relations
in order to maintain or improve the
organization’s competitiveness.
• Aiming to improve their own salaries,
bonuses and other fringe benefits -
just like all employees of the
organization.
DIRECTORS AND SHAREHOLDERS
Directors (or executives) are the group
of senior managers who are legally
responsible for the overall running of a
company on behalf of their shareholders
(the legal co-owners of the company):
• They have similar interests to
managers but are also likely to strive
to improve their share ownership
rights and performance related
bonuses.
• They are concerned with the
organization’s return on investment for
their shareholders.
• They strive to improve the
competitiveness of the organization.
Shareholders (or stockholders) are
people or other organizations that buy
shares in the company. They own a part
of the business:
• They have rights to a share of any
profits that the company earns
(dividend payments); shareholders
expect regular payment of dividends.
• They also have voting rights (based
on the number of shares they own) on
how the company should be run.
• As co-owners of the limited liability
company, shareholders expect the
business to earn a certain (financial)
return on their investment
EXTERNAL STAKEHOLDERS
External stakeholders are people or organizations not part of the business but have a
direct interest in its decisions, actions and performance. Examples of external
stakeholder groups include:
• Customers
• Competitors
• Financiers
• Labor unions (trade unions)
• Pressure groups
• Suppliers
• The government, and
• The local community
T.O.K QUESTION

• If anyone can potentially be considered a stakeholder, how useful is the notion of

‘’stakeholder’’?
• Investigate the number and types of
unions that exist in your country.
QUIZZ
CONFLICT BETWEEN STAKEHOLDERS
• Different stakeholder groups have
different interests, which can
conflict. Conflict refers to the mutually
exclusive and incompatible interests
of different stakeholder groups. If this
is not managed, it often leads to
protracted disagreements, disputed
and arguments in the workplace.
• Employees demand higher wages,
which raises production costs so can
reduce the amount of profits from
which shareholders receive dividend
payments.
• Similarly, senior managers and
directors may demand large bonuses
for their work, but this may also
reduce the profits available to
distribute to the company’s
shareholders.
CONFLICT BETWEEN STAKEHOLDERS
It is likely that stakeholder conflict is likely to exist at least to some extent (especially for
large organizations) due to the varying interests of the different stakeholder groups.
• Satisfying the interests of stakeholders is therefore a particularly difficult balancing act
of striving to meet the complex and competing interests of all stakeholder groups.
• Watch this short news report about stakeholder conflict at Uber and Lyft in California,
USA
T.O.K QUESTION

• How can the sustainability be a factor of conflict between stakeholders?

STAKEHOLDER ANALYSIS

• First step is to prioritize or rank the

interest of various stakeholders.
• In this approach, owners and managers
are central to decision making, while
suppliers, employees and financiers,
consumers are furthered removed.
• More distant are government, pressure
groups, the media and the local
community.
• Decision – makers try to satisfy those
stakeholders closest to the centre.
 STAKEHOLDER MAPPING ANALYSIS
It places each stakeholder group in the matrix:
• Group A Minimal contact: Have minimal
interest in the business and have limited
power over it, are rarely a problem for the
business.
• Group B Keep informed: For owners and
managers, making this group feel included
is important.
• Group C Keep satisfied: Pivotal group of
stakeholders must kept satisfied. They have
the power to influence other groups.
• Group D Key players: Are the most
important. The business must not merely
communicate them, it must also consult
them.
ATL ACTIVITY – PEOPLE PROBLEMS ROLE PLAY - HOW THE
CONFLICT WORSENS OR GETS RESOLVED.