Business Studies Find your chair: Look at the picture what does this mean to you? Be prepared to answer if called upon: This does not require any verbal or non-verbal communication with anyone else in the class.

Business Studies Chapter 5

Chapter Overview The difference groups affected by business behavior The relationship between a business and these groups

Stakeholder Groups All businesses involve and affect many other people and groups by their activities. Stakeholders are groups or individuals who have an interest in a business. Shareholders are persons or organizations that own a part of a company.

Who are the Stakeholders Owners of the business Business employees Businesses managers that make decisions Suppliers of goods and services Banks and other organizations that provide loans Customers who buy products The government

Roles, rights and responsibilities of the Stakeholders Each stakeholder groups above will have their own objectives. Shareholders want financial rewards in return for risk to their investment. Suppliers want to be paid on time. The government will want the business to pay taxes on time.

Business Studies 5.2

The Importance and Influence of Stakeholders Positive Affects The interaction between a business’s decisions or actions and its stakeholders is very important. Employees may be affected by a decision to reduce the size of the business. Suppliers maybe affected by an increase in orders and be able to grow their business. The community may benefit from the expansion of the business and greater income being earned and spent in the area.

Negative Affects of stakeholders Shareholders may decide to sell shares of the company if they don’t agree with the business. Banks can refuse to lend to the business. Employees can leave and work elsewhere, or as a group they can strike which means withdraw labor from the company. Suppliers can refuse to supply the business or demand better payment terms.

Accountability to Stakeholders Accountability is the extent to which an individual or a group is held responsible for a decision or a policy. Social responsibility is the philosophy under which business consider the interests of all groups in society as a central part of their decision- making.

The Shareholder Concept The owner of one or more shares of stock in a corporation, commonly also called a "stockholder." The benefits of being a shareholder include receiving dividends for each share as determined by the Board of Directors, the right to vote (except for certain preferred shares) for members of the board of directors, to bring a derivative action (lawsuit) if the corporation is poorly managed, and to participate in the division of value of assets upon dissolution and winding up of the corporation, if there is any value. The shareholder concept regards rewarding owners as the key business objective.

The Stakeholder Concept Businesses are increasingly trying to work with their shareholders and regard them more as a partner. This would be more like a cooperative approach which an organization focuses on a long term approach to treat stakeholders. Basic idea is that profit is not necessary the only business objective but what is best for everyone involved. Being better than the law requires.

How Conflict Might Arise From Stakeholders Having Different Aims Sometimes stakeholders have different opinions about the business. Investors may push for lower costs to increase their profits May lead to lower pay for employees. In order to meet the demands of the stakeholders the business may need to relocate to cheaper production facilities overseas. In order to meet government demands for environmentally friendly that can cost more money that translates into higher prices for the customers.

How Changing Business Objectives Might Affect Stakeholders A demand for higher profits will always drive to reduce costs and less investment in training, welfare and career development. It is very difficult for managers to make decisions to satisfy all stakeholders simultaneously especially at times of change when major strategic decisions may be forced upon them.

Homework Gold Fields Ghana Engages Stakeholders Hitachi Foxconn Changes its Working Practices Page 37 #1-10 Due FRIDAY JUNE 26TH TEST CHAPTER 4 & 5 FRIDAY JUNE 26TH