Unit 1.4 Stakeholders

Any person or organization that has a direct interest in and is affected by the performance of a business Internal Stakeholders – members of the organization (employees, shareholders, managers and directors) External Stakeholders – do not form part of the business but have a direct interest or involvement in the actions of the organization (customers, suppliers and the government)

Business Employees Customers Suppliers Investors Rivals Gov ’ t. Managers Owners STAKEHOLDERS OF AN ORGANIZATION

Internal Stakeholders EmployeesEmployees ShareholdersShareholders ManagersManagers DirectorsDirectors

External Stakeholders SuppliersSuppliers CustomersCustomers CompetitorsCompetitors Special Interest GroupsSpecial Interest Groups –Trade unions or labor unions –Pressure groups –Industry trade groups –Local community

Special Interest Groups (SIG) Is an organization that advocates certain issues, such as the prevention of cruelty to animals, protection of the environment or prevention of smoking in public areasIs an organization that advocates certain issues, such as the prevention of cruelty to animals, protection of the environment or prevention of smoking in public areas Members who are passionate about influencing changes in government policy and legislation for a specific causeMembers who are passionate about influencing changes in government policy and legislation for a specific cause Serve to protect the specialist needs and concerns (interests)Serve to protect the specialist needs and concerns (interests)

SIG Trade Unions or Labor UnionsTrade Unions or Labor Unions –Aim to uphold and enhance the conditions of work for their members –Wages and salaries to rise with inflation; introduction of minimum wage to improve the earnings; better working conditions

SIG Pressure GroupsPressure Groups –Consists of individuals with a common interest who seek to place demands on organizations to act in a particular way or influence a change in their behavior –Greenpeace, groups campaigning against smoking, deforestation and the harmful treatment of animals

SIG Industry Trade GroupsIndustry Trade Groups –Organizations that specialize in public relations with the aim of promoting a particular industry, through education and advertising –Anti-piracy advertising; promote products of the industry (promotion to support the interests of the whole industry)

SIG Local CommunityLocal Community –Place demands on the businesses that operate in their community –Includes: Job creation and opportunities to provide extra income and spending in the local communityJob creation and opportunities to provide extra income and spending in the local community The need to be considerate of the local environmentThe need to be considerate of the local environment A wide choice in the provision of products and at competitive pricesA wide choice in the provision of products and at competitive prices Sponsorship of local and fund-raising eventsSponsorship of local and fund-raising events

Stakeholder Conflict Different stakeholder groups have varying interests in an organization.Different stakeholder groups have varying interests in an organization. Conflict arises because the business cannot necessarily meet the need of all its stakeholders simultaneously.Conflict arises because the business cannot necessarily meet the need of all its stakeholders simultaneously. Major cause of potential stakeholder conflict is the pay and remuneration of the directors of a company.Major cause of potential stakeholder conflict is the pay and remuneration of the directors of a company. Stakeholders have more than one interest in an organization, therefore, different objectives.Stakeholders have more than one interest in an organization, therefore, different objectives.

Resolving Stakeholder Conflict Negotiation – depend largely on the relative bargaining power of the different stakeholdersNegotiation – depend largely on the relative bargaining power of the different stakeholders Businesses aim for ‘ best-fit ’ compromise so that stakeholder groups are all reasonably pleased with the conduct of the businessBusinesses aim for ‘ best-fit ’ compromise so that stakeholder groups are all reasonably pleased with the conduct of the business Stakeholder mapping model can be used to assess the relative interest and power of stakeholders in the business (see page 69)Stakeholder mapping model can be used to assess the relative interest and power of stakeholders in the business (see page 69) Public relations (PR) – publicized the good work that the business is doing or promote good public relationsPublic relations (PR) – publicized the good work that the business is doing or promote good public relations

Review Explain the difference between external and internal stakeholders.Explain the difference between external and internal stakeholders. What is the difference between stakeholders and shareholders?What is the difference between stakeholders and shareholders? Distinguish between a director and a shareholder of a company.Distinguish between a director and a shareholder of a company. What are the four main types of special interest groups (SIGs)?What are the four main types of special interest groups (SIGs)?

Review Differentiate between lobbying and boycotting?Differentiate between lobbying and boycotting? How might pressure groups affect the success of a business?How might pressure groups affect the success of a business? Outline four sources of conflict in a business.Outline four sources of conflict in a business. How might businesses resolve conflict in the workplace?How might businesses resolve conflict in the workplace?