1.4 Stakeholders A stakeholder is any person or organisation that has a direct interest in or is affected by the performance of the business. The main stakeholders include the owners of the business (shareholders), managers, employees, suppliers, investors, competitors and the community.

The Traditional view of business….. …..often referred to as the shareholder concept. As shareholders are the owners of the company, the firm has a legally binding duty to take decisions that will increase shareholder value.

The Stakeholder Theory or Concept is…. ….that there are many other parties involved and interested in business activity and that the interests of these groups should be considered by business decision-makers.

“The Story of Stuff”

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

Definition: Stakeholder concept….. …..is the view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders.

Exam Tip! Do not confuse the term 'stakeholder' and 'shareholder'. Stakeholder is a much broader term that covers many groups, including shareholders.

Definition: Shareholder….. ….Any person, company, or other institution that owns at least one share in a company. Shareholders are the owners of a company. They have the potential to profit if the company does well, but that comes with the potential to lose if the company does poorly.

Internal Stakeholders members of the organisation; i.e.: the employees the shareholders (who own the business) managers and directors of a business

External Stakeholders do NOT form part of the organisation but have a direct interest or involvement in the actions of the organisation. Examples include: customers suppliers the government competitors special interest groups

Stakeholder conflicts Business decisions can have both negative and positive effects on stakeholders, but it is rare for all stakeholders to be either positively or negatively affected by any one business activity. It is also possible for any one stakeholder group to experience both negative and positive effects from the same business decision. For example, a local community could benefit from the jobs a new factory brings, but also suffer from increased traffic congestion. This is why conflicts of interest between stakeholder groups with different objectives can arise.

Unilever: an example of stakeholder conflict Unilever is the world's third largest consumer goods company.The video highlights the most typical stakeholder conflict - that between shareholders who want to maximise profits, dividends and share values and employees who want job security and reasonable benefits, including financial security in retirement.

Shared Value: A new concept where businesses create value for all stakeholders. The main idea behind creating shared value is that the COMPETITIVENESS of a company and the HEALTH of its local communities are mutually dependent. Recognising and capitalising on the interconnectedness of societal and economic progress has the potential to drive innovation, the next stage of global growth and to redefine capitalism.