Learning Intentions: Success criteria: To introduce stakeholders within and out with business organisations. Success criteria: You should be able to: describe what a stakeholder is • identify stakeholders, both internal and external • describe stakeholders interests and influences describe interdependence and conflict amongst stakeholders

Stakeholders Stakeholders are people with a key interest in a business. Stakeholders affect businesses by exerting influence over decisions. Their influence depends on the degree of their involvement or relative interest in a company.

The three Is… When answering questions about stakeholders think of the three Is: Identify (who are they?) Interest (why do they want the firm to succeed?) Influence (how can they affect the firm’s future?)

Identifying stakeholders for all business types External Customers Banks/lenders Investors National/Local government Suppliers Donors (for charities) Taxpayers Society/Local Community Internal Owners/shareholders Employees/workers Management Competitors are not classed as a stakeholder - don’t fall into this trap!

Stakeholder Interest Owners want high profits, high dividends. Managers want promotion, bonuses, job security. Employees want better wages, better working conditions, job security.

Stakeholder Interest Suppliers want regular orders, prompt payment. Customers want low prices, high quality. Banks want loans repaid on time.

Stakeholder influence Owners put capital in, vote at AGM (change board of directors). Managers hire/fire employees, create policy and rules, make decisions. Employees go on strike, increase/decrease productivity, provide good/bad customer service.

Stakeholder influence Suppliers raise/lower prices, change delivery times, change credit terms. Customers can choose to buy or not to buy products, affect ‘word of mouth’ and reputation. Banks grant or deny loans, change interest rates, change repayment details (end date).

Conflict amongst stakeholders?? What does this mean? Interdependence amongst stakeholders?? What does this mean?

Command word practice Describe Give a thorough description of whatever you are being specifically asked about. It is vital that you describe the correct point not just the theory point.

Exam question Describe how five different stakeholders could influence an organisation. (5 marks) In this question you have to describe not the stakeholder but their influence on the business. Class could answer the question individually. Each group could prepare an answer covering all five stakeholders. Split the class into five groups and each group is given a different stakeholder. Important to point out what it is they have to describe and how they should do it.

One to get you started... The bank is a stakeholder and they could influence the business by granting a loan – this would mean the business could carry out their chosen objective to expand. The influence – carrying out the objective is clear in this answer.

Now it’s your turn Describe how five different stakeholders could influence an organisation. (5 marks) You have 10 minutes.

Peer-assessment solution The following stakeholders have various influences on a business such as: Manager – makes decisions on the future plans of the organisation helping to expand or improve the business Worker – can produce a quality product or service by working hard and increase productivity shareholder/owners – purchase more shares increasing the available capital for the business Customer – buys the product or service increasing sales and in turn profits Local community – petition the organisation to make a change to environmental policies improving the emissions from a business Government – alters legislation and can keep businesses on track with laws and implementing ideas eg minimum wage act Bank – approves a loan improving the businesses finances and allowing it to expand Suppliers – alter the price of supplies either higher or lower, this causes a knock on effect for the businesses customers