Business Stakeholders

Understanding Stakeholders

A stakeholder refers to any individual, group or organisation that has a certain interest related to the activities and behaviour of a business.
Internal stakeholders include people who are directly involved in the company such as employees, managers, and owners. Their interests largely revolve around the daily operations and performance of the business.
External stakeholders are groups or individuals outside the business but whose interests are significantly affected by the business activities. These include customers, suppliers, creditors, government, and local communities.

Role of Stakeholders

Employees require fair wages, secure job conditions, and prospects for career development.
Owners and shareholders expect a satisfactory return on their investment and wish to increase the value of their shares.
Suppliers aim to maintain a sustainable trading relationship with the business, to receive payments on time and get repeat orders.
Customers look for top quality products, at competitive prices.
Government expect businesses to adhere to their regulatory policies, pay taxes and contribute to the economic development.
Local communities often value businesses that provide employment opportunities, minimises pollution and participate in community development.

Stakeholder Conflict

Stakeholder conflict may arise when the interests of various stakeholders are incompatible.
Examples of stakeholder conflict include owners wanting increased profits which could involve job cuts, conflicting employees interests; or businesses seeking to maximise profits while government and local communities advocating for environmental sustainability.

Importance of Effective Stakeholder Management

Effective stakeholder management can contribute to business success by fulfilling the expectations and requirements of key stakeholders.
It helps a business respond to the changes in stakeholder expectations, identify business opportunities, and develop a positive corporate image.
Mismanagement of stakeholders can result in conflicts, low employee morale, customer dissatisfaction, poor business reputation, and reduced financial performance.

Methods of Stakeholder Management

Establishing clear lines of communication with stakeholders is key to understand their expectations and to maintain their trust.
Stakeholder engagement strategies like surveys, interviews, and focus groups help collect feedback and gain insights.
Businesses can provide training to employees to align them towards organisational goals and values.
Implementing effective stakeholder policies that consider the interests of all stakeholders can help manage conflicting interests.
Regularly reviewing and adapting these strategies to the changing business environment and stakeholder expectations can keep conflicts at bay.