Stakeholders and their Influence

Stakeholders

A stakeholder is any person, group or organisation that has an interest in the activities of a business.
Examples of stakeholders include employees, customers, suppliers, shareholders, government, local communities and creditors.

Shareholders: They own shares in the business. Their primary interest is in profitability as this can influence the dividends they receive and the share price. They can influence management decisions through voting rights at the AGM.
Employees: They have a interest in job security, wages and working conditions. Their influence can come from their ability to disrupt production or services through industrial action.
Customers: They are interested in the business providing good quality products at fair prices. They influence a business through their purchasing decisions.
Suppliers: Interested in steady orders and prompt payment. They can influence the business through the quality, price and reliability of their delivery.
Government: Interested in businesses adhering to regulations, creating jobs and paying taxes. They have considerable influence through legislation.

Stakeholders are important as they provide the resources that a business needs to survive and grow. This includes financial resources, human resources, customers to buy the products and services, and suppliers who provide essential inputs.

There can be conflicts between different stakeholder groups. For example, shareholders may want high dividends which could mean less investment in worker wages or facilities.

Regular communication with stakeholders can help to avoid conflicts and ensure that the business meets its stakeholders’ needs and expectations.
A business can communicate with its stakeholders through meetings, newsletters, annual reports and corporate websites.

Stakeholder mapping is a tool that helps businesses to identify and understand their stakeholders, and to manage their relationship and communication with them.
Stakeholders can be mapped according to their power over the business and their interest in its activities. This can help a business to prioritise its resources and attention.

Stakeholder theory suggests that companies should make decisions that consider all stakeholders, not just shareholders.
According to this theory, businesses have a social responsibility, and they should act in a way that benefits society as a whole. At the same time, they need to balance these considerations with their need to generate a profit.