Unit 1 – Introduction to Business Management
1.4 – Stakeholders
Stakeholders are individuals, groups, or organizations affected by or influencing a business’s activities, decisions, or objectives. Understanding stakeholders helps managers make better, more responsible decisions.
Types of Stakeholders
Internal Stakeholders
- Owners/Shareholders: Invest in and own the business. They seek profit, growth, and value.
- Managers/Executives: Responsible for leading teams and making strategic choices. Motivated by bonuses, reputation, advancement.
- Employees/Staff: Carry out day-to-day work. Seek job security, fair pay, working conditions, and personal development.
Internal stakeholders are inside the organization, have direct influence, and their success is tied to business performance.
External Stakeholders
- Customers: Expect value, good service, safety, quality products, and fair prices.
- Suppliers: Want a reliable partnership with timely payment and consistent orders.
- Creditors/Lenders: Provide loans and credit; expect repayments with interest.
- Government: Regulates, taxes, legislates, and sometimes subsidizes or contracts business activity.
- Community & Society: Seek jobs, support, ethical activity, and limited negative impacts (e.g., pollution).
- Pressure Groups/NGOs: Campaign for ethical, social, or environmental behavior.
- Competitors: Vary from adversaries to collaborators, depending on context.
- Media: Influences public perception and spreads news or issues related to the business.
External stakeholders are not part of the business but are impacted by or can impact its actions.
Stakeholder Comparison Table
| Stakeholder | Type | Main Interests/Objectives |
|---|---|---|
| Owners/Shareholders | Internal | Profit, growth, share value |
| Managers | Internal | Performance, bonuses, career, efficiency |
| Employees | Internal | Job security, pay, fair treatment |
| Customers | External | Price, quality, service, safety |
| Suppliers | External | Long contracts, fair payment |
| Creditors | External | Timely loan repayments |
| Government | External | Taxes, employment, compliance |
| Community/Society | External | Jobs, positive local impact |
| Pressure Groups | External | Social/environmental standards |
| Competitors | External | Fair competition, industry health |
Conflicts Between Stakeholders
Stakeholder conflict arises when stakeholders have different aims, priorities or interests—so not all can be satisfied at once. Businesses need to identify, manage, and often balance or compromise between interests.
Examples of Stakeholder Conflicts
- Shareholders vs. Employees: Higher profits may mean job cuts or lower wages.
- Managers vs. Customers: Higher prices increase profits but upset buyers.
- Community vs. Business: Factory brings jobs but causes noise or pollution.
- Pressure Groups vs. Business Owners: Demand costly environmental practices.
- Short-term vs. Long-term interests: Quick profit vs. sustainable growth or ethical standards.
Resolving Stakeholder Conflict
- Consultation: Listening to/studying different stakeholder groups before deciding.
- Negotiation & compromise: Reluctant groups may bargain for concessions.
- Transparency: Share key info so conflicts and priorities are clear.
- Ethical frameworks: Apply core values or codes of conduct to guide decisions.
- Communication: Keep all stakeholders informed and explain decisions honestly.
Key Takeaways & Exam Tips
- Define internal and external stakeholders.
- Use examples to show conflicting objectives.
- Explain how managers can balance needs (consultation, negotiation, ethics, communication).
- Stakeholder mapping and communication are essential tools for every effective business leader.