Stakeholders | N5 Business Management

Interests, Influences & Impact

Stakeholders are individuals or groups of people who will benefit if the organisation does well, but may suffer if it does not do well.

Internal Stakeholders

Owners/Shareholders
Managers
Employees

External Stakeholders

Banks/Lenders
Customers
Suppliers
Local communities
Pressure groups
Local government
National government

Stakeholders have different interests in the success of an organisation, depending on their role in the organisation and what they have ‘at stake’. Sometimes these interests may conflict, so different stakeholder groups look for ways to influence the decision-making process so that their interests are fulfilled. These influences will impact on the decisions and actions of an organisation.

Stakeholder (Internal)	Interests	Influence/Impact
Shareholders	Shareholders in a private limited company have invested finance in the organisation by buying shares of ownership. They want to see the value of their shares rise, and their share of the profit (dividend) to increase.	Shareholders can vote at the Annual General Meetings to remove, or appoint Directors. They can vote to accept or reject proposals for distribution of profits in the form of dividends. They may decline to buy more shares of ownership. This can impact on the decision-making capacity of the directors and may leave the organisation short of investment to carry out its long-term plans.
Owners (Sole Trader or Partnership)	Owner(s) of a sole trader or a partnership are stakeholders in their own businesses. They want to keep their investment safe and not go bankrupt. They want to make a good profit as the reward for risks taken and the efforts they have put in.	Sole traders or partners can influence by making long term decisions on the direction of the business and short-term decisions on how it will be run day-to-day. They can choose to wind up the business if their interests have not been met.
Managers	Managers want job security, favourable pay and working conditions, and good promotion prospects. They may also want more responsibility and status in the organisation. This may be linked to the performance of the business eg a bonus or promotion if things are going well.	Although managers must make long-term decisions that reflect the interests of the owners, they can make medium-term and short-term decisions about the day-to-day operation of the organisation which will be to their personal advantage. Successful management decisions will lead to a more successful / profitable organisation or one which makes best use of its limited resources.
Employees	Employees also want job security, better pay and working conditions. They want to feel valued at work and to have opportunities to develop their careers.	Employees can take industrial action eg strikes or working to rule to persuade owners or managers to improve pay. They may resign from the organisation taking valuable skills with them. Alternatively, they may choose to work hard, give good customer service and remain loyal to the business. These actions may leave the organisation short of staff and therefore unable to fulfil its obligations to customers. Contract deadlines may be missed leading to penalties and damage to reputation (or the reverse if employees are working hard). The organisation’s image may be damaged by prolonged industrial action or enhanced by positive employee relations. This will effect decisions made by customers and potential future employees.

Stakeholder (Internal)

Interests

Influence/Impact

Shareholders

Shareholders in a private limited company have invested finance in the organisation by buying shares of ownership. They want to see the value of their shares rise, and their share of the profit (dividend) to increase.

Shareholders can vote at the Annual General Meetings to remove, or appoint Directors. They can vote to accept or reject proposals for distribution of profits in the form of dividends.

They may decline to buy more shares of ownership.

This can impact on the decision-making capacity of the directors and may leave the organisation short of investment to carry out its long-term plans.

Owners (Sole Trader or Partnership)

Owner(s) of a sole trader or a partnership are stakeholders in their own businesses. They want to keep their investment safe and not go bankrupt.

They want to make a good profit as the reward for risks taken and the efforts they have put in.

Sole traders or partners can influence by making long term decisions on the direction of the business and short-term decisions on how it will be run day-to-day.

They can choose to wind up the business if their interests have not been met.

Managers

Managers want job security, favourable pay and working conditions, and good promotion prospects.

They may also want more responsibility and status in the organisation. This may be linked to the performance of the business eg a bonus or promotion if things are going well.

Although managers must make long-term decisions that reflect the interests of the owners, they can make medium-term and short-term decisions about the day-to-day operation of the organisation which will be to their personal advantage.

Successful management decisions will lead to a more successful / profitable organisation or one which makes best use of its limited resources.

Employees

Employees also want job security, better pay and working conditions.

They want to feel valued at work and to have opportunities to develop their careers.

Employees can take industrial action eg strikes or working to rule to persuade owners or managers to improve pay.

They may resign from the organisation taking valuable skills with them.

Alternatively, they may choose to work hard, give good customer service and remain loyal to the business.

These actions may leave the organisation short of staff and therefore unable to fulfil its obligations to customers.

Contract deadlines may be missed leading to penalties and damage to reputation (or the reverse if employees are working hard).

The organisation’s image may be damaged by prolonged industrial action or enhanced by positive employee relations. This will effect decisions made by customers and potential future employees.

Stakeholder (Internal)	Interests	Influence/Impact
Suppliers	Suppliers want repeat orders from the organisation so they get a steady income. They want supplies purchased to be paid for on time to avoid cash flow problems.	Suppliers can change the length of time of credit or the level of discount they offer on their supplies. They can ensure supplies are delivered in a good time scale. This can impact on the organisation’s abilities to meet deadlines and control costs.
Banks	Banks want to lend funds to organisations so that they can charge interest, but they need assurance that they will be repaid. Banks want the organisation to carry out their day to day banking through the bank as they pay fees on this.	Banks can vary the rates of interest paid on the loan. They may change the repayment terms on loans offered eg give more or less time to repay the loan. They may turn down a loan application or ‘foreclose’ (call in) the loan if repayments are not reliable. These actions can impact on operating costs and therefore ability to compete in the market. They may help or hinder expansion plans Ultimately the actions of the bank may cause or prevent an organisation from going bankrupt.
Customers	Customers want competitive prices that are value for money. They want reliable quality and a range of products to choose from. Some consumers want to influence the materials and methods of production used for social or environmental reasons	Customers can stop buying products if they do not match their expectations, or if they feel the organisation is not being responsible in its operations. They may also give negative reviews which may influence other customers. Alternatively they can give good reviews and make repeat purchases. These actions can impact on the cash flow of an organisation. An organisation may need to change its suppliers and/or production methods to ensure they are acceptable to customers.
National Government	National government wants organisations to work within the law, pay their taxes, and provide employment.	The government can introduce laws which affect the way the business is run eg health and safety, employment equality, minimum wage. They can set up bodies to regulate activities eg Off-Comm. They can make changes to levels of tax that must be paid on profits. These actions can impact on an organisation’s cost control, and may cause it to change its pricing and promotional activities to remain within the law. Ensuring compliance with laws and regulations can be time-consuming and failure to do so can results in fines.
Local Government	Local government wants organisation to set up and remain in their area as this creates employment and provides income in the form of business rates	Local government my grant (or deny) planning permission for an organisation wanting to expand. They may offer an advice and support service to encourage local businesses to set up. This can impact on the expansion plans of an organisation.
Local Community	The local community wants an organisation to treat the locality respectfully by not creating noise or environmental pollution. They want job opportunities and better infrastructure.	Local community residents can lobby their local councillor or MP to take action against an organisation if necessary. They may decide to boycott the organisation or mount a protest (see pressure groups below). Complying with local community requirements can increase costs, but if successful reputation will be enhanced.
Pressure Groups	Pressure groups may be local or national organisations that unite people with common ideals and beliefs. Their interest is that they want to see businesses operating in a socially, ethically or environmentally friendly way that reflects their beliefs.	Pressure groups can organise press releases to inform people of actions by organisations. They can organise protest marches, hand out flyers, encouraging customers to boycott a product, encourage people to lodge objections with the government. The organisation may incur increased costs to meet the demands of the group. They may secure loyal customers if they are seen to be sympathetic to the requests of pressure groups.

Stakeholder (Internal)

Interests

Influence/Impact

Suppliers

Suppliers want repeat orders from the organisation so they get a steady income.

They want supplies purchased to be paid for on time to avoid cash flow problems.

Suppliers can change the length of time of credit or the level of discount they offer on their supplies.

They can ensure supplies are delivered in a good time scale.

This can impact on the organisation’s abilities to meet deadlines and control costs.

Banks

Banks want to lend funds to organisations so that they can charge interest, but they need assurance that they will be repaid.

Banks want the organisation to carry out their day to day banking through the bank as they pay fees on this.

Banks can vary the rates of interest paid on the loan.

They may change the repayment terms on loans offered eg give more or less time to repay the loan. They may turn down a loan application or ‘foreclose’ (call in) the loan if repayments are not reliable.

These actions can impact on operating costs and therefore ability to compete in the market. They may help or hinder expansion plans

Ultimately the actions of the bank may cause or prevent an organisation from going bankrupt.

Customers

Customers want competitive prices that are value for money.

They want reliable quality and a range of products to choose from.

Some consumers want to influence the materials and methods of production used for social or environmental reasons

Customers can stop buying products if they do not match their expectations, or if they feel the organisation is not being responsible in its operations.

They may also give negative reviews which may influence other customers.

Alternatively they can give good reviews and make repeat purchases.

These actions can impact on the cash flow of an organisation.

An organisation may need to change its suppliers and/or production methods to ensure they are acceptable to customers.

National Government

National government wants organisations to work within the law, pay their taxes, and provide employment.

The government can introduce laws which affect the way the business is run eg health and safety, employment equality, minimum wage.

They can set up bodies to regulate activities eg Off-Comm.

They can make changes to levels of tax that must be paid on profits.

These actions can impact on an organisation’s cost control, and may cause it to change its pricing and promotional activities to remain within the law. Ensuring compliance with laws and regulations can be time-consuming and failure to do so can results in fines.

Local Government

Local government wants organisation to set up and remain in their area as this creates employment and provides income in the form of business rates

Local government my grant (or deny) planning permission for an organisation wanting to expand.

They may offer an advice and support service to encourage local businesses to set up.

This can impact on the expansion plans of an organisation.

Local Community

The local community wants an organisation to treat the locality respectfully by not creating noise or environmental pollution.

They want job opportunities and better infrastructure.

Local community residents can lobby their local councillor or MP to take action against an organisation if necessary.

They may decide to boycott the organisation or mount a protest (see pressure groups below).

Complying with local community requirements can increase costs, but if successful reputation will be enhanced.

Pressure Groups

Pressure groups may be local or national organisations that unite people with common ideals and beliefs.

Their interest is that they want to see businesses operating in a socially, ethically or environmentally friendly way that reflects their beliefs.

Pressure groups can organise press releases to inform people of actions by organisations.

They can organise protest marches, hand out flyers, encouraging customers to boycott a product, encourage people to lodge objections with the government.

The organisation may incur increased costs to meet the demands of the group. They may secure loyal customers if they are seen to be sympathetic to the requests of pressure groups.