Business stakeholders

What are stakeholders?

Within a business there are a huge range of stakeholders. A stakeholder is simply a person or a group that is affected by the business and its operations. Stakeholders have an interest in the business for different reasons and will be affected by the success of the business. The main types of stakeholders include:

• Owners – the owners of a business will obviously be affected by how much success the business has. This success will affect the money that the owners make as well as what steps they can take with the company. Owners of a business may look to sell, and the success and profitability of the business will have a direct impact on the amount of money that the business can be sold for. The owners of a business have a responsibility to make as much money as they can while ensuring the business is sustainable and therefore able to continue operating for a long period of time.
• Managers – managers are large stakeholders in a business as they will be employed in their role. If the company is not successful, the managers could lose their jobs or be paid less money if their earnings are incentive based. A manager in a company will be in charge of ensuring the workers are productive so that the business runs efficiently. This efficiency will turn into higher profits and more money to be made by the managers.
• Employees – much like managers, employees want a business to be successful and make a large profit so that their jobs are secure. Employees will want good wages as well as pleasant working conditions and holiday entitlements. Keeping employees happy in a company will result in higher costs to the business and lower profits. This may cause a conflict between employees and the managers or owners who want different things.
• Customers – the customers of a business are very important stakeholders. They have an interest in the company as they want it to be successful and sustainable but to also offer good value for money on what it sells. Customers will expect a business to deliver on what it promises and be competitive in the marketplace.
• Suppliers – the suppliers of a business will have interest in the success achieved. They will want to be able to continue selling goods and services to the business and therefore want the company to be around for a long period of time. Suppliers want businesses that are successful to work with so that they can build strong relations and have a secure customer base.
• The local community – people that live close to a business will not want to be badly affected by the operations of the business. This means they will not want the business to disturb them or pollute the local environment. As well as this, the local community will want the business to be successful so that it can offer jobs to those that live locally.
• The government – the government of the country that a business operates in will want the business to be a success so that jobs are offered to people in that country. The government will also benefit by taxing the business on its profits as well as charging business rates. Governments will want a business to be successful and abide by the law so that they do not have to impose sanctions and so residents are not at risk.

How stakeholders are affected by business activity

The stakeholders of a company can be affected in a variety of ways by a business and its activity. When a business is successful, the stakeholders will see positives in their own lives and when a business is not performing then the stakeholders will feel the damage. Positive things for stakeholders can include:

• More money being earned
• More opportunities and jobs
• An improved community
• Safety and security
• A better deal with the business

Despite there being some positives to being a stakeholder, there is also the risk of a negative impact. This may occur when the company does not do particularly well when trading and starts to lose money. Negative impacts may also be felt if a business’s operations have an effect on the everyday life of an individual. Common negative impacts from a business will include:

• Loss of money or not making as much as was predicted
• Less opportunities or jobs
• Damage to the community
• Pollution
• Being sold a product that is of poor quality
• Laws being broken
• Jobs not being secure

Possible conflicts between stakeholders

Stakeholders in a business all want different things and have their own agenda. Due to the fact that each stakeholder wants something different, there is likely to be some form of conflict at some point between different stakeholders.

Stakeholders such as owners and managers are likely to be focused on making money and increasing the profitability of the company. This is quite likely to be different to others such as employees who will be more interested in getting a good wage and working conditions. Since the profitability of the business does not necessarily result in them being paid a higher wage, employees would prefer that the company invests money back into itself in order to improve working conditions rather than the owners taking all the profits. This could potentially result in a conflict between owners and employees in a business who want different things.

Conflict can also occur between the business and external sources such as the local community and government. In this case it is likely that the business is trying to make money but external stakeholders do not think it is behaving ethically. Ensuring that the environment is protected fully will be high on the agenda of local residents and authorities but may not be as important to a business that is striving for profitability. For this reason, conflict can occur when the business does not invest enough money into being environmentally friendly and does damage to the surrounding areas.