© boardworks ltd 20071 of 251 of 27© boardworks ltd 2007 stakeholders teacher’s notes included...

© Boardworks Ltd 20071 of 251 of 27 © Boardworks Ltd 2007

Stakeholders

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Stakeholders Unit 2: People in Business

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Learning objectives


What is a stakeholder? What different types of stakeholders do businesses have?

What are the interests and expectations of different stakeholder groups?

How do stakeholders influence small and large businesses?

Why does conflict sometimes exist between different stakeholder groups?

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The role of business owners

However, there are other people who have an interest in, and some influence on, businesses.

Owners of businesses to a greater or lesser extent:

make decisions about the business.

receive a share of the profits

manage and control the business

These people are known as stakeholders.


What is a stakeholder?

A stakeholder is any individual or organization that is affected by the activities of a business. This means that the business has some impact on their lives.

Tesco is the UK’s largest supermarket chain. Can you thinkof any individuals or organizations who might have a stakein Tesco? Add your ideas to the board.


Types of stakeholders

All stakeholders in a business are either internal stakeholders or external stakeholders.

pressuregroups

financiers

government

suppliers

employees

customersowners

competitors

localcommunity

In any business there are a number of different stakeholders:

Stakeholders


Types of stakeholders

All shareholders in a business are stakeholders. They may be internal or external stakeholders, depending

on whether or not they also work in the business.

External stakeholders in a business include suppliers, customers, competitors, communities, pressure groups financiers and the government. These people have an interest in the business, but are not part of it.

Internal stakeholders are people who are part of a business, including the owners themselves, managers, and other employees. Internal stakeholders are directly affected by the activities of the business.


Case study

Who are the stakeholders in Bonnie’s Ice Creams?

is a sole trader. She sells ice cream on the harbour in Whitstable. Bonnie usually works alone, but sometimes she employs an

Bonnie works in close proximity to ,and during the summer months attracts many .Bonnie does all the financial paperwork for the business, and must declare what she earns to the .

When setting up her business, Bonnie borrowed half the money she needed from her . In order to trade on the harbour, Bonnie had to seek approval from the , and agree to comply with the regulations as set by .

assistant.

Bonnie

boyfriendForeshore

CommitteeWhitstable Council’s Environmental Health Department

another ice cream vendorcustomers

Inland Revenue


Internal or external stakeholders?


Are you a stakeholder?

You are a stakeholder in many organizations – because there are many organizations which have an impact on your life.

Think of one business in which you are a stakeholder. This might be a shop you regularly use, a business you work part-time for, or even an organization such as your school.

What is the nature of your stake in the organization?

How would you be affected if the organization closed?

How might a closure affect other stakeholder groups?


The influence of stakeholders

All stakeholders have an influence over businesses, but this influence will vary depending on the type of stakeholder andthe type of business.

Do you think you have an influence over any businesses? Consider the way you and your family can influence the following businesses:

Tesco

your local newsagent

your school.


Stakeholder groups: customers

Customers are the people who buy abusiness’s goods or services.

Customers will usually be interested in matters such as:

the range of goods and services offeredthe price and quality of goods or servicesthe opening hours and availability of staffthe helpfulness of staffthe overall efficiency of the business.

Customers are one of the mostimportant stakeholder groups inany business.

Why do you think this is?


Stakeholder groups: owners and shareholders

However, the nature of an owner’s stake in a business will vary depending on the type of owner they are.Consider these stakeholders: the sole proprietor of a shop and a £500 shareholder in Tesco.

All owners and shareholders of a business have a common interest. They have each invested money in the business; if the business is successful, they will make money; if the business fails they will lose money.

What is the difference in the nature of their stakes?

Who has more at risk?


Stakeholder groups: employees

Employees expect a number of thingsfrom a business they work for, including:

fair pay and treatment

good working conditions

job security and prospects

an appropriate range of facilities.

How might employees influence a business?

Managers share the same expectations as other employees, but will have additional concerns which come with their jobs, such as a pressure to increase sales and cut production costs. As managers are often shareholders, they will also be interested in making money on their shares.


Stakeholder groups: employees

Employees can influence how effectively a business runs through how effectively they fulfil their job roles.

What impact would a strike have on a business?

Employees can also influence a business by refusing to do their jobs at all, i.e. going on strike. Employees might strike if they feel they’ve been treated unfairly by their employer, or to demand more pay or better working conditions.


Stakeholder groups: suppliers

Suppliers provide goods and services to abusiness.

They rely on the business being successful so that it continues to place orders.

Suppliers can influence a business by the quality and price of what they supply, as well as the speed at which they supply it.

If there are few suppliers offering the same product or there are no substitutes, a supplier will have a lot of power over a business demanding this product, and can raise its prices. However, if there are many suppliers of a particular product or service, it is the business which has power over the supplier.


Stakeholder interests and influence


Stakeholder groups: financiers

Financiers are individuals who invest money in a business i.e. shareholders, or organizations such as banks which lend money to businesses.

Financiers are interested in a business succeeding so that they:

make a profit on their investment

receive repayments on time.

Financiers can influence a business through how much money they lend, or invest in that business. With more capital, a business is able to grow. Financiers are powerful stakeholders; they are able to close a business or make it sell its assets in order to repay debt.


Stakeholder groups: the local community

Can you think of any ways in which communities might influence local businesses?

A business can have a big impact on the area in which it is located. A local community will usually expect a business to:

provide jobs and services

avoid disrupting or polluting the area.

Imagine each of these business developments happening in the area where you live:

the building of a new motorway a new shopping centre a waste incinerator plant.

What positive, and what negativeimpacts might each business have on your community?


Stakeholder groups: the government

The government is a stakeholder in every type of business. Why do you think this might be?

The government is interested in businesses doing well because businesses provide people with employment, and pay tax to the government. The more profit a business makes, the more money the government receives. Overall, successful businesses mean a healthier economy.

The government monitors the activities of businesses, and can influence them through the laws and regulations it passes to do with business practices. Businesses are also affected by how much tax the government charges.


Stakeholder groups: pressure groups

A pressure group is an organized group of people whichpersuades businesses, and the government, to act in ways that are in line with their particular views. Pressure groups can have a big influence over a business by creating negative publicity about the business’s activities.

Do some research to find out about the beliefs, activities and campaign methods of one of these pressure groups:

‘SPEAK’ is a British animal rights group which campaigns to end vivisection in the UK. In 2004, the construction of an Oxford animal testing laboratory was temporarily halted due to the on-goingprotests of SPEAK and other groups.

TUC Amnesty Friends of the Earth


Stakeholder groups: competitors

A competitor will want to know how well the business is doing, what new goods or services it is offering, what the prices are of goods and services, and how the business is advertising its products.

List three more ways in which a business such as Tesco might influence its competitors.

All these factors may affect the business decisions of a competitor. For example, imagine if Tesco significantly lowered all the prices of bread in its stores. How do you think Sainsbury’s would respond, and why?


Anagrams


Hot seat


Question time!

Identify three types of stakeholder in a business and describe the nature of their interest.

1.

2.

3.

Why would the government be interested in the amount of profit a business makes?

The building of a new school in a residential areawould affect which type of stakeholder?

4. How can a supplier influence a business?


Glossary

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