3.2.3 Understanding the role and importance of stakeholders
The need to consider stakeholder needs when making decisions
Stakeholder = anyone with an interest in the business and its operations
Stakeholder groups:
- Customers
- Employees
- Investors/banks
- Suppliers/distributors
- Shareholders
- Owners/managers
- Competitors
- The government
- Local communities
- Environmental pressure groupies
- The media
Stakeholder mapping:
Power = their part in decision making or how much they would negatively affect you
Purpose = helps you when making decisions and prioritise stakeholders where there will be potential conflict
Stakeholder needs and the possible overlap and conflict of these needs
Stakeholders needs:
- Employees – happy environment, high wage, keeping their job, good & safe working conditions
- Suppliers – regular orders, contractual agreement, security
- Customers – low price, high quality, good customer service, value for money
- Competitors – price, customers, (affected by other decisions)
- Government – wants them to do well, collect taxes (and raise them)
- Local communities – local environment, friendly firms
- Owners and managers – dividends, potential benefits, expansions, happy employees, profit
- Investors and banks – repayments on time and with full interest
- Shareholders – regular dividends, how much profit the firm makes
Potential conflicts between stakeholders:
Influences on the relationship with stakeholders
Factors that affect stakeholder relationships:
- Quality of products made
- Information available
- How easy it is to communicate with them
- Their status
- Customer service
- Influence or power
- Workplace environment for employees
- How much money they have invested into the business
- Views on the environment
- Revenue produced
- Prices of products being sold
- Decisions made by the firm
How to manage the relationship with different stakeholders
How to communicate with stakeholders:
- General meetings
- Letters
- Email and social networking
- Posters of advertising
- Public forums
- Media release