what is a stakeholder this video is going to look into the typical stakeholders of a business
how the business can impact these stakeholders and why these stakeholders may come into conflict
with one another over certain business decisions
what is a stakeholder a stakeholder is anyone that has an interest in a business
stakeholders can have an impact on a business or be impacted by the business
these people can be individuals groups of people or other organizations before we go
into the types of stakeholders it's important to know that these stakeholders can be split
into two different types internal and external stakeholders internal stakeholders are people
whose interest in a company comes through a direct relationship from within the business such as
shareholders these are internal as they are part owners of the business due to them holding shares
in the business it's important to distinguish the difference between a stakeholder and a shareholder
a shareholder has shares in the business which means they own part of the business however
because they own a part of the business they are also a stakeholder as they have an interest
in the business being successful as it will result in them receiving a share of the profits
employees are internal stakeholders as they carry out the day-to-day activities the business
requires these tasks are usually delegated by the managers managers are also internal stakeholders
as they work directly for the business and are in charge of implementing the vision of the owners
in contrast to internal stakeholders external stakeholders are those who do not directly work
for the company but are affected in some way by the actions and outcomes of the business
examples of these are customers they buy the products or service offered by the business
and therefore have an interest in the business's long-term success suppliers these are external
to the business as they are an organization in themselves or responsible for providing
the business with products or services the local community is anyone located nearby to the business
they have an interest in how the business operates in their local community
pressure groups have a shared goal and try to influence the decision made by a business
in pursuit of this goal and finally government this can be both local or central government
and they want businesses to provide employment and pay taxes now we know the different
stakeholder groups let's look at what each stakeholder wants in terms of their objectives
stakeholder objectives stakeholders have their own objectives and expectations of a business
these objectives will vary by stakeholder and here are some of the common objectives
for the different stakeholder groups shareholders want maximum profit a long-term growth managers
want a good salary and opportunities for further career progression employees want good levels of
pay job satisfaction and job security and may also have an interest in career progression just like
managers customers want a good quality and range of products at reasonable prices suppliers want
to receive payments on time and regular orders the local community so people living within the area
may be looking for work which local business can provide to them pressure groups want to increase
awareness of their cause and influence the business to make decisions that further their goal
i.e animal rights groups may pressure cosmetic companies to stop testing on animals government
governments want businesses to create more jobs in order to raise more money from taxes and save
money on benefit payments as you can see each stakeholder has their own set of expectations
for a business and depending on how the business acts this will affect stakeholders in different
ways effects of business activity on stakeholders each of these stakeholders is affected differently
by what direction the business takes and which stakeholders they prioritize
let's look at an example at mcdonald's which has been pretty popular over recent years there's no
doubt mcdonald's is a huge success in the business world this has led to employees rightly or wrongly
arguing due to mcdonald's success they are entitled to a higher hourly wage this has been
known as a fight for 15 as they believe this wage should be 15 pounds an hour due to this
mcdonald's needs to decide which stakeholders they want to prioritize as a wage increase will
not only impact the employees but will directly impact all stakeholders possibly in the following
ways shareholders the effects of a wage increase on shareholders would most likely be negative the
wage increase would mean a large increase in costs for mcdonald's and would see wages rise
to almost double this would result in a reduction in profits and a possible reduction in share price
and dividend payments to shareholders managers will potentially see their salaries increase
to ensure they are incentivized to still take on their additional responsibilities
if this did not happen it will be demotivating as an employee with less responsibility
would receive an equal or even a higher wage than managers employees this will be a positive
for the employees as they will see their wages rise to 15 pounds an hour which will mean they
are better off financially it may push mcdonald's towards a more automated system as we've seen with
the touchscreen ordering system as staffing may need to be reduced to keep costs down
customers could see an increase in prices or a reduction in quality as mcdonald's
would try to recover some losses from suppliers therefore reducing quality or by raising prices
suppliers may see mcdonald's try to negotiate a better price for its product or even find new
suppliers that are willing to lower their prices people in the local area may now be financially
better off this means they will be able to spend money in the local area and in turn could boost
the local economy pressure groups that lobbied for the wage increase will be satisfied and this
will reduce the pressure on the business from such activists the government will now be earning more
money annually as people repaying more income tax or potentially decreasing their reliance on
financial support from the government stakeholder impact ultimately their decision will come down
to which stakeholder mcdonald's deems to have the greatest impact on the future growth of the
business as the action stakeholders take can also have an impact on the business in the same way
in which the actions of the business can impact the stakeholder what impact can the stakeholders
have on a business shareholders have a significant impact as they fund the business if they dislike
what they see they could sell shares which could see billions wiped off the company's value
managers make decisions at a lower level but can still impact the culture and effectiveness of a
businesses day-to-day operations employees have relatively low influence on a business
at an individual level however collectively they can refuse to work and take strike action
customers can stop using a product or service and are responsible for spreading either a positive or
negative message about a business through word of mouth in person or on social media suppliers
could refuse to provide a business with the goods it needs to operate local communities
and pressure groups can oppose business operations and try to stop certain acts happening
that the local community and these pressure groups don't agree with finally the government can pass
laws that must be followed and these can have a massive impact financially and on the way the
business operates with all groups having different objectives and a different level of impact this
means that when issues arise such as a wage increase to 15 pounds then this puts stakeholders
in conflict with one another as each one wants a different outcome from the issue stakeholder
conflicts conflicts between stakeholders will occur and it's something a business must navigate
sensitively let's use the mcdonald's wage rise to look at where conflict may occur on this issue
employee versus shareholders employees want 15 pound an hour in order for them to become more
financially stable on the other hand shareholders want to make as much money from their investment
in the business as possible and ideally want to pay as little as possible to employees
as this will maximize profits the two stakeholders have totally conflicting interest in the business
and both objectives cannot be met at the same time if mcdonald's decides to
pay the 15 pounds immediately then this will increase operating costs and reduce profits
impacting shareholders negatively on the other hand if mcdonald's pay their employees too low in
order to give shareholders maximum profits then this could mean employees not wanting to work
for mcdonald's and taking strike action again mcdonald's needs to try and strike a balance
between profits and employee wages which will satisfy both the shareholder and the employees
another conflict over the issue may be between employees and customers these may be in conflict
due to the employee wanting higher wages but the customer wanting no price increases
these wants are conflicting as higher wages could result in mcdonald's raising their prices to cover
the increased wage bill if the business handles both of these conflicts well then
this will usually result in a compromise being made that each stakeholder can live with such as
raising the weight of ten pound for the commitment being made to increase to fifteen pounds
over a five year period this may make employees feel they've been heard and shareholders would
have time to see how these changes would impact profits and prices for the consumer
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