Stakeholder Model


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Stakeholder Model

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Stakeholder Model

  1. 1. The Stakeholder Model BTEC Business
  2. 2. Pressures on Business <ul><li>Competitive pressures – Modern business faces greater competitive pressure: </li></ul><ul><li>More open markets </li></ul><ul><li>Globalisation </li></ul><ul><li>Shareholders seeking ever higher profits </li></ul>
  3. 3. Pressures on Business <ul><li>Pressure of responsibility - G rowing importance to consumers of ethical business: </li></ul><ul><li>Total UK sales of Fair Trade products grew in 2004 by more than 50% to £140 million </li></ul><ul><li>Environmental legislation </li></ul>
  4. 4. How Should Firms Respond? <ul><li>‘ Inclusivity’: </li></ul><ul><li>Take a wide view of why the firm exists </li></ul><ul><li>Recognise range of interest groups </li></ul><ul><li>Form partnerships with wide range of groups </li></ul>
  5. 5. What’s Different About This? <ul><li>Firms used to aim for maximum profits to keep shareholders happy </li></ul><ul><li>This was often against interests of groups outside organisation </li></ul><ul><li>Now, interdependence seen as vital </li></ul><ul><li>Partnerships with all interest groups </li></ul>
  6. 6. What Does This Mean? <ul><li>Difficult to balance the different short term demands of shareholders and stakeholders </li></ul><ul><li>Firms can benefit considerably from cooperating with stakeholder groups </li></ul><ul><li>Their needs can be built into the firm’s decision making processes </li></ul>
  7. 7. Benefits Firms Can Expect <ul><li>Better public relations </li></ul><ul><li>More favourable reporting of firm’s activities in media </li></ul><ul><li>Quality relationships with suppliers </li></ul><ul><li>Lower staff turnover </li></ul>
  8. 8. Benefits Firms Can Expect <ul><li>Higher employee motivation </li></ul><ul><li>Reduced impact of pressure groups on firm’s activities </li></ul><ul><li>But only if firm genuinely commits to stakeholder model. </li></ul>
  9. 9. Meeting the Needs of Stakeholders BTEC Business
  10. 10. What are Stakeholders? <ul><li>Stakeholders are groups of people who have an interest in a business organisation </li></ul><ul><li>They can be seen as being either external to the organisation, or internal </li></ul><ul><li>But some may be both! </li></ul>
  11. 11. Types of Stakeholder <ul><li>Owners (I) </li></ul><ul><li>Shareholders (I) </li></ul><ul><li>Managers (I) </li></ul><ul><li>Staff or employees (I) </li></ul><ul><li>Customers (E) </li></ul><ul><li>Suppliers (E) </li></ul><ul><li>Community (E) </li></ul><ul><li>Government (E) </li></ul><ul><li>I = Internal </li></ul><ul><li>E = External </li></ul>
  12. 12. Internal and External Stakeholders <ul><li>Internal stakeholders are those who are ‘members’ of the business organisation </li></ul><ul><li>Owners and shareholders </li></ul><ul><li>Managers </li></ul><ul><li>Staff and employees </li></ul><ul><li>External stakeholders are not part of the firm </li></ul>
  13. 13. But…..! <ul><li>Some groups can be both internal and external stakeholders </li></ul><ul><li>Such as staff or shareholders who are also local residents </li></ul><ul><li>Can you think of any others? </li></ul>
  14. 14. Characteristics of Stakeholders <ul><li>1. Owners and Shareholders </li></ul><ul><li>The number of owners and the roles they carry out differ according to the size of the firm </li></ul><ul><li>In small businesses there may be only one owner (sole trader) or perhaps a small number of partners (partnership) </li></ul><ul><li>In large firms there are often thousands of shareholders, who each own a small part of the business </li></ul>
  15. 15. <ul><li>2. Managers: </li></ul><ul><li>organise </li></ul><ul><li>make decisions </li></ul><ul><li>plan </li></ul><ul><li>control </li></ul><ul><li>are accountable to the owner(s) </li></ul>Characteristics of Stakeholders
  16. 16. Characteristics of Stakeholders <ul><li>3. Employees or Staff: </li></ul><ul><li>A business needs staff or employees to carry out its activities </li></ul><ul><li>Employees agree to work a certain number of hours in return for a wage or salary </li></ul><ul><li>Pay levels vary with skills, qualifications, age, location, types of work and industry and other factors </li></ul>
  17. 17. Characteristics of Stakeholders <ul><li>4. Customers: </li></ul><ul><li>Customers buy the goods or services produced by firms </li></ul><ul><li>They may be individuals or other businesses </li></ul><ul><li>Firms must understand and meet the needs of their customers, otherwise they will fail to make a profit or, indeed, survive </li></ul>
  18. 18. <ul><li>5. Suppliers: </li></ul><ul><li>Firms get the resources they need to produce goods and services from suppliers </li></ul><ul><li>Businesses should have effective relationships with their suppliers in order to get quality resources at reasonable prices </li></ul><ul><li>This is a two-way process, as suppliers depend on the firms they supply </li></ul>Characteristics of Stakeholders
  19. 19. <ul><li>6. Community: </li></ul><ul><li>Firms and the communities they exist in are also in a two-way relationship </li></ul><ul><li>The local community may often provide many of the firm’s staff and customers </li></ul><ul><li>The business often supplies goods and services vital to the local area </li></ul><ul><li>But at times the community can feel aggrieved by some aspects of what a firm does </li></ul>Characteristics of Stakeholders
  20. 20. <ul><li>7. Government: </li></ul><ul><li>Economic policies affect firms’ costs (through taxation and interest rates) </li></ul><ul><li>Legislation regulates what business can do in areas such as the environment and occupational safety and health </li></ul><ul><li>Successful firms are good for governments as they create wealth and employment </li></ul>Characteristics of Stakeholders