The document discusses stakeholders of a business. It defines stakeholders as any entity affected by or able to affect a business's operations. Stakeholders can be internal, like employees and managers, or external, like customers, suppliers, the community, and government. The interests and influences of different stakeholder groups are examined, such as employees' interest in fair pay and working conditions and their ability to strike. Stakeholder analysis is introduced as a process to categorize stakeholders by their importance and interest to develop engagement strategies. Stakeholder mapping is described as a tool to classify stakeholders into four types based on their power and interest in the business.

1. Chapter Four
Business and Its
Stakeholders

2. Meaning of stakeholder
• Are any entity that is effected by
the operations of the business or
affect the operations of a
business.
• Groups or individuals that have
an interest in the well being of
the company and they are
affected by the goals ,operations
or activities of the organizations

3. Stakeholder Examples
Managers
Employee
s
Custom
ers and
Rivals
Supplier
s
Community
Governmen
t
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4. Types of stakeholders
INTERNAL
• Stakeholders are
those within a
company
• Their interest stems
from direct
employment,
ownership or
investment.
• Are directly affected
by the operations
and decisions of a
business and are
EXTERNAL
• These are stakeholders
from outside the
business are also called
secondary stakeholders
• have an interest in the
company but have no
direct influence on its
decisions and are not
directly affected by its
performance
• Suppliers
• Banks and lenders
• Government
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Some
stakeholders
are
both
internal
and
external.
E.g.
Staff
my
share
holder
as
well
as
community

5. Interests and influences of
stakeholders on business
Interest
• Company stakeholders are often interested
in the outcome of a company because they
are invested in it in some way.
• It is possible to have many different
stakeholders, all with different interest;
making it difficult for a business to satisfy
each
Influences
• Stakeholders may influence business
in decision-making, aims and objectives,
operational issues, sales, costs and profits.
• Owners have the most impact, as they make
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6. Interests and influences
EMPLOYEES
INTEREST
• Good Salary
• Job Satisfaction
• Good Working
Conditions
• Job Security
INFLUENCE
• Increased productivity
, performance and
better costumer
satisfaction
• Industrial Action
Strike, go slows,
Overtime ban and Work
to rule

7. INTEREST
• Good
Salary/Bonuses
• Job Satisfaction
• Responsibility and
Status
INFLUENCE
• Plan, Organize and
Control
• Make Decisions
Such as, hiring staff,
selling products, etc
• May leave a company
MANAGERS
Interests and influences

8. . OWNERS AND SHAREHOLDERS
• Own total or a part of a business
• Do not get involved in the day-to-
day running of the business
• Have a right to vote at the
company’s general assembly
• Receive a share of the profits – this is
called a dividend
• In small businesses there may be
only one owner (sole trader) or
perhaps a small number of partners
(partnership)
• In large firms there are often
thousands
of shareholders, who each own a

9. SHAREHOLDERS
INTERNAL STAKEHOLDERS
INTEREST
• High profit
• High dividend
• Long term growth
• Stay in business
• Positive corporate
image
INFLUENCE
• They can
influence decision
making
• They can vote for
certain Directors
• They can choose
to sell their shares

10. SUPPLIERS
INTEREST
A long term
relationship
Large size contracts
Frequent and regular
orders
Prompt payment
Fair prices
Growth of the firm for
more orders
INFLUENCE
Change prices
Offer discounts
Change their lead
times
EXTERNAL STAKEHOLDERS

11. BANKS AND LENDERS
INTEREST
They want to make
sure cash flow is
stable
So they can ensure
repayment
INFLUENCE
They can choose
whether to grant or
withhold loans
They can extend or
shorten the loan
repayment period
They can change the
interest rates
EXTERNAL STAKEHOLDERS

12. INFLUENCE
Legislation (Minimum Wage Act)
Can issue bans (Smoking in local
areas)
Set taxation rates
Offer or withhold grants and
licences
GOVERNMENT
EXTERNAL STAKEHOLDERS

13. LOCAL COMMUNITY
INTEREST
Companies provide jobs
for an area
Businesses offer
goods/services
The community cares
about the area they live
in
INFLUENCE
Can make complaints
to Local Authority
Can protest against
the company
EXTERNAL STAKEHOLDERS

14. CUSTOMERS
INTEREST
They want best quality
products
At lowest possible
price
A range of goods and
services
INFLUENCE
They can choose
whether or not to
purchase goods or
services
They may recommend
the business to friends
and family
EXTERNAL STAKEHOLDERS

15. EXTERNAL STAKEHOLDERS
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COMPETITIOR
• Any person or entity which is a rival against
another. In business, a company in the same
industry or a similar industry which offers a
similar product or service.
Competitors interest
• To compete by all lawful means
• To differentiate its product from those of other
businesses

16. Role of stakeholders in business
 Voting and Decision-making
• Stakeholders may be responsible for voting on
significant changes in the business. Voting can
take place annually based on the corporate
structure of the business or during any meeting.
 Management
• Stakeholders can hold significant management
positions where they may report directly to the
president, CEO or chief financial officer.
 Investing
 Social and Environmental
Responsibilities
• Stakeholders must continuously ensure that
decisions they are making for the business are

17. Stakehol
ders
Possible rights include Possible responsibilities
include
Employees To be treated fairly, to be
paid fairly, to be kept
informed
To work effectively, to turn up
for work on time
Suppliers To be paid on time, to be
informed of any potential
changes in orders in the
future
To provide good quality
products meeting the set
specifications at the time set
Owners/
shareholder
s
To receive a share of profits,
to be kept informed by
management
To treat management fairly
Customers To be supplied the right
quality products on time
To pay on time
Government To be paid taxes, to have To protect businesses,
Stakeholders rights and
responsibilities

18. Managers To be rewarded appropriately
for responsibilities, to have
duties proportionate with
seniority
To carry out duties to best
of ability, to be discrete in
handling sensitive business
data
Lenders To be repaid promptly and on
time
Not to charge excessive
interest rates or to withdraw
loans without a reasonable
period of notice
The local
communit
y
To live in an area that is free
from excessive noise or other
forms of pollution, to have a
say in decisions which impact
on the local community and to
benefit from employment
To cooperate with the
business in its daily activities
Stakeholders rights and
responsibilities
Stakehol
ders
Possible rights include Possible responsibilities
include

19. The interaction between a business’s
decisions/ actions and its stakeholders
• Any business decision can affect stakeholders
– Reducing the size of a business would affect employees
– Reduced profits would affect shareholders
– Increased orders would affect suppliers
– Expansion would affect community allowing for greater
income to be earned
– Creation of more jobs would affect the government
regarding taxes
• This impact can be both positive and negative
– Sometimes one group will benefit and another may suffer
– Cutting wages would benefit shareholders, but employees
would suffer

20. The interaction between a business’s
decisions or actions and its
stakeholders..
• If stakeholders don’t like the decisions of the
business, they can take various actions to avoid the
effects
– Shareholders can sell their shares
– Banks can refuse to lend more or charge more for the
business to borrow
– Employees can resign
– Employees can strike
– Suppliers can refuse to supply or demand better payment
terms

21. Stakeholder analysis
A stakeholder analysis is a process
of systematically gathering and
assessing information about
stakeholders to;
• Categorize their relative
importance as actors and
• Develop strategies on how to
involve them in the in business
development

22. Identifying and categorizing
stakeholders
– Stakeholder mapping

23. Mapping descriptions
Stakeholder type 1: Crowd (Low power, less interested
people)
• Are those marginal stakeholders who have a small level
of interest or stake in the issue and little influence or
power.
Strategy:
• Engage if resources permit. Monitor with minimum
effort.
• Do not communicate excessively.
Stakeholder type 2: Observers (Low power, interested
people)
• This type of stakeholder has a high level of interest or a
significant stake in the issue but little influence or
power over outcomes; they are reluctant observers to

24. Mapping descriptions ..
Stakeholder type 3: Influencers (High power, less
interested people)
•Are those stakeholders who have significant
influence or power but don’t necessary exercise it
due to a low level of interest or minimal stake in
the issue.
Strategy:
•Engage supportive stakeholders and keep them
satisfied
Stakeholder type 4: Key players (High power,
interested people)
•This type of stakeholder is likely to influence the
outcome of an issue because of their high level of
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