Stakeholders in a business
Stakeholders
- A stakeholder is any person or group with an interest in a business.
- Internal stakeholders: owners/shareholders (profit), managers (growth, bonuses), employees (fair pay, job security).
- External stakeholders: customers, suppliers, lenders, government, local community, pressure groups.
Practice
Which is an internal stakeholder?
Internal stakeholders (owners, managers, employees) are inside the firm; customers, suppliers and government are external.
Why objectives conflict
- Stakeholders want different things, so objectives clash:
- owners want higher profit, but employees want higher pay (which lowers profit),
- customers want low prices, but owners want a high margin,
- the community wants less pollution, but cutting it raises costs.
Practice
Why might owners and employees have conflicting objectives?
Higher wages please employees but reduce profit, which owners want to maximise — a classic conflict.
Managing the conflict
- good communication with every group,
- compromise — give each group part of what it wants,
- negotiation — talk to reach agreement,
- decide which stakeholders matter most for each decision.
Practice
How can stakeholder conflict be managed? (Choose all that apply.)
Communication, compromise and negotiation help manage conflict; ignoring stakeholders makes it worse.
You've got it
Key idea
- a stakeholder has an interest in the firm: internal (owners, managers, employees) vs external (customers, suppliers, government, community)
- their objectives conflict (profit vs pay, low prices vs margin)
- manage it by communication, compromise, negotiation, and prioritising