Stakeholders | What is a Stakeholder?

Summary

This video delves into the concept of stakeholders in business, distinguishing between internal and external stakeholders and their varying objectives. It explores the potential conflicts that arise from differing interests, using McDonald's wage increase as a case study. The video also discusses the impact of business decisions on stakeholders and how businesses must navigate these conflicts to balance the needs of shareholders, employees, customers, and other stakeholders.

Takeaways

• 😀 A stakeholder is anyone with an interest in a business, which can include individuals, groups, or organizations.
• 🏢 Stakeholders can be categorized into internal (e.g., shareholders, employees, managers) and external (e.g., customers, suppliers, local community, pressure groups, government) groups.
• 💼 Shareholders are part-owners of the business due to their shares, making them both stakeholders and owners.
• 👷‍♂️ Employees are internal stakeholders as they contribute to the day-to-day operations of the business.
• 🛒 External stakeholders like customers and suppliers are impacted by the business's actions and have interests in its success.
• 🌐 The local community and pressure groups are also stakeholders, with the former interested in local business operations and the latter aiming to influence business decisions.
• 💹 Stakeholder objectives vary; shareholders seek maximum profits, employees want job security and satisfaction, and customers look for quality products at reasonable prices.
• 💰 Business activities can have different effects on stakeholders, such as wage increases impacting shareholders' profits and employees' financial stability.
• 🤝 Stakeholders can influence the business; for instance, shareholders can sell shares if dissatisfied, and customers can stop using a service or spread word-of-mouth.
• ⚖️ Conflicts between stakeholders, like employees wanting higher wages and shareholders wanting to maximize profits, require careful navigation by the business.
• 🔄 Compromises often need to be made to balance the interests of different stakeholders, such as gradual wage increases to satisfy both employees and shareholders.

Q & A

What is a stakeholder in the context of a business?

A stakeholder is anyone that has an interest in a business, which can include individuals, groups of people, or other organizations. They can impact or be impacted by the business.

How are stakeholders classified in terms of their relationship to a business?

Stakeholders are classified into two types: internal and external. Internal stakeholders have a direct relationship with the business, like shareholders and employees. External stakeholders do not directly work for the company but are affected by its actions, such as customers and suppliers.

What is the difference between a shareholder and a stakeholder?

A shareholder is a specific type of stakeholder who owns part of the business through shares. While shareholders have an influence on the business due to their ownership, stakeholders can include a broader range of individuals or groups with an interest in the business, not necessarily through ownership.

What are some common objectives of different stakeholder groups?

Shareholders seek maximum profit and long-term growth, managers want good salaries and career progression, employees desire fair pay, job satisfaction, and security, customers look for quality products at reasonable prices, suppliers aim for timely payments and consistent orders, and the local community may seek job opportunities.

How can a business decision, such as a wage increase, affect various stakeholders differently?

A wage increase can lead to higher costs, potentially reducing profits and affecting shareholders negatively. It could also lead to price increases or quality reductions for customers, and might necessitate cost-cutting measures like automation or renegotiating supplier contracts.

What is an example of a stakeholder conflict within a business?

A conflict might occur between employees who want higher wages and shareholders who want to maximize profits. If the business increases wages, it could lead to reduced shareholder returns, but not doing so might lead to employee dissatisfaction or strikes.

How can a business navigate conflicts between stakeholders?

A business can navigate stakeholder conflicts by finding a balance that satisfies the interests of different stakeholders. This might involve compromises, such as phased-in wage increases or cost-saving measures that don't overly burden any single group.

What impact can stakeholders have on a business?

Stakeholders can significantly impact a business through their actions. Shareholders can influence the company's value by buying or selling shares, employees can affect operations through their work or collective actions, customers can affect the business's reputation and sales, and external groups can influence public perception and regulatory compliance.

Why is it important for a business to consider the interests of all stakeholders?

Considering the interests of all stakeholders is important for a business to maintain a positive reputation, ensure long-term success, and comply with legal and ethical standards. It also helps in managing potential conflicts and maintaining a stable operating environment.

How can external stakeholders, like the local community, influence a business?

External stakeholders like the local community can influence a business by affecting its public image, providing a workforce, and influencing local regulations. They can also impact the business through consumer behavior and community support or opposition.

What role do pressure groups play in the context of business stakeholders?

Pressure groups play a role in advocating for specific causes and can influence business decisions that align with their goals. They can exert pressure on businesses to adopt certain practices or policies, which can affect the business's operations and public image.