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.

Outlines

00:00

👷‍♂️ Understanding Stakeholders in Business

This paragraph introduces the concept of stakeholders in a business context. Stakeholders are defined as individuals, groups, or organizations that have an interest in a business and can either impact or be impacted by it. The paragraph distinguishes between internal stakeholders, such as shareholders and employees who have a direct relationship with the company, and external stakeholders like customers, suppliers, and the local community who are affected by the business's actions. The video emphasizes the importance of recognizing the different types of stakeholders and understanding their potential influence on business decisions.

05:03

💼 Stakeholder Objectives and Business Impact

This section delves into the specific objectives that stakeholders may have for a business. It outlines the common goals of various stakeholder groups, such as shareholders seeking maximum profit and long-term growth, managers aiming for good salaries and career opportunities, employees desiring fair pay and job security, and customers looking for quality products at reasonable prices. The paragraph also discusses how business activities can affect stakeholders differently, using McDonald's as an example to illustrate how a wage increase could impact various stakeholders, including shareholders, managers, employees, customers, suppliers, the local community, pressure groups, and the government.

10:06

🤝 Balancing Stakeholder Interests and Conflicts

The final paragraph addresses the potential conflicts that can arise among stakeholders due to differing interests and objectives. It uses the example of McDonald's wage increase to demonstrate how employees' demand for higher wages can create conflicts with shareholders who seek to maximize profits. The paragraph highlights the need for businesses to navigate these conflicts sensitively and find a balance that satisfies the interests of all stakeholders. It suggests that compromises, such as gradual wage increases over time, can help alleviate conflicts and maintain stakeholder satisfaction. The video concludes by encouraging viewers to engage with the content and subscribe for more business-related videos.

Keywords

💡Stakeholder

A stakeholder is defined as anyone who has an interest in a business, which includes individuals, groups, or organizations that can either influence or be influenced by the business. In the context of the video, stakeholders are central to understanding the dynamics of business decisions and their impacts. The script discusses how stakeholders can be internal or external to a business and provides examples such as shareholders, employees, and customers.

💡Internal Stakeholders

Internal stakeholders are individuals whose interest in a company stems from a direct relationship within the business. The video script highlights shareholders, employees, and managers as examples of internal stakeholders. These stakeholders are integral to the company's operations and decision-making processes, as they contribute directly to the business's success and are affected by its outcomes.

💡External Stakeholders

External stakeholders are those who do not work directly for the company but are affected by its actions and outcomes. The script mentions customers, suppliers, the local community, pressure groups, and government as examples. These stakeholders can influence or be influenced by the business's decisions, such as through purchasing decisions, supply chain relationships, or regulatory compliance.

💡Shareholders

Shareholders are individuals or entities that own part of a company through shares and are therefore internal stakeholders. The video explains that shareholders have a vested interest in the company's success as it affects their profits and share value. An example from the script is the potential negative impact on shareholders if a company like McDonald's increases employee wages, which could lead to reduced profits and share price.

💡Conflict

Conflict in the context of the video refers to the disagreements or opposing interests among stakeholders over certain business decisions. The script uses the example of a wage increase at McDonald's, where employees desire higher wages for financial stability, while shareholders aim to maximize profits, leading to a potential conflict between these two groups.

💡Objectives

Objectives of stakeholders are their goals or expectations from a business. The video outlines various objectives for different stakeholder groups, such as shareholders seeking maximum profit and long-term growth, employees looking for job satisfaction and security, and customers wanting quality products at reasonable prices. These objectives can sometimes lead to conflicts when business decisions affect stakeholders differently.

💡Impact

Impact in this video refers to the effects that business activities or decisions have on stakeholders. The script discusses how different stakeholders are affected by business decisions, such as a wage increase at McDonald's impacting shareholders' profits and employees' financial stability. Understanding these impacts is crucial for businesses to manage stakeholder relations effectively.

💡Compromise

Compromise is a concept discussed in the video as a potential resolution to stakeholder conflicts. It involves finding a middle ground where all parties can accept the outcome. An example given is raising wages incrementally over time to balance the needs of employees for higher pay and shareholders for maintaining profitability.

💡Pressure Groups

Pressure groups are external stakeholders that share a common goal and attempt to influence business decisions to further their cause. The video mentions how these groups can create conflict with other stakeholders, such as animal rights groups pressuring cosmetic companies to stop animal testing. The script also illustrates how the satisfaction of pressure groups can reduce conflict and pressure on the business.

💡Government

Government, as external stakeholders, can influence businesses through regulations and policies. The video explains that governments have interests in businesses providing employment and paying taxes. An example given is the potential increase in tax revenue if a business like McDonald's raises wages, leading to higher income tax payments from employees.

💡Career Progression

Career progression is a term used in the video to describe the advancement of an individual's career within a company. It is mentioned as one of the objectives for managers and employees, who seek not only good salaries but also opportunities for growth and development. The video implies that businesses need to consider these objectives when making decisions that affect their internal stakeholders.

Highlights

A stakeholder is anyone with an interest in a business, who can impact or be impacted by the business.

Stakeholders can be categorized into internal and external groups.

Internal stakeholders include shareholders, employees, and managers who have a direct relationship with the business.

External stakeholders are not directly employed by the company but are affected by its actions, such as customers and suppliers.

Shareholders are part-owners of the business due to their shareholding, and they are also stakeholders.

The difference between a stakeholder and a shareholder is that shareholders own part of the business.

Managers are internal stakeholders responsible for implementing the vision of the business owners.

Customers, as external stakeholders, are interested in the business's long-term success.

Suppliers, as external stakeholders, provide products or services to the business.

The local community and pressure groups are also considered external stakeholders.

Governments, both local and central, are stakeholders interested in employment and tax revenue.

Stakeholders have varying objectives, such as shareholders seeking maximum profit and employees seeking job security.

Business activities can affect stakeholders differently based on the direction the business takes.

An example of stakeholder impact is the 'Fight for 15' wage increase debate at McDonald's.

A wage increase can have negative effects on shareholders due to increased costs and reduced profits.

Employees may see higher wages as a positive outcome, but it could lead to increased automation in the business.

Customers might face higher prices or reduced quality if wages increase.

Suppliers could be pressured to lower prices or improve payment terms due to a business's wage increase.

Stakeholder conflicts, such as between employees and shareholders over wage increases, require careful navigation by the business.

Compromises may be necessary to balance the interests of different stakeholders, such as gradual wage increases.

Transcripts

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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