1.1.8
Stakeholders
Types of Stakeholders
Types of Stakeholders
Internal and external stakeholders are individuals or groups of individuals affected by a business and its decisions.


Internal stakeholders
Internal stakeholders
- Employees are an internal stakeholder as they are affected by the decisions made by the business in terms of salaries and wages, recruitment policies and job security.


External stakeholders
External stakeholders
- Suppliers are an external stakeholder as they are affected by the decisions made by the business in terms of order quantities and payment terms.
- Communities are an external stakeholder as they are affected by the decisions made by the business in terms of local jobs and traffic congestion in residential areas because of deliveries.
- Customers are an external stakeholder as they are affected by the decisions made by the business in terms of products and services sold and prices charged.


Relationships with stakeholders
Relationships with stakeholders
- Businesses can manage their relationship with stakeholders using communication and consultation:
- Communication can be used between a business and its stakeholders to share information, through methods such as email and newsletters, so that stakeholders can remain informed of developments within the business.
- Consultation can be used to investigate the views and feeling of stakeholders so that they feel involved in any decisions made by the business, though the power of stakeholders to change decisions made is still limited as the business defines the stakeholder’s influence.


The power of stakeholders
The power of stakeholders
- Stakeholders can have different levels of power and interest and a business must consider this power and interest when deciding how to manage their relationship.
- The business may wish to ensure that certain stakeholder groups remain satisfied and this may require consultation instead of communication.
Stakeholder Maps
Stakeholder Maps
A stakeholder map can be used to display the relative power and interest of different stakeholder groups.


Stakeholder maps
Stakeholder maps
- Stakeholders with high power and high interest will need to be managed closely and consultation may be appropriate for these individuals and groups.
- Stakeholders with high power and low interest will need to be kept satisfied as they have the power to influence the business if they become dissatisfied.
- Stakeholders with low power and low interest will need to be monitored though they lack influence and interest in many business decisions.
- Stakeholders with low power and high interest need to be kept informed and consultation may be appropriate.


Examples of different stakeholders
Examples of different stakeholders
- For example, Morrison’s shareholders have high power, as they can vote at AGMs, and they have high interest, as they receive dividend payments, so Morrisons must manage this relationship closely.
- For example, Google employees have high interest, though relatively low power, as they cannot influence decisions, so Google may decide to keep them informed of major changes, but they may not consult with staff.


Relationships with stakeholders
Relationships with stakeholders
- Power and influence can affect a business’ relationship with stakeholders, though there are several additional influences which can affect this relationship:
- The expertise and skill level of staff may affect the relationship between an employer and its employees as an employer may wish to consult with staff if they are able to contribute their expertise to a decision being made.
- The business’ performance may affect the relationship between stakeholders, as poor financial performance may require the business to build a stronger relationship with customers and suppliers so that more favourable payment terms can be negotiated.
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
Jump to other topics
1Exploring Business
1.1Features of Business Organisations
1.2Organisation of Businesses
1.3Business Environment
1.3.1External Influences
1.3.2Political & Legal Change
1.3.3Economic Environment
1.3.4Social & Technological Environment
1.3.5Lifestyle & Technological Environment
1.3.6Corporate Social Responsibility
1.3.7The Competitive Environment
1.3.8Innovation
1.3.9Risk & Uncertainty
1.3.10Porter's Five Forces
1.3.11SWOT Analysis
2Marketing Campaigns
2.1Marketing
3Business Finance
3.1Sources of Finance
3.2Financial Planning
3.3Financial Statements
4International Business
4.1Globalisation
4.2International Business
4.3International Economic Environment
4.4Factors Affecting International Business
5Principles of Management
5.1Management & Leadership
5.2Theories of Motivation
6Business Decision Making
6.1Business Principles & Practices
6.2Quality Management
6.3Human Resources
6.4Documents & Business Decisions
Unlock your full potential with Seneca Premium
Unlimited access to 10,000+ open-ended exam questions
Mini-mock exams based on your study history
Unlock 800+ premium courses & e-books