Stakeholders
SUPPOSE YOU WORK FOR A BANKING INSTITUTION. WHO ARE YOUR STAKEHOLDERS? WHAT ARE YOUR RESPONSIBILITIES TOWARDS EACH OF THE STAKEHOLDERS?
Groups / individuals that are affected by and/or have an interest in the operations and objectives of the business
Most businesses have a variety of stakeholder groups which can be broadly categorised as follows:
Stakeholder groups vary both in terms of their interest in the business activities and also their power to influence business decisions. Here is a useful summary:
Stakeholder Main Interests Power and influence
Shareholders Profit growth, Share price growth, dividends Election of directors
Banks & other Lenders Interest and principal to be repaid, maintain credit rating Can enforce loan covenants
Can withdraw banking facilities
Directors and managers Salary ,share options, job satisfaction, status Make decisions, have detailed information
Employees Salaries & wages, job security, job satisfaction & motivation Staff turnover, industrial action, service quality
Suppliers Long term contracts, prompt payment, growth of purchasing Pricing, quality, product availability
Customers Reliable quality, value for money, product availability, customer service Revenue / repeat business
Word of mouth recommendation
Community Environment, local jobs, local impact Indirect via local planning and opinion leaders
Government Operate legally, tax receipts, jobs Regulation, subsidies, taxation, planning
Stakeholder power is an important factor to consider whenever you are asked to write about the relationship between a business and its stakeholders. In the context of strategy, what is important is thepower and influence that a stakeholder has over the business objectives
For stakeholders to have power and influence, their desire to exert influence must be combined with their ability to exert influence on the business. The power a stakeholder can exert will reflect the extent to which:
• The stakeholder can disrupt the
Groups / individuals that are affected by and/or have an interest in the operations and objectives of the business
Most businesses have a variety of stakeholder groups which can be broadly categorised as follows:
Stakeholder groups vary both in terms of their interest in the business activities and also their power to influence business decisions. Here is a useful summary:
Stakeholder Main Interests Power and influence
Shareholders Profit growth, Share price growth, dividends Election of directors
Banks & other Lenders Interest and principal to be repaid, maintain credit rating Can enforce loan covenants
Can withdraw banking facilities
Directors and managers Salary ,share options, job satisfaction, status Make decisions, have detailed information
Employees Salaries & wages, job security, job satisfaction & motivation Staff turnover, industrial action, service quality
Suppliers Long term contracts, prompt payment, growth of purchasing Pricing, quality, product availability
Customers Reliable quality, value for money, product availability, customer service Revenue / repeat business
Word of mouth recommendation
Community Environment, local jobs, local impact Indirect via local planning and opinion leaders
Government Operate legally, tax receipts, jobs Regulation, subsidies, taxation, planning
Stakeholder power is an important factor to consider whenever you are asked to write about the relationship between a business and its stakeholders. In the context of strategy, what is important is thepower and influence that a stakeholder has over the business objectives
For stakeholders to have power and influence, their desire to exert influence must be combined with their ability to exert influence on the business. The power a stakeholder can exert will reflect the extent to which:
• The stakeholder can disrupt the