Critically Examine the Connections Between Stakeholder Claims and the Product Market. Use an Extended Example to Illustrate Your Point. Essay Example
Various stakeholders have the right to influence the decisions that the company makes since they directly command respect from these companies. Due to the influence exerted by shareholders, business policies must be formulated to fit the needs of most if not all stakeholders so as to have successful businesses. Stakeholders are all individuals and organizations that are related to the company in one way or another. The term stake is usually taken to mean a portion or share in the business. Examples include shareholders, employees, partners and investors. Stakeholders are further defined as those groups or individuals that affect the day to day running of the business and those that the business affects. It is at this juncture that the community, suppliers, consumers, banks, government, trade unions and other organization affecting the business are incorporated. Stakeholders can also refer to those organizations or individuals that the company cannot do without. The concept of stakeholder claims is that each stakeholder has something that they want from the organization or make certain demands from the organization to which they are affiliated. For example, shareholders claim dividends; employees claim remuneration and insurance; customers claim quality, favorable, prices and constant supply; Financiers and investors will claim interest rates. These are but a few examples of shareholder claims. More will be discussed in the course of the essay. According to Phillips &Freeman (2003 pp 25-32), only shareholders that hold direct financial risks should have absolute right to influence decisions and policies taken by the firm. Other stakeholders such as customers and suppliers are said to process freedom of exit and therefore do not have a lot of influence (RBS, 2002 pp 16). Stakeholder claims will most definitely affect the activities of the firm and this includes the product market. When we mention product market, the first thing that comes to mind is consumers