Stakeholders in a Business
Grade: 4 Pool 6B
Principles of Business
Date:November 2, 2020
Prepared by: Ms.Thomas
To appreciate the importance of the various stakeholders in a business.
At the end of the lesson the students should be able to:
define the term stakeholder in their own words
list the two main types of stakeholder from memory
differentiate between internal and external stakeholder in their own words
list the stakeholders in a business from memory
discuss the roles of the various stakeholders in their own words.
What Is a Stakeholder?
A stakeholder is an individual or group who has an interest in business activities and can either affect or be affected by the business.
Be punctual for class.
Respect teacher, peers and self.
Indicate, by raising hands, when questions are to be asked.
Wait to be acknowledged by teacher
Actively participate in class discussions and activities relating to Investment
completes all assignments on time
Stakeholders in a Business
How Many stakeholders listed??????
Types of Stakeholders
Internal vs External Stakeholders
Internal stakeholders are people whose interest in a company comes through a direct relationship, such as employment, ownership, or investment. External stakeholders are those who do not directly work with a company but are affected somehow by the actions and outcomes of the business. Suppliers, creditors, and public groups are all considered external stakeholders.
An employer pays for the services of employee as well as paying for the resources that go into making goods and services. Employers are frequently referred to as entrepreneurs because they take the risk of setting up a business. Their role and function is to combine the inputs of labour, capital (machinery and equipment) and land (resources provided by nature).An employer wants to see their business grow over time.
Employees provide labour services in the form of physical labour and also mental labour ( for example making calculations, creating spread sheet, designing a new product idea, etc). The employees will exchange their labour for a wage (usually paid weekly) or a salary (paid monthly). Employees wan t the business to do well because this will impact directly on the wages they earn. However, more than this, employees will want to work for an organisation that provides job security.
The role as an accounts clerk - to serve as support to the accountant – to verify, organize, process and store the financial records of the company.
The role of a compliance officer – to ensure that the business operates in accordance with accepted standards – to execute the compliance policy to ensure that the business meets professional and accepted business standards.
The primary purpose of providing goods and services is to fill needs. Customers are the key stakeholders in an organisation. They purchase a company’s goods or services, and when they are not satisfied they may switch to buying from a competing organisation. Customers will also provide feedback to the business on the product. It is the responsibility of the marketing department to collate and analyse this feedback. Customer want to be supplied with goods and services that meet their requirement, and the sum of money that consumers are willing to pay for goods is often a clear indication of positive consumer feedback.
The role of suppliers is to supply raw material, components, services and finished products to allow businesses to create their product/services for their customers. A supplier will seek to build relationships with businesses, enabling them to supply orders in the short and long term.
They supply products to a business (For example: coffee beans and milk to make a cup of coffee)
They often want to receive a promotion or a pay rise.
They want to buy quality goods from a business for a fair price.
Businesses can have a positive effect on them. For example, businesses create jobs or support local charities.
Businesses pay them taxes.
The Local community
A community consists of the groups and individuals who live in areas affected by a business. One major role that a community often plays is to provide employees as well as infrastructure for the business. Another role is that communities often give businesses feedback on the impact they are having on the local area.
The Local Community
A business can be a great benefit to a community, providing tax money, local access to unique goods and services, jobs, and community development programs. However, a business can also be a drain on a community by increasing traffic, creating pollution, hurting small businesses, and altering real estate prices. As a result, businesses must look at the needs of the community, and ensure that negative repercussions are minimized while community engagement is maximized.
The environment is a key stakeholder in business.There are many ways that companies degrade the environment through pollution and wasteful use of resources. At its manufacturing locations, Grace Foods has well-established processes that reduce waste and save energy. It also ensures careful management of use of water in production processing.
A government’s main role in terms of businesses is to pass laws, make sure there is law and order, and achieve economic stability to encourage business activity. Higher standard of living means consumers have more income to spend on purchasing goods/services. The government often encourages some businesses and business activities for example through subsidies (payment to support production) and direct purchase of businesses output.
Future generation are key stakeholders in any process of decision making . Decision made today by companies like Grace Foods will often have long-term effects, such as the provision of healthy foods that enables people to stay healthier for longer. If current resources are used to build hospitals, schools and factories, then these will benefit people who may not yet born.
The government also have a direct interest in supporting successful businesses because flourishing businesses are able to pay more tax.
Governments tax businesses, and therefore have a firm stake in their success. Governments can in fact be considered primary stakeholders, considering the profit motive involved.