Stakeholders are people, or groups of people, that have an effect on, or are effected by, a business. They are people with an interest in a business and its actions.

Shareholders
These are owners who have invested money into an organisation and expect a return in the form of dividends and capital gain for the risk they have taken. All businesses need to look after their shareholders by paying regular dividends, otherwise shareholders will sell their shares. This will mean the value of the company will fall along with its share value.

Employees
People have many different needs which they seek to satisfy at work. Organisations need to keep their employees happy and motivated. The reward will be low absenteeism, low staff turnover, and increased productivity.

Suppliers (a creditor)
Good relations with suppliers provides a number of mutual benefits. Suppliers which are happy with a company will provide prompt delivery and favourable credit arrangements, and will get a stable repeat customer in return.

Financial institutions (a creditor)
Good relations with financial institutions, ie banks will mean easier access to capital and favourable credit arrangements.

Customers
Satisfied customers are vitally important to the survival of a business. In today's dynamic and competitive markets, customer's needs must be met as exactly as is possible. This means good service at the point of sale, after-sale and before-sale. This should hopefully ensure repeat business.

Community, pressure groups and society
A wide range of groups need to be considered when a particular action is up for discussion (see Cost/benefit analysis). Examples are established pressure groups (Greenpeace), local residents and other local businesses.

Government
Businesses have to uphold legislation set by the government (as in internalising) to ensure consumer protection, health and safety in the workplace and, of course, when paying their taxes.

Which group comes first?

For a long time, it was thought that looking after the needs of shareholders was absolutely paramount. However, experience has shown that by looking after other stakeholder groups, shareholders are able to reap even larger benefits. The act of not concentrating totally on one stakeholder group but instead satisfying them all to a certain extent is called satisfycing.

There is now an increased awareness of the fact that reputation is one of the most important assets a business has. By satisfycing, all stakeholders are sated, and a company can use its reputation to survive hard times due to the positive image and customer loyalty it will have acquired.

Stake"hold`er (?), n.

The holder of a stake; one with whom the bets are deposited when a wager is laid.

 

© Webster 1913.

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