Stakeholders: The Key Players in Business Success
- Jojo is the CEO of a company launching a new product.
- Who do you need to consider?
- Employees, customers, suppliers, and even the local community.
These are your stakeholders—individuals or groups with an interest in your business activities.
Stakeholders
Stakeholders are individuals or groups who are affected by or have an interest in a business's activities.
Internal and External Stakeholders
Stakeholders are divided into two categories: internal and external.
Internal Stakeholders
Internal stakeholders
Internal stakeholders are individuals or groups directly involved in the organization and its operations. They have a direct interest in the business’s performance and decision-making.
Employees
- Roles: Perform assigned tasks, collaborate with colleagues, and contribute to business operations.
- Objectives: Meet performance targets, earn salaries and benefits, and develop skills for career growth.
- Responsibilities: Maintain productivity, follow company policies, and uphold workplace ethics.
Example
A software developer aims for a competitive salary and flexible working hours while ensuring code quality and meeting deadlines.
Managers
- Roles: Oversee operations, make strategic decisions, and lead teams.
- Objectives: Achieve business targets, earn bonuses, and advance careers.
- Responsibilities: Ensure team performance, manage resources, and maintain ethical standards.
Example
A sales manager focuses on meeting quarterly sales targets while motivating the team and maintaining customer relationships.
Owners/Shareholders
- Roles: Provide capital and make high-level decisions.
- Objectives: Maximize profits, increase share value, and ensure business growth.
- Responsibilities: Support management, reinvest profits, and uphold corporate governance.
Example
A shareholder in a tech company expects dividends and transparency in financial reporting.
External Stakeholders
External stakeholders
External stakeholders are individuals or groups outside the organization who are affected by its activities or have an interest in its performance. They do not directly work for the business but can influence or be influenced by its actions.
Customers
- Roles: Purchase products or services.
- Objectives: High-quality products, reasonable prices, and excellent service.
- Responsibilities: Provide feedback and pay for purchases.
Example
A customer buying a smartphone expects durability and after-sales support.
Suppliers
- Roles: Provide goods or services needed for production.
- Objectives: Secure contracts, receive timely payments, and maintain strong relationships.
- Responsibilities: Deliver quality products on time and adhere to agreements.
Example
A supplier of organic ingredients to a restaurant ensures timely delivery and consistency in quality.
Government
- Roles: Regulate business activities and collect taxes.
- Objectives: Ensure compliance with laws, promote economic growth, and protect consumers.
- Responsibilities: Enforce regulations and provide a stable business environment.
Example
A government agency monitors food safety standards in restaurants.
Local Community
- Roles: Interact with the business’s social and environmental impact.
- Objectives: Job creation, environmental protection, and community development.
- Responsibilities: Support local businesses and engage in dialogue.
Example
A community near a factory advocates for pollution control and supports local hiring initiatives.
The Importance of Stakeholder Engagement
Engaging stakeholders is crucial for business success. Here’s why:
- Improved Decision-Making: Stakeholders provide diverse perspectives that help businesses make informed choices.
- Enhanced Reputation: Addressing stakeholder concerns builds trust and strengthens the brand.
- Risk Management: Early engagement helps identify and mitigate potential risks.
- Long-Term Success: Satisfied stakeholders contribute to sustainable growth.
Example
- Gold Fields Limited operates mines in Ghana, employing 5,200 people.
- The company holds stakeholder forums to discuss issues with government officials, community members, and investors.
- This engagement has led to investments in education, health, and clean water projects, benefiting both the business and the community.
Balancing Stakeholder Interests
Businesses often face conflicting stakeholder interests.
Example
- Employees may want higher wages, while shareholders seek cost reductions.
- Customers demand low prices, but suppliers need fair compensation.
Tip
- When analyzing stakeholder conflicts, focus on the most relevant groups and their specific objectives.
- This approach helps you develop clear, analytical arguments.
Reflection
Self review
- Can you identify the key stakeholders for a business you are familiar with?
- What are their objectives, and how might they conflict?
Theory of Knowledge
- How do cultural differences influence stakeholder expectations?
- Consider how businesses might adapt their strategies in different regions.
