CHAPTER 1.4 STAKEHOLDERS
Stakeholder = is a person or organization with a direct interest in, and is affected by, the
activities and performance of a business.
Interests of internal stakeholders (AO2)
Internal stakeholders = members of the organization i.e. the employees, managers, directors
and shareholders of the organization
Employees:
- Definition = the staff of a business will have a stake (an interest) in the organization
they work for
- Employees are likely to strive to improve their pay, working conditions, job security
and opportunities for career progression.
Managers and directors:
- Managers are the people who oversee the daily operations of a business.
- Directors are senior executives who have been elected by the company’s
shareholders to direct business operations on behalf of their owners.
- Senior managers and directors might aim to maximise their own benefits, such as
annual bonuses and other perks (aim for profit maximization)
Shareholders (stockholders):
- Limited liability companies are owned by shareholders.
- This stakeholder group invests money in a company by purchasing its shares
- Stockholders are a powerful stakeholder group as they have voting rights and a ‘say’
in how the company is run
- As the owners of the company, they are also entitled to a share of its profits
Shareholders have two main objectives:
- To maximise dividends ( proportion of the company’s profits distributed to
shareholders)
- To achieve a capital gain in the value of the shares (a rise in the share price)
Interests of external stakeholders (AO2)
External stakeholders do not form part of the business but have a direct interest or
involvement in the organizations i.e. customers, suppliers, pressure groups, competitors and
the government.
Stakeholder = is a person or organization with a direct interest in, and is affected by, the
activities and performance of a business.
Interests of internal stakeholders (AO2)
Internal stakeholders = members of the organization i.e. the employees, managers, directors
and shareholders of the organization
Employees:
- Definition = the staff of a business will have a stake (an interest) in the organization
they work for
- Employees are likely to strive to improve their pay, working conditions, job security
and opportunities for career progression.
Managers and directors:
- Managers are the people who oversee the daily operations of a business.
- Directors are senior executives who have been elected by the company’s
shareholders to direct business operations on behalf of their owners.
- Senior managers and directors might aim to maximise their own benefits, such as
annual bonuses and other perks (aim for profit maximization)
Shareholders (stockholders):
- Limited liability companies are owned by shareholders.
- This stakeholder group invests money in a company by purchasing its shares
- Stockholders are a powerful stakeholder group as they have voting rights and a ‘say’
in how the company is run
- As the owners of the company, they are also entitled to a share of its profits
Shareholders have two main objectives:
- To maximise dividends ( proportion of the company’s profits distributed to
shareholders)
- To achieve a capital gain in the value of the shares (a rise in the share price)
Interests of external stakeholders (AO2)
External stakeholders do not form part of the business but have a direct interest or
involvement in the organizations i.e. customers, suppliers, pressure groups, competitors and
the government.
