You are a stakeholder of the business, if you buy goods and/or use services from that business. You are also the stakeholders, if you work for that business or have invested in it by buying shares on the stock exchange.
A stakeholder is any individual person, any group of people or any organization who has a direct interest in a business. It is because they are affected by its actions, activities and performance.
The decisions of a business may have positive and negative effects on stakeholders.
Internal stakeholders & External stakeholders
All businesses have two types of stakeholders:
1. Internal stakeholders. Members of the organization, i.e. the employees, managers, directors and owners (shareholders).
2. External stakeholders. Everyone who does not belong to the organization, but who has interest in its activates, e.g. lenders, local community or the government.
Cooperation with stakeholders
Each stakeholder group has their own objectives which they will want to achieve them through their relationship with the business.
Example: The Kirin Group's Cooperation with Stakeholders
Objectives of one stakeholders group might conflict with the objectives of other stakeholder groups, or with the business objectives of the company itself. There is often conflict between two or more business stakeholders. It happens because it is often not possible for a business decision to satisfy the different objectives of different groups of stakeholders at the same time. Sometimes a single business decision may have both positive and negative effects for the same stakeholder.
The Shareholder Concept
The shareholders are the legal owners of the company. The traditional view of business is called ‘the shareholder concept’. According to it, the business has a duty to put their needs first, make decisions that will increase shareholder value which means running the business in a profitable way. Directors and managers ultimately are responsible to shareholders for the performance of the business. So, they must keep the owners satisfied.
The Stakeholder Concept
According to ‘the stakeholder concept’ businesses and their managers have responsibilities not only to shareholders, but also to a wide range of groups such as the suppliers, employees and customers. This more recent approach to business responsibilities does not end with these four groups. But, it also considers claims that interests of local communities, the public, government and pressure groups should be considered by business decision-makers.
