Business Organisations: Stakeholders
A stakeholder is anyone who has an interest in a business either from an internal or external perspective. This means they are affected by the business and its actions. A stakeholder can play an active part in running the business or can be passively affected based on how the business operates. To understand how business stakeholders are identified and how they need to be considered within a business have a look at the sections below.
Identification of stakeholders
When setting up a business, it is important to identify who the stakeholders are and the part that they will play in the running the business. Some examples of stakeholders in an online business are the owners of the business, customers, employees, suppliers, creditors, investors and the Government. Each of these stakeholders will have some level of input and output to the business and need to be considered when planning how the business if run. In the examples listed above the owners will be thinking about the short and long term objectives of the business and how it can increase the market share and profits of the business. The owners need to communicate with other stakeholders to ensure they are aware of what is expected of them and also to ensure they comply with the expectations of other stakeholders. For example, owners will need to work with the business managers and financial department to ensure that they comply with the Government regulations on paying VAT and business taxes. Customers need to be considered at all times when running a business. The owners and employees of the business will need to ensure that customers are offered value and quality products and services. The customer service must be professional and courteous and businesses must consider customer needs and survey them on their expectations to ensure the business builds up successful customer relations and increase their market share. Business owners and the management team need to communicate effectively with employees to ensure they are aware of how the business should be run. Employees need to have clear cut contracts detailing the expectations of their role within the organisation. Customer facing employees need to be aware of the company’s strategy on dealing with customers and should be trained accordingly. Similarly employees need to be able to build relationships with suppliers and distributors to ensure the business runs successfully and makes a profit. Suppliers need to have a committed relationship with a business to ensure they can meet their needs and deliver goods as and when needed. Successful businesses will have firm contracts in place with suppliers to ensure they have access to supplies on terms that suits both parties and that payment for goods is managed in advance under the terms and conditions outlined in the contract. Creditors are an important part of any business as they allow the business to borrow money to pay suppliers and for other bills such as electricity and heating costs. Businesses need to create strong and trusting relationships with their creditors in order for the business to operate successfully. A supplier can be seen as a creditor as they will supply a business with goods before they are paid for. The goods can then be resold by the business in advance before paying the creditor for goods that have been received on credit. Investors in the business need to see the business plans and accounts so that they can make decisions on whether to invest money in a business. Maintaining trusting relationships with investors will be beneficial for the business as future investment may be required to expand the business. If previous investors have got their initial investment back along with a profit they will be inclined to re-invest in the business if they are in agreement with the strategy that the management team will use to take the business forward. All businesses need to comply with Government legislation in terms of reporting their income and paying taxes etc. The Government in return need to support businesses by communicating relevant information to them in terms of complying with these laws. As can be seen from the identification of stakeholders in a business is an important aspect of running the business in terms of identifying how each stakeholder acts or needs to be considered in order to ensure that the business operates successfully. Other stakeholders that could be recognised within a business are potential employees, past employees, trade unions, research groups and local and national communities. These should be identified when forming a business and the needs of each group of stakeholders should be considered throughout the life time of a business.
Satisfying stakeholder objectives
When stakeholders in a business have been identified each group or individual will have different objectives in terms of what is expected from them by the business and what they expect from the business itself. One of the examples in the previous section on identification of stakeholders explains how the business operates to try and ensure that customers get good value and customer service from the business. This shows how the business itself is operating to try and satisfy the stakeholder objective of the customer. In turn the customer signing up to a loyalty scheme or feeding back to the business by providing a product review is satisfying the stakeholder objectives of the business, its owners and customer service employees responsible for gathering information on customers to improve the quality of service provided.
In business understanding the pluralist perspective is important. By pluralist perspective it means that the needs and desires of a range of individuals and groups need to be considered. For example different stakeholders with different objectives within the business may have contradictory views on how the business should be run. Having a pluralist perspective on how the business is run means considering the views of all stakeholders involved in the business and making decisions that benefit as many people within the organisation as possible. If all business decisions evolved around the working conditions of the employees and then length of time of their work shifts and seen this as the most important thing then this could have a detrimental effect on other areas within the business. If employees only had to work on week days only then the needs of customers to have orders dispatched immediately during the weekend would not be met. Decisions need to be made to ensure as many stakeholders as possible benefit from all decisions. By considering the pluralist perspective this will minimise any conflict or disagreement within the business. Employees can also benefit from being a member of workers unions to ensure their needs are met. Additionally the business should have a communication channel that recognises the value of its employees and works with the union to resolve any conflicts. The key point of taking a pluralist perspective when making business decisions is that decisions are made to benefit the collective at all times. Using approaches such as this should also consider the business, religious, ethical and cultural views of stakeholders that are affected by decisions made in the business.
The concept of corporate mission objectives and policies
Having corporate mission objectives (mission statements) and policies ensures that stakeholders within an organisation have a clear focus on the short and long terms aims of the business. The company mission statement will motivate employees to work towards a common goal and set targets for all members of the organisation to ensure that the business is successful. Linking working policies to the mission statement ensure that rules and regulations are set so that people are aware of what is required of them within their individual roles. An example of a corporate mission statement is Google’s which states:
Google’s mission is to organise the world’s information and make it universally accessible and useful.
This is the key aim of the business and allows stakeholders to work towards collective goals that ensure the business does everything in its power to work towards this objective. Having day to day working policies for different groups of employees and stakeholders means that everyone has a clear structure for working towards common goals.