Business Management – 1.4 Stakeholders – Flashcards
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Stakeholders
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People or groups of people who can be affected by, and therefore have an interest in, any action by an organisation
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Stakeholder concept
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The view that businesses and their managers have responsibilities to a wide range of groups, not just shareholders
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Directors
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The senior members of staff who have been elected by shareholders of a company to run the company on their behalf
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External stakeholders
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These stakeholders do NOT form part of the organisation but have a direct interest or involvement in the actions of the organisation. Examples include customers, suppliers and the government
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Internal stakeholders
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These stakeholders are members of the organisation; i.e. the employees, the shareholders (who own the business), managers and directors of a business
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Managers
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The people responsible for the day-to-day running of the organisation, or a department within the organisation. They are accountable to directors and responsible for their staff teams
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Pressure groups
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A type of special interest group which consist of individuals with a common concern who seek to place demands on organisations to act in a particular way or to influence change in their behaviour (e.g. Greenpeace and PETA)
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Shareholders
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The people who own shares in a private or public limited company; i.e. they are the part owners of a company
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Special interest group
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An organisation of people who have a common interest, such as the protection of the global environment, and collectively act to achieve that interest by swaying public opinion and support, lobbying government policy and influencing business behaviour
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*Suppliers*. External or internal stakeholder?
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External
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*Customers*. External or internal stakeholder?
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External
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*Special interest groups*. External or internal stakeholder?
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External
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*Local community*. External or internal stakeholder?
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External
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*Competitors*. External or internal stakeholder?
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External
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*Government*. External or internal stakeholder?
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External
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*Employees*. External or internal stakeholder?
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Internal
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*Shareholders*. External or internal stakeholder?
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Internal
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*Managers*. External or internal stakeholder?
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Internal
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*Directors*. External or internal stakeholder?
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Internal
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Distinguish between *shareholders* and *stakeholders*
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Shareholders are the part owners of a private or public company. They have a direct interest in the activities and performance of a business and are, therefore, stakeholders of an organisation. However, there are other stakeholders of an organisation that do not necessarily own shares in the business; e.g. employees, the local community, suppliers, competitors. So, *shareholders are stakeholders, but stakeholders are not necessarily shareholders*.
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"Women are people, but people are not necessarily women." Apply this same reasoning to *shareholders* and *stakeholders*
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*Shareholders are stakeholders, but stakeholders are not necessarily shareholders*.
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"Cats are animals, but animals are not necessarily cats." Apply this same reasoning to *shareholders* and *stakeholders*
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*Shareholders are stakeholders, but stakeholders are not necessarily shareholders*.
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stakeholder conflict
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conflicts that arise because objectives and expectations are often different.
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Some possible areas of conflict between stakeholders (min 3)
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1 Directors remuneration and managers pay and benefits. 2 Managers' and shareholders' views on ethical behavior and social responsibility. 3 Directors' decision to reinvest profits in expansion projects rather than paying out dividends. 4 Shareholders seeking annual dividend payments and maximum returns on their investments. 5 Employee pay and benefits, e.g., issues of employees' health and safety while they are on the job.
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ways to resolve stakeholder conflicts
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1 negotiation 2 mediation 3 accommodation 4 compromise 5 collaboration
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negotiation
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The stakeholders involved in a conflict soften their stands and agree to a compromise on their positions. For example, a settlement of dispute between employees and management).
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mediation
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A third party facilitates the process of negotiations between stakeholders who cannot find a common solution to their conflict.
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accommodation
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Stakeholders, who may be in a position of power, satisfy the objectives of other stakeholders while overlooking some elements of their own objectives. For example, to accommodate the concern of an environmental group, an oil company suspends its offshore-drilling activities.
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compromise
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Stakeholders set aside their views and work towards a mutually favorable solution.
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collaboration
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Different stakeholder groups are actively involved in finding the best solution to the conflict For example, management and employee's representatives collaborate on the development and implementation of a health-care plan for employees)
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stakeholder mapping
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a useful tool for planning how to deal with various stakeholders. It allows managers to identify the most influential stakeholders and the actions that could be taken to deal with their conflicting objectives.
