Stakeholders

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SUPPOSE YOU WORK FOR A BANKING INSTITUTION. WHO ARE YOUR STAKEHOLDERS? WHAT ARE YOUR RESPONSIBILITIES TOWARDS EACH OF THE STAKEHOLDERS? Groups / individuals that are affected by and/or have an interest in the operations and objectives of the business Most businesses have a variety of stakeholder groups which can be broadly categorised as follows:

Stakeholder groups vary both in terms of their interest in the business activities and also their power to influence business decisions. Here is a useful summary:

StakeholderMain InterestsPower and influence
ShareholdersProfit growth, Share price growth, dividendsElection of directors Banks & other LendersInterest and principal to be repaid, maintain credit ratingCan enforce loan covenants Can withdraw banking facilities

Directors and managersSalary ,share options, job satisfaction, statusMake decisions, have detailed information EmployeesSalaries & wages, job security, job satisfaction & motivationStaff turnover, industrial action, service quality SuppliersLong term contracts, prompt payment, growth of purchasingPricing, quality, product availability CustomersReliable quality, value for money, product availability, customer serviceRevenue / repeat business Word of mouth recommendation

CommunityEnvironment, local jobs, local impactIndirect via local planning and opinion leaders GovernmentOperate legally, tax receipts, jobsRegulation, subsidies, taxation, planning Stakeholder power is an important factor to consider whenever you are asked to write about the relationship between a business and its stakeholders. In the context of strategy, what is important is thepower and influence that a stakeholder has over the business objectives For stakeholders to have power and influence, their desire to exert influence must be combined with their ability to exert influence on the business. The power a stakeholder can exert will reflect the extent to which: •The stakeholder can disrupt the business’...
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