The terms stakeholder refers to persons and groups that affect, or are affected by, an organization’s decisions, policies and operations. This is the definition of stakeholder; however, I think the most important part is not the definition of stakeholder, and the real important is that what the power of stakeholder is.
Stakeholder power means the ability to use resources to make an event happen or to secure a desired outcome. Experts have recognized four types of stakeholder power: voting power, economic power, political power, and legal power.
Voting power means that the stakeholder has a legitimate right to cast a vote. Under the voting power condition, the stakeholder is the real owner of a company not the manager. The board of directors is the represent of stakeholders in democratic method. So, the voting power keeps the company to develop in safety. The company can provide perfect products and services in a long term.
Customers, suppliers, and retailers have economic power with the company. Suppliers can withhold supplies or refuse to fill orders if a company fails to meet its contractual responsibilities.
Under the situation, it really protects the customers, suppliers, and retailers’ benefits. It stops the illegal things to happen. This is a limitation to a company, and the company will have a sustainable development situation.
Governments exercise political power through legislation, regulations, or lawsuits. While government agencies act directly, other stakeholders use their political power indirectly by urging government to use its powers by passing new laws or enacting regulations. A new law is good or not, and it should be tested in a democratic method by the all of stakeholders. The managers of a company cannot make a new rules or laws to manage the company. So, the political power is a best way to limit the manager’s power
Finally, stakeholders have legal power when they bring suit against a company for damages, based on harm
Bibliography: Lawrence, A. T., & Weber, J. (2011). Business and society: stakeholders, ethics, public policy (13th ed.). Boston: McGraw-Hill Irwin