Question

an assignment about stakeholders

Answer 1

STAKEHOLDERS

stakeholder can be defined as a person, group, organization or social society at large who own a share in business. we can also say that they are the person or group of persons who have a stake or some claim on the business. stake is simply defined as the interest in the activities of the business. stakeholder can affect the business, can be affected by the business and can be both affected by the business and affect the business. they are different from shareholders. shareholders are the persons or group of persons who have ownership interest in the business. if a busines plays its duty towards its shareholders only then business is considered as having no moral obligations. on the other hand, if business understands its duty towards stakeholders then it puts consideration on maximizing the interest of the shareholders as well as considered the interest of the stakeholders too.

Types of stakeholders:- stakeholders can be divided into two parts i.e. internal stakeholders and external stakeholders.

INTERNAL STAKEHOLDER:- it can be defined as the people or group of people that are the part of the organization. they serve the organization or we can say that these are the people or the group that participates into the management of the company. they can influence the success or failure of the business entity or can be affected by the success or failure of the business too because they have vested interest in the functioning of the company. these are also known as primary stakeholders. they are dedicated to provide their services to the company. without these stakeholders no company can survive in the long run. they put a great impact on the company because they knows all about the secrets and matters of the business entity.

types of internal stakeholders

1. employees:- these are the people who works for the company with the motive of remuneration. they provide laror and their skills to the organization and in return expect commensurate income and job satisfaction.

2. board of directors:- these are the group of the people who governs the incorporated business entity. they are elected by the members of the organization at Annual General Meeting. they may conduct internal investigation to gather the information about participation of employees or teams.

3. owners:- these are the people who owns the business. they can be shareholders or partners of the business.

4. executive managers:- these are the persons who have a responsibility to manage the entire department. they can be CEO or CFO.

5. investors:- these are the people or group of people who have invested their money in the business entity.

EXTERNAL STAKEHOLDER:- these are the individual or group of individual who are not a part of the management. infact these are the individuals or group of individuals who forme the business environment and can be affected indirectly by the work of the organization. they do not participate into day to day activities if the company and have no idea about the internal functions or matters of the business entity. they can deal with the entity externally and uses the financial information of the entity to know about the performance, liquidity and profitability of the business entity.

types of external stakeholders

1. customers:- they can be considered as the king of the business and are the most immediate external stakeholder that must be considered by the company. generating loyality into these stakeholders is very necessary for the survival of the business in the long run. they are the people who are going to consume the product or service of the company.

2. suppliers:- these are the people who provides inputs to the organization such as raw material, equipment etc. buainess entity should build loyal relationship to their suppliers.

3. creditors:- these are the people, bank or financial institution who have responsibilty to provide the funds in the organization. they expects from the entity that business will meet its payment deadlines consistently and resposibly. business entity should maintain good relationship with its creditors and make sure that they can get quality financing in the future.

4. communities and governments:- business operates within communities so firm has great responsibility towards its society because firm also uses its resources. a business entity is controlled and guided by the rules and regulations of the government such as they have to pay taxes that are imposes on the business by government. so the entity should maintain strong relations with the local officials and the community developments as they can effect their business.

5. intermediaries:- these are the people who works as a link in between business entity and its customers or consumers such as wholesellers, retailers or distributors.

6. clients:- these are the people or parties with whom company do the business or provide their services.

importance of stakeholders in business

1. long term relationships:- if a company maintains strong and loyal long term relationship with its stakeholders then then it runs more efficiently and can produce major profits. long term relationship with stakeholders can help business entity to retain its customers, employees, increase productivity and to maintain a high level of trust with the consumers.

2. feedback and product development:- stakeholders plays advisory and participatory role in the organization. they provide their feedback during the development process which effect directly the product or the services and the success of the company. it also helps to earn loyality of new stakeholder.

3. sense of community:- there must be the sense of the community among stakeholders which shapes the organizational development positively within the company. as a company establish itself then community of business entity grows to include internal stakeholders as well as external stakeholders. it can establish the sense of community among stakeholders by arranging loyality programs, promotions, memberships etc.

4.considerations:- company should act upon stakeholder"s considerations and criticism which give a competitive edge to the company. stakeholder provides positive feedback as well as negative feedback too which is very hard for companies to hear. if business entity listens and act upon tha negative feedback which is provided by the stakeholders then a company can increase stability and avoid future problems by taking preventive measures.