Internal & External Stakeholders (DP IB Business Management)

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Lisa Eades

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An Introduction to Stakeholders

Stakeholders are individuals or groups that affect or are affected by the actions of a business
- A business needs to take into account the needs and interests of its stakeholders in order to operate successfully and ensure long term success

Diagram: business stakeholders

**Groups with an interest in the activities of a business**

Internal Stakeholders

Internal stakeholders are individuals or groups inside the business
- Employees
- Managers and Directors
- Business owners

Objectives of Internal Stakeholders

Stakeholder	Objective	Example
Owners	Owners may be sole traders, a partner in a business or a shareholder in a private limited company Owners are likely to work within the business as well as own it and so will be relying on the business to provide an income They will want all, or a share of the profit and will want the business to be succeed	The owner of a small building business may want it to provide a job and income The owner may also have the aim of passing the business on to a family member on retirement
Employees	Employees are individuals who work for a company Their primary objective is to earn a living, have job security and be compensated fairly for their work and have a safe working environment	Google employees in California have some of the best working conditions in the world, with the Company offering sleeping pods, games rooms and free speciality coffee all day
Management	Managers are individuals who are responsible for the day-to-day operations of a company Their primary objective is to meet the company's goals and objectives They want to maximise profits and minimise costs while ensuring that the company operates efficiently	A McDonald's manager may want their restaurant to increase sales and reduce costs by improving efficiency

External Stakeholders

External stakeholders are individuals or groups outside of a business
- Customers
- Shareholders
- Creditors
- Suppliers
- The local community
- Local and national government
- Pressure groups

Objectives of External Stakeholders

Stakeholder	Objective	Example
Customers	Customers are individuals or businesses who purchase goods/services from a business Their primary objective is to receive high-quality products or services at a fair price Customers also want good customer service and a positive experience with the company	A Nike customer may want the company to provide high-quality shoes at a reasonable price - and to deal promptly with any customer concern issues
Shareholders	Shareholders are individuals or entities who own a portion of a company's stock They invest in the company with the goal of making a profit Shareholders' primary objective is to maximise their returns on investment They want the company to be profitable and generate a high return on their investment	An Apple shareholder may want the company to release new products and increase sales to increase the value of their shares
Suppliers & creditors	Suppliers and creditors are likely to be one and the same Their primary objective is for the business to pay what it owes promptly and in full Suppliers often want to be able to establish long-term arrangements with customers to improve business stability	An egg supplier is likely to value a long-term supply contract with a leading supermarket even if the price it receives for its eggs is low because sales are guaranteed
The local community	The local community includes individuals and organisations that live or operate in the area where a business operates Their primary objective is for the business to have a positive impact on the community This may include the business being environmentally responsible, providing jobs, and contributing to local causes	Burnley Savings & Loans Ltd (Bank of Dave) donates all of their profits to local charities and good causes
Local and national government	The government is responsible for creating and enforcing laws and regulations that affect businesses Their primary objective is to promote the public good and protect the interests of citizens The government wants companies to operate within the law and contribute to the economy	The government may want a company to pay taxes, comply with environmental regulations, and create jobs
Pressure groups	Pressure groups are organisations that seek to influence the policies and actions of businesses or governments Their primary objective is to promote a specific cause or agenda Pressure groups want the company to support their cause or take action on an issue	An animal rights group may want a clothing company to stop using animal products in their clothing

Exam Tip

Some stakeholders can be both internal and external

Shareholders are usually classified as external stakeholders but employees and business managers may own shares and therefore have an internal stake in business success too
Similarly, the local community is usually considered to be an external stakeholder but it is likely to contain workers for a business

The fact that stakeholders may wear more than one 'hat' can make meeting their varied objectives even more of a challenge and businesses will need to take care to understand concerns effectively

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