Business 101: Defining Stakeholders
Stakeholders are people and groups affected by, or that can effect an organizations operations, policies, and decisions. The number of stakeholders and their interests can be large and a company’s ability in making decisions can become a very complex and drawn-out experience. A stakeholder creates conditions that can influence a company to stay in or withdraw from a specific market. Even though a stakeholder has this influence on a company it is still the company that has the ultimate and final decision.
When a company makes its final decision the company cannot make this decision without regards to its stakeholders interests. The pros and cons of decision making affect the company and its stakeholders and weighs heavy on the company manager. When a company considers disregarding their stakeholder’s wishes and concerns to be wrong and does not listen to stakeholders this action usually proves to be a costly decision to the company.
Stakeholders have the ability to stick a fork into a company or business but yet also be a vital part of the company’s assets. Companies need to take a comprehensive approach and take into account the needs of its group of stakeholders. Investors, stakeholders, and creditors provide financial capital to the company and its employees. Employees contribute their work, skills and knowledge. Suppliers provide materials, energy, and other supplies to the company.Wholesalers, retailers, and distributers help move products.
Primary stakeholders are critical to a company’s survival. Secondary Investors, stakeholders, and creditors provide financial capital to the company and its employees. Employees contribute their work, skills and knowledge. Suppliers provide materials, energy, and other supplies to the company. Wholesalers, retailers, and distributers help move products. Primary stakeholders are critical to a company’s survival. Secondary stakeholders are the groups in society who are affected by the company’s activities and decisions. These groups include levels of government, general public and social activist groups. Even though these are secondary stakeholders they are still very important to a company’s survival. Stakeholders can be well organized or not so well organized. Each stakeholder has its own relationship with the company and its managers. Owners of a company have to insure that the investment they have made in a company receives a return on their investment. Stakeholder coalitions may be actively involved with a company today and not so active or involved next week.
Groups continue to change their relationship with companies and stakeholders. A company and its stakeholder relationship is called a social contract that is an implied understanding as how they act toward one another. A new social contract is what we have in today’s world and involves employees, stakeholders, and the company. There are many companies in today’s world both small and large that are committed to finding ways to increase this social contract. What is certain about companies, business, and society is that it is always changing. A company’s ability to change and adapt with the changing times of the economy could be the difference of whether a company survives or not.