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Internal and external stakeholders

Business Studies Notes and

Related Essays

Stakeholders in a Business

 A Level/AS Level/O Level

Your Burning Questions Answered!

Analyze the different types of internal and external stakeholders in a business, and explain how their interests can be aligned.

Discuss the ethical responsibilities that businesses have towards their stakeholders. Consider both internal and external stakeholders.

Evaluate the impact of stakeholder power on business decision-making. How can businesses balance the interests of different stakeholder groups?

Examine the role of stakeholder engagement in developing sustainable and ethical business practices.

Suggest ways in which businesses can effectively manage stakeholder relationships to enhance organizational performance and reputation.

Stakeholders in a Business: Who's Got a Piece of the Pie?

Imagine a business like a giant pizza. Everyone wants a slice, and everyone has a stake in how the pizza is made and how it tastes. These people with a stake are called stakeholders.

1. What are Stakeholders?

Stakeholders are individuals or groups who have an interest in the success or failure of a business. This interest can be financial, social, or environmental.

2. Internal Stakeholders

These are the people inside the business who have a direct impact on its operations. Think of them as the ingredients that go into making the pizza.

  • Employees: The cooks and servers, they make the pizza happen. They have an interest in fair wages, good working conditions, and job security.
  • Management: The chefs and the restaurant manager, they decide what kind of pizza to make, how to make it, and how much to charge. They are responsible for the overall success of the business.
  • Owners: The owners are the ones who put the money up to start the pizza place. They want to make a profit and grow the business.

3. External Stakeholders

These are the people outside the business who have an interest in its activities, but aren't directly involved in its day-to-day operations. Consider them the customers and the community the pizza place is a part of.

  • Customers: They are the ones who eat the pizza! They want a good quality product at a fair price.
  • Suppliers: They provide the ingredients, like flour, cheese, and tomatoes. They want to be paid on time and have a long-term relationship with the business.
  • Creditors: They lend money to the business, like banks. They want to be repaid with interest.
  • Government: They set the rules and regulations for businesses, like safety standards and taxes. They want businesses to operate ethically and contribute to the community.
  • Local Community: They might be neighbors, residents, or environmental groups. They want the business to be a good neighbor, not create pollution, and contribute to the local economy.

4. Why Do Stakeholders Matter?

Understanding stakeholders is crucial for a business to succeed. Here's why:

  • Making Informed Decisions: By considering the needs and interests of stakeholders, businesses can make better decisions that benefit everyone involved.
  • Building Trust and Relationships: When businesses work with their stakeholders, they build trust and strong relationships that are essential for long-term success.
  • Improving Reputation: Companies that prioritize stakeholder interests create a positive brand image and attract more customers, employees, and investors.

5. Real-World Examples:

  • Apple: They have a strong focus on customer satisfaction, creating innovative products that appeal to a wide audience. They also prioritize employee well-being, offering competitive salaries and benefits.
  • Patagonia: This company is known for its commitment to environmental sustainability, using recycled materials and advocating for conservation. They are a good example of a business that balances profits with social responsibility.

Remember: Stakeholders are not just names on a list. They are real people with real needs and concerns. By understanding and responding to their interests, businesses can create a more sustainable and successful future for everyone.

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