A2: Stakeholders and their Influence
A2: Stakeholders and their Influence
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Welcome to the 'Stakeholders' component of our BTEC International Level 3 course. In this crucial section, we'll explore the diverse array of individuals and groups that have a vested interest in a business's operations and success.
You'll learn to identify and differentiate between internal stakeholders, such as managers and employees, and external stakeholders, including suppliers, customers, and government agencies. We will also examine how these various stakeholders influence business decisions and practices, and why understanding their needs and interests is vital for long-term success. In the final section of this topic, you'll also discover the importance of effective communication with stakeholders, exploring both traditional and modern methods, including the role of social media.
By the end of this unit, you'll have a comprehensive understanding of how businesses balance the often-competing demands of different stakeholders to achieve their goals while maintaining corporate social responsibility.
What are Stakeholders?
What are Stakeholders?
Stakeholders are individuals, organizations or groups with a vested interest in the actions and outcomes of a specific organization. All stakeholder groups are directly affected by the performance of the business. Different stakeholder groups have different degrees of influence on the organization.
Robert Edward Freeman (b. 1951), an American philosopher and professor of business administration at the Darden School of the University of Virginia, is considered to be the father of stakeholder theory. Freeman's Strategic Management: A Stakeholder Approach (1984), widely regarded as being the foundation of stakeholder theory, defines stakeholders as:
"Any group or individual who can affect or is affected by the achievement of the organization's objectives." (page 46)
Fran Ackermann and Colin Eden provided an alternative definition of stakeholders in their book Making Strategy: The Journey of Strategic Management (1998):
"People or small groups with the power to respond to, negotiate with, and change the strategic future of the organization." (page 117)
1.4-poster-(ryka-infographic).pdfKey Content:
Key Content:
To be successful in this aspect of the course, you will need to know the following:
Definition and role of Internal Stakeholders including:
Definition and Role of External Stakeholders including
suppliers, lenders, competitors, trade receivables, trade payables, customers, government agencies and departments (local, national, international), communities (local, national, international), pressure groups, interest groups.
The influence of stakeholders on business success, e.g. shareholder value; customers as long-term assets (strong customer service enables customer loyalty and retention); employee involvement, corporate social responsibility (community groups and interest groups).
Methods of communicating with stakeholders e.g. written (reports, newsletters, email, letters, leaflets), verbal (meetings, committees); the role of technology including social media.
Stakeholders Explained
Stakeholders Explained
Watch the video on the right to explore the different types of stakeholders as well as their objectives and potential conflicts.
When you have watched the video, confirm your understanding of the key ideas by completing the knowledge check below.
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