What is a Stakeholder?

what is a stakeholder this video is going to 
look into the typical stakeholders of a business   how the business can impact these stakeholders 
and why these stakeholders may come into conflict   with one another over certain business decisions what is a stakeholder a stakeholder is 
anyone that has an interest in a business   stakeholders can have an impact on a 
business or be impacted by the business   these people can be individuals groups of 
people or other organizations before we go   into the types of stakeholders it's important 
to know that these stakeholders can be split   into two different types internal and external 
stakeholders internal stakeholders are people   whose interest in a company comes through a direct 
relationship from within the business such as   shareholders these are internal as they are part 
owners of the business due to them holding shares   in the business it's important to distinguish the 
difference between a stakeholder and a shareholder   a shareholder has shares in the business which 
means they own part of the business however   because they own a part of the business they 
are also a stakeholder as they have an interest   in the business being successful as it will 
result in them receiving a share of the profits   employees are internal stakeholders as they 
carry out the day-to-day activities the business   requires these tasks are usually delegated by the 
managers managers are also internal stakeholders   as they work directly for the business and are in 
charge of implementing the vision of the owners   in contrast to internal stakeholders external 
stakeholders are those who do not directly work   for the company but are affected in some way 
by the actions and outcomes of the business   examples of these are customers they buy the 
products or service offered by the business   and therefore have an interest in the business's 
long-term success suppliers these are external   to the business as they are an organization 
in themselves or responsible for providing   the business with products or services the local 
community is anyone located nearby to the business   they have an interest in how the business 
operates in their local community   pressure groups have a shared goal and try 
to influence the decision made by a business   in pursuit of this goal and finally government 
this can be both local or central government   and they want businesses to provide employment 
and pay taxes now we know the different   stakeholder groups let's look at what each 
stakeholder wants in terms of their objectives   stakeholder objectives stakeholders have their 
own objectives and expectations of a business   these objectives will vary by stakeholder 
and here are some of the common objectives   for the different stakeholder groups shareholders 
want maximum profit a long-term growth managers   want a good salary and opportunities for further 
career progression employees want good levels of   pay job satisfaction and job security and may also 
have an interest in career progression just like   managers customers want a good quality and range 
of products at reasonable prices suppliers want   to receive payments on time and regular orders the 
local community so people living within the area   may be looking for work which local business can 
provide to them pressure groups want to increase   awareness of their cause and influence the 
business to make decisions that further their goal   i.e animal rights groups may pressure cosmetic 
companies to stop testing on animals government   governments want businesses to create more jobs 
in order to raise more money from taxes and save   money on benefit payments as you can see each 
stakeholder has their own set of expectations   for a business and depending on how the business 
acts this will affect stakeholders in different   ways effects of business activity on stakeholders 
each of these stakeholders is affected differently   by what direction the business takes 
and which stakeholders they prioritize   let's look at an example at mcdonald's which has 
been pretty popular over recent years there's no   doubt mcdonald's is a huge success in the business 
world this has led to employees rightly or wrongly   arguing due to mcdonald's success they are 
entitled to a higher hourly wage this has been   known as a fight for 15 as they believe this 
wage should be 15 pounds an hour due to this   mcdonald's needs to decide which stakeholders 
they want to prioritize as a wage increase will   not only impact the employees but will directly 
impact all stakeholders possibly in the following   ways shareholders the effects of a wage increase 
on shareholders would most likely be negative the   wage increase would mean a large increase in 
costs for mcdonald's and would see wages rise   to almost double this would result in a reduction 
in profits and a possible reduction in share price   and dividend payments to shareholders managers 
will potentially see their salaries increase   to ensure they are incentivized to still 
take on their additional responsibilities   if this did not happen it will be demotivating 
as an employee with less responsibility   would receive an equal or even a higher wage 
than managers employees this will be a positive   for the employees as they will see their wages 
rise to 15 pounds an hour which will mean they   are better off financially it may push mcdonald's 
towards a more automated system as we've seen with   the touchscreen ordering system as staffing 
may need to be reduced to keep costs down customers could see an increase in prices 
or a reduction in quality as mcdonald's   would try to recover some losses from suppliers 
therefore reducing quality or by raising prices   suppliers may see mcdonald's try to negotiate 
a better price for its product or even find new   suppliers that are willing to lower their prices 
people in the local area may now be financially   better off this means they will be able to spend 
money in the local area and in turn could boost   the local economy pressure groups that lobbied 
for the wage increase will be satisfied and this   will reduce the pressure on the business from such 
activists the government will now be earning more   money annually as people repaying more income 
tax or potentially decreasing their reliance on   financial support from the government stakeholder 
impact ultimately their decision will come down   to which stakeholder mcdonald's deems to have 
the greatest impact on the future growth of the   business as the action stakeholders take can also 
have an impact on the business in the same way   in which the actions of the business can impact 
the stakeholder what impact can the stakeholders   have on a business shareholders have a significant 
impact as they fund the business if they dislike   what they see they could sell shares which 
could see billions wiped off the company's value   managers make decisions at a lower level but can 
still impact the culture and effectiveness of a   businesses day-to-day operations employees 
have relatively low influence on a business   at an individual level however collectively 
they can refuse to work and take strike action   customers can stop using a product or service and 
are responsible for spreading either a positive or   negative message about a business through word 
of mouth in person or on social media suppliers   could refuse to provide a business with the 
goods it needs to operate local communities   and pressure groups can oppose business 
operations and try to stop certain acts happening   that the local community and these pressure groups 
don't agree with finally the government can pass   laws that must be followed and these can have 
a massive impact financially and on the way the   business operates with all groups having different 
objectives and a different level of impact this   means that when issues arise such as a wage 
increase to 15 pounds then this puts stakeholders   in conflict with one another as each one wants 
a different outcome from the issue stakeholder   conflicts conflicts between stakeholders will 
occur and it's something a business must navigate   sensitively let's use the mcdonald's wage rise 
to look at where conflict may occur on this issue   employee versus shareholders employees want 15 
pound an hour in order for them to become more   financially stable on the other hand shareholders 
want to make as much money from their investment   in the business as possible and ideally want 
to pay as little as possible to employees   as this will maximize profits the two stakeholders 
have totally conflicting interest in the business   and both objectives cannot be met at 
the same time if mcdonald's decides to   pay the 15 pounds immediately then this will 
increase operating costs and reduce profits   impacting shareholders negatively on the other 
hand if mcdonald's pay their employees too low in   order to give shareholders maximum profits then 
this could mean employees not wanting to work   for mcdonald's and taking strike action again 
mcdonald's needs to try and strike a balance   between profits and employee wages which will 
satisfy both the shareholder and the employees   another conflict over the issue may be between 
employees and customers these may be in conflict   due to the employee wanting higher wages 
but the customer wanting no price increases   these wants are conflicting as higher wages could 
result in mcdonald's raising their prices to cover   the increased wage bill if the business 
handles both of these conflicts well then   this will usually result in a compromise being 
made that each stakeholder can live with such as   raising the weight of ten pound for the commitment 
being made to increase to fifteen pounds   over a five year period this may make employees 
feel they've been heard and shareholders would   have time to see how these changes would 
impact profits and prices for the consumer   we appreciate you watching this video to 
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