Stakeholder Influence

1151 WordsOct 23, 20105 Pages
stakeholders - interests and power Common and conflicting interests of stakeholders The different stakeholder groups have different interests some in common with other stakeholders and some in conflict. Examples of common interests: * Shareholders and employees have a common interest in the success of the organisation. * High profits which not only lead to high dividends but also job security. * Suppliers have an interest in the growth and prosperity of the firm. Examples of conflicting interests * Wage rises might be at the expense of dividend. * Managers have an interest in organisational growth but this might be at the expense of short term profits. * Growth of the organisation might be at…show more content…
Levers operated by connected stakeholders * Shareholders have voting rights and can sell shares thus making the company vulnerable to take over. * Creditors can refuse credit, charge high interest rates, take legal action for non-payment and, in extreme cases, initiate moves to liquidate the company. * Suppliers can refuse future credit. * Customers can seek to buy goods/services elsewhere and enjoy consumer protection rights. Levers operated by government & pressure groups The government can exert influence through taxation, government spending, legal action, regulation and threatened changes in the law. Community and pressure groups can exert influence by: * Publicising business activities they regard as unacceptable. * Political pressure for changes in the law * Refusing to buy goods/services fro named firms * Illegal actions such as sabotage Stakeholder analysis “All animals are equal but some are more equal than others” [George Orwell, Animal Farm] Inequality of influence: It is naïve to believe that the stakeholders have equality in terms of power and influence. Managers have more influence than environmental activists. At the same time the institutional investor with 25% of shares will have a greater influence that the small shareholder. Banks have a considerable impact on firms facing cash flow problems but can be
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