N4 BUSINESS IN ACTION/N5 UN4 BUSINESS IN ACTION/N5 UNDERSTANDING BUSINESSNDERSTANDING BUSINESS

HOW ARE SMALL HOW ARE SMALL BUSINESSES BUSINESSES INFLUENCEDINFLUENCED

StakeholdersStakeholders

LEARNING INTENTIONS AND LEARNING INTENTIONS AND SUCCESS CRITERIASUCCESS CRITERIA

LEARNING INTENTIONS:LEARNING INTENTIONS:

I understand that thereI understand that there

are different stakeholdersare different stakeholders

who can influencewho can influence

business activities andbusiness activities and

success.success.

SUCCESS CRITERIA:SUCCESS CRITERIA: II can explain what a can explain what a

stakeholder isstakeholder is I can identify and describe I can identify and describe

internal and external internal and external stakeholdersstakeholders

I can describe the different I can describe the different interests that stakeholders interests that stakeholders have and how these can have and how these can conflict.conflict.

I can describe what I can describe what stakeholders can do to stakeholders can do to influence a business both influence a business both positively and negatively.positively and negatively.

WHAT IS A STAKEHOLDER?WHAT IS A STAKEHOLDER?

A person or group of people who have anA person or group of people who have an

interest in a business or organisation and ininterest in a business or organisation and in

the way in which it is managed and run.the way in which it is managed and run.

PORTLETHEN ACADEMY PORTLETHEN ACADEMY STAKEHOLDERSSTAKEHOLDERS

Think about our school. There are manyThink about our school. There are many people that have a ‘stake’ in it and have apeople that have a ‘stake’ in it and have a genuine concern about how well it isgenuine concern about how well it is performing. performing.

Can you name some of these Can you name some of these stakeholders?stakeholders?

What is the difference between them?What is the difference between them?

BUSINESS STAKEHOLDERSBUSINESS STAKEHOLDERS

As with the school, businesses have peopleAs with the school, businesses have people

or groups of people who are interested inor groups of people who are interested in

how each business performs. Each will behow each business performs. Each will be

looking for that business to producelooking for that business to produce

results which suit their own personalresults which suit their own personal

needs. needs.

INTERNAL STAKEHOLDERSINTERNAL STAKEHOLDERS

These are people or groups of people whoThese are people or groups of people who

are inside the business, eg employees.are inside the business, eg employees.

Can you think of any more internalCan you think of any more internal

stakeholders?stakeholders?

Managers, Directors, Shareholders/Owners, Volunteers,Managers, Directors, Shareholders/Owners, Volunteers,

Councillors.Councillors.

EXTERNAL STAKEHOLDERSEXTERNAL STAKEHOLDERS

These are people or groups of people whoThese are people or groups of people who

are outside the business eg suppliers.are outside the business eg suppliers.

Can you think of any more external Can you think of any more external

stakeholders?stakeholders?

Customers, Lenders, Government (HMRC), LocalCustomers, Lenders, Government (HMRC), Local

Community, Pressure Groups, Support AgenciesCommunity, Pressure Groups, Support Agencies

VIDEOVIDEO

Let’s watch a short video clip about Stakeholders:Let’s watch a short video clip about Stakeholders:

http://www.bbc.co.uk/learningzone/clips/10969.htmlhttp://www.bbc.co.uk/learningzone/clips/10969.html

Now complete Worksheet 13 on the computer andNow complete Worksheet 13 on the computer and

Worksheet 14 in your jotters.Worksheet 14 in your jotters.

Conflicts of InterestConflicts of Interest

You have seen by doing Worksheet 14 thatYou have seen by doing Worksheet 14 that

different stakeholders have different interests. different stakeholders have different interests.

Can anyone see a problem with this? Can anyone see a problem with this?

Due to the demands placed on businesses by soDue to the demands placed on businesses by so

many different stakeholders, it is no surprise that many different stakeholders, it is no surprise that

there are often disagreements and conflict there are often disagreements and conflict

between the different groups. between the different groups.

AREAS OF CONFLICTAREAS OF CONFLICT

Shareholders and EmployeesShareholders and Employees

Shareholders want good dividends whereasShareholders want good dividends whereas

Employees want good pay and conditions ofEmployees want good pay and conditions of

work. To give employees a pay rise meanswork. To give employees a pay rise means

that costs will be up and profits down, sothat costs will be up and profits down, so

Shareholders will get a smaller dividend.Shareholders will get a smaller dividend.

AREAS OF CONFLICTAREAS OF CONFLICT

Managers and EmployeesManagers and EmployeesManagers want to keep within the budget forManagers want to keep within the budget fortheir department so that they get a bonus.their department so that they get a bonus.Employees want more pay eg moreEmployees want more pay eg moreovertime pay.overtime pay.To give employees more overtime payTo give employees more overtime paymeans that managers go over their budgetmeans that managers go over their budgetand will not receive a bonus.and will not receive a bonus.

AREAS OF CONFLICTAREAS OF CONFLICT

Customers and Business OwnersCustomers and Business OwnersCustomers want value for money, good Customers want value for money, good quality and good service. Owners wantquality and good service. Owners wantgood profits.good profits.To give customers value for money mayTo give customers value for money maymean lowering the selling price which maymean lowering the selling price which maymean lower profits. To get good profitsmean lower profits. To get good profitsbusinesses may cut costs by reducing the quality businesses may cut costs by reducing the quality of the product.of the product.

AREAS OF CONFLICTAREAS OF CONFLICT

Local Community and the Business OwnersLocal Community and the Business OwnersThe local community can often suffer at the hands of a The local community can often suffer at the hands of a businesses through the effects of pollution, noise, businesses through the effects of pollution, noise, congestion and the building of new factories in areas ofcongestion and the building of new factories in areas ofoutstanding beauty. outstanding beauty.

However, if the business faces strong protests from However, if the business faces strong protests from residents and from pressure groups concerned about itsresidents and from pressure groups concerned about itsactions, then it may decide to relocate to another area,actions, then it may decide to relocate to another area,causing much unemployment in the community it leavescausing much unemployment in the community it leavesbehind.behind.

TASKTASK

In pairs, each of you will be given the In pairs, each of you will be given the interests/complaints of stakeholders in theinterests/complaints of stakeholders in thebusiness Primark.business Primark.

Starting with the pair who are the ChancellorStarting with the pair who are the Chancellorof the Exchequer, read your script and thenof the Exchequer, read your script and thenexchange views and have a lively debateexchange views and have a lively debateabout stakeholders conflicts of interests!about stakeholders conflicts of interests!

INFLUENCE OF STAKEHOLDERSINFLUENCE OF STAKEHOLDERS

OWNER’S INFLUENCEOWNER’S INFLUENCE

Owners influence the activities of a business

by being able to MAKE DECISIONS that

managers and staff have to work to achieve.

Owners have a HIGH level of influence

because no one else in the business has

the authority to overrule their decisions.

STAKEHOLDER INFLUENCESSTAKEHOLDER INFLUENCES

MANAGER’S INFLUENCE

Managers influence the activities of business byMAKING DECISIONS to help it achieve theobjectives the owners have set.

The level of influence of a manager VARIES withtheir level of AUTHORITY. For example, topmanagers can overrule decisions of managersbelow them in the organisation.

STAKEHOLDER INFLUENCESSTAKEHOLDER INFLUENCES

EMPLOYEES INFLUENCEEMPLOYEES INFLUENCE

Employees can positively influence the activities of

a business by WORKING HARD to support

the decisions of owners and managers.

Employees can negatively influence the activities

of a business by INDUSTRIAL ACTION (such as a

STRIKE).

STAKEHOLDER INFLUENCESSTAKEHOLDER INFLUENCES

THE GOVERNMENTTHE GOVERNMENTGovernment influence the activities of a business byMAKING LAWS which change the way that they have tooperate. They also influence the activities of a business bychanging TAX RATES which will affect the amount ofmoney that it has.

Government has a HIGH level of influence becausebusinesses will end up in court facing penalties if they do not do as they are told by law.

STAKEHOLDER INFLUENCESSTAKEHOLDER INFLUENCES

BANKSBANKSBanks positively influence the activities of abusiness by LENDING enough money atreasonable RATES OF INTEREST to allowthem to do things that will increase consumersatisfaction.

Banks negatively influence the activities of abusiness by NOT LENDING enough money orcharging high RATES OF INTEREST.

STAKEHOLDER INFLUENCESSTAKEHOLDER INFLUENCES

CUSTOMERSCUSTOMERSCustomers can positively influence the ability of a businessto achieve its objectives by USING MORE OF THEIRGOODS AND SERVICES.

Customers can negatively influence the ability of abusiness to achieve its objectives by NOT USING THEIRGOODS AND SERVICES.

The level of influence that a customer has VARIES with theamount that they are SPENDING.

STAKEHOLDER INFLUENCESSTAKEHOLDER INFLUENCES

SUPPLIERSSUPPLIERSSuppliers positively influence the activities of a business by PROVIDING the RESOURCES theyneed for production.

Suppliers negatively influence the activities of a business by NOT PROVIDING the RESOURCESthey need for production eg if they were not payingtheir bills on time.

STAKEHOLDER INFLUENCESSTAKEHOLDER INFLUENCES

LOCAL COMMUNITYLOCAL COMMUNITYThe local community can positively influence theactivities of a business by supporting them throughthe MEDIA eg writing good reviews.

The local community can negatively influence theactivities of a business by campaigningagainst them as PRESSURE GROUPS andin the MEDIA.

TASKTASK

Complete Worksheet 15 in your jotters.Complete Worksheet 15 in your jotters.