Lesson 2 - Who are the Stakeholders

Visit Coffee Nation's website here and see if you can identify all the stakeholders!

What is a STAKEHOLDER?

A stakeholder is an individual or group of people that have an interest in a business. Stakeholders want the business to do well, because when it does they benefit.  Similarly when it fails, then stakeholders suffer in some way!

The main stakeholders can be divided in to INTERNAL and EXTERNAL stakeholders.

INTERNAL stakeholders are those directly connected with the business:

• EMPLOYEES, directors, managers, workers and staff.  They work for the business and in return they receive a wage or a salary.A job may also bring a sense of purpose and status.  If the business closed they would loose their income and have to look elsewhere for work.  Similarly a successful business can pay higher wages and train its staff to a higher standard so workers have a STAKE in the their EMPLOYERS doing well.  When UNEMPLOYMENT is running high it may be difficult to find a job 

• SHAREHOLDERS - these are investors who have bought a small part of a business.  They receive a share certificate and in return will receive a SHARE of the profits that the business makes.  This payment is usually called a DIVIDEND.  A business that is doing well will pay a large dividend and a business that is doing badly will pay nothing at all.  Apple announced recently that they have £30bn in spare cash which they will now give to their shareholders over the next five years.  

EXTERNAL stakeholders have an interest in the business but are not actually part of the organisation

• CUSTOMERS - A successful business might be able to reduce the price it charges its customers, it will also attempt to improve the quality of its products and service it supplies. A failing business might try to cut corners with its products, reducing its quality but if it was to close down there would be less choice for customers.    
• SUPPLIERS - When a business buys materials from a supplier it will usually receive CREDIT and will not have to pay for its goods immediately allowing the business to make the product and make a profit so it can pay for its supplies.  If the business is not successful it might not be able to pay the supplier.  Suppliers therefore want the business to do well so that their bills get paid.  Some businesses go a step further.  Coffee nation could buy cheaper coffee but it wants to only deal with responsible suppliers that ensure the GROWERS earn a good INCOME. 
• CREDITORS - Suppliers are a type of creditor as the business owes them money.  There are other types of borrowing such as loans from a bank.  Creditors like the business to do well so that they can get repaid and potentially lend bigger loans in the future.
• THE LOCAL COMMUNITY - businesses have to pay taxes for local council services which in turn provide for lighting, road maintenance, waste collection and emergency services.  If the business fails these services will struggle to be provided and the area could become run down.  Businesses also sponsor additional activities and play centers.  The money paid to employees is spent in local shops and creates additional taxes so the local community has a very big STAKE in the local businesses doing well.  If the business does too well local people could complain about noise pollution, air pollution and traffic pollution so this would then be protested against and receive public complaints. 

The influence of  'stakeholders' questions that you will need to answer in an exam!

1. What is a stakeholder?
2. List three of coffee nations stakeholders
3. How does Coffee Nation look after its customers?
4. What is a creditor?
5. Is an employee an internal or external creditor?
6. How might buying fairtrade coffee actually help Coffee Nation?
7. List three ways consumers wold be affected if Coffee Nation were to go out of business?
8. Give three ways the local community might be affected when a business closes?
9. How might the local community benefit from Thorpe Park presence?

Worksheets

Stakeholders