13: Stakeholders (Part 1)

Stakeholder is an individual or group, who has an interest in what the organization does, or an expectation of the organization.

1 Internal Stakeholders
They are intimately connected to the organization, and their objective are likely to have a strong influence on how it is run.

Internal stakeholders include:
1. Employees are those who get paid from working and concern about their job security.
Example: If workers are to be given more responsibility, they will expect increased pay.

2. Managers/Directors are those who have higher status in the organization, they also get paid, bonus from working and they concern about their job security too.
Example: If growth is going to occur, the managers will want increased profits, leading to increased bonuses.


2 Connected Stakeholders
They are having a contractual relationship with the organization.

Connected Stakeholders include:
1. Shareholders are those who want steady flow of income so possible capital growth and the continuation of the business will give them confident on the organization.
Example: If capital is required for growth, the shareholders will expect a rise in the dividend stream .

2. Customers are those who want satisfaction from the services and goods/products.
Example: Any attempt to for example increase the quality and the price, may lead to customer dissatisfaction.

3. Suppliers are those will get paid promptly while they supplying the goods/products.
Example: If a decision is made to delay payment to suppliers to ease cash flow, existing suppliers may cease supplying goods.

4. Finance Providers are those who invest or buy the security of the company hence they are looking for the ability to repay the finance.
Example: The firm’s ability to generate cash.