Who stakeholders are
A stakeholder is any person or group that is affected by a business, or that can affect it.
- Internal stakeholders are inside the business: owners (sole traders, partners or shareholders), managers and employees.
- External stakeholders are outside: customers, suppliers, the local community, the government, lenders (banks) and pressure groups.
A shareholder owns part of a company. Every shareholder is a stakeholder, but most stakeholders are not shareholders.
What each group wants
- Owners/shareholders: profit, a rising share price, dividends.
- Managers: growth, a good salary and bonus, power.
- Employees: fair pay, safe work, job security, training.
- Customers: low prices, good quality, good service.
- Suppliers: regular orders and payment on time.
- Local community: jobs, little noise and pollution, support for local life.
- Government: taxes paid, laws followed, jobs created.
- Lenders: loans and interest paid back on time.
Stakeholder influence and conflict
Stakeholders can influence a business: owners vote, staff can strike, customers can stop buying, government can pass laws, banks can refuse loans, and local people can protest or refuse planning permission.
Conflict happens when a decision helps one group and hurts another. Examples:
- Raising prices: more profit for owners, but customers pay more.
- Cutting jobs to save costs: owners gain, employees and the community lose.
- Using cheaper suppliers: lower costs, but old suppliers lose orders and quality may fall.
Some aims overlap too: if the firm grows, owners get profit, staff get jobs and government gets tax.
Mapping stakeholders and managing relationships
Stakeholder mapping places each group on a grid by power (how much it can affect the firm) and interest (how much it cares):
- High power, high interest: key players, involve them closely.
- High power, low interest: keep them satisfied.
- Low power, high interest: keep them informed.
- Low power, low interest: watch, with little effort.
To manage relationships, firms communicate (meetings, newsletters, reports, social media), consult before big changes, explain reasons and sometimes compromise (for example, offering retraining when jobs change).
Try it
Think of your school canteen. List six stakeholders and what each wants. Then place them on a power-interest grid. In the 3D free play, try each decision and count happy and upset groups.
Key formulas and definitions
- Stakeholder = anyone affected by, or able to affect, the business
- Internal: owners, managers, employees
- External: customers, suppliers, community, government, lenders
- Shareholder ⊂ stakeholder (owns shares)
- Map by power × interest → key players, keep satisfied, keep informed, monitor
Worked examples
1. A supermarket decides to open 24 hours. Name one stakeholder who gains and one who may lose.
Customers gain (shop any time). Local residents may lose (noise and traffic at night). Some staff may dislike night shifts.
2. Classify: bank, cashier, shareholder, town council, customer.
Internal: cashier, shareholder. External: bank (lender), town council (government), customer.
3. A factory wants to cut costs by 10% by using a cheaper chemical that smells. Explain the conflict.
Owners gain profit, but the local community suffers bad smells and the government may fine the firm. The firm must balance profit against community and legal pressure.
4. Where on a power-interest grid would a large bank that lent the firm $2 million go?
High power (it can call in the loan) and usually high interest in the firm's finances, so a key player to manage closely.
Common mistakes
- Using stakeholder and shareholder as the same word. Shareholders are only one kind of stakeholder.
- Putting employees as external. Employees work inside the firm, so they are internal.
- Thinking stakeholders always conflict. Many aims overlap, such as growth helping owners, staff and government.
- Saying only owners can influence the firm. Customers, staff, government, lenders and the community also have power.