The Role Of Stakeholders

Role of Stakeholders in Decision Making

Employees:
Employees should all see where the business is heading, and where it is heading towards otherwise they might see little point in changes in changes that have been made and may become suspicious. A work force that sees little relevance in what it is doing, or which sees that it is never able to reach set targets, will be far less productive, and may in-fact become demotivated, resistant to change and even disruptive. It is very important that the changes are explained clearly to employees and that any fear they may have are properly addressed.

Investors:
Investors are important because the business relies on their investment to finance the decisions that it takes. They may, for example, become worried that the business has no overall direction and look for other places to put their money. They may not see the benefit of decisions, particularly long-term ones which could affect the amount they receive. If they are unhappy they could seek to replace the managing director., chairperson, or even members of the board of directors. This would leave the business weakened and prone to take-over.

Shareholders:
They will be very interested in any decision that effects the dividends that they receive is their share of profits. Any decision that will reduce profits, even for a short while, will not be popular with the shareholders.
If shareholders are unhappy with the decisions made, they can voice their concerns at the Annual General Meeting, and even take a vote to replace members of the Board of Directors or the Chief Executive. This is something that the managers of the business would want to avoid, so they would have to consider how shareholders will feel about the decisions made.

Customers:
Customers will be concerned if the decisions affect the price, quality, or service of the product – they may change their buying habits if the product does not meet their requirements.

Suppliers:
Suppliers will want to get regular orders with prompt payment – these may be effected by the decisions made by the business.
For example, if there is a decision to increase production then more materials will be ordered from the supplier. He suppliers may then have to vary the period of credit and/or the level of discount offered to the firm.

If the supplier finds it difficult to provide the extra materials, then the decision may have to be changed.

Community:
The community could be effected in many ways by the decisions made by the business.
For example, if the business decides to expand, this could lead to more traffic, on the local roads and more pollution, or could mean the destruction of the local beauty spot, affecting local wildlife.
The local community could be worried by such a development.
They could form a local pressure group which could campaign against the expansion, or they could involve a large organisation such as ‘Friends of the Earth’ to campaign for them. The local council would come under pressure to stop the expansion from going ahead.
It is important that the concerns of the community are taken into account when making decisions which will effect them, particularly when one of the objectives of the business may be social responsibility.

Government:
The government passes legislation which affects business’, and so this will have to be taken into account when decisions are made.
For example, the government recently increased the cost of road transportation through increases in the cost of road tax and fuel for lorries. Obviously in terms of keeping costs down, the less distance the product has to travel by road to it’s markets the better, so the business may decide to move it’s factory nearer to it’s main customers.
If the government decides to reduce the rate of income tax, consumers would have more money to spend and this could mean greater demand for the business’ product. The business will then have to decide if they want to expand, so it can satisfy the customer’s new demands.
It is also important for the business that any decisions it takes are legal, otherwise they could be prosecuted.
The government can introduce legislation at any time to prevent what they see as undesirable actions by businesses, e.g. a firm gaining a monopoly position in a particular industry. Therefore it is important that businesses take into account what the government will approve or disapprove of when making decisions.



Source by Dukkha

Category: Online Jobs

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