Business Stakeholders Responsbilities

Business Stakeholders
Internal Stakeholders
Internal stakeholders, primarily employees, owners and managers, are directly involved
in the operations and strategy of the organization.
LEARNING OBJECTIVES
Differentiate between internal and external stakeholders.
KEY TAKEAWAYS
Key Points
 Internal stakeholders are individuals or groups who are directly and/or financially
involved in the operational process.
 External stakeholders are indirectly influenced by the organization ‘s operations.
 Employees and managers are internal stakeholders impacted by organizational
strategy and success, with some influence on the organization’s decisions.
 Owners have a larger impact on organizational management, and take a larger
amount of accountability compared to managers and employees.
Key Terms
 stakeholders: People or organizations with a legitimate interest in a given

situation, action, or enterprise.
Stakeholder Theory
Organizational management is largely influenced by the opinions and perspectives of

internal and external stakeholders. A stakeholder is any group, individual, or community
that is impacted by the operations of the organization, and therefore must be granted a
voice in how the organization functions. External stakeholders have no financial stake in
the organization, but are indirectly influenced by the organization’s operations.
Internal Stakeholders
Internal stakeholders are individuals or groups who are directly and/or financially
involved in the operational process. This includes employees, owners, and managers.
Each of these groups is potentially rewarded directly for the success of the firm.
Employees
Employees are primary internal stakeholders. Employees have significant financial and
time investments in the organization, and play a defining role in the strategy, tactics,
and operations the organization carries out. Well run organizations take into account
employee opinions, concerns, and values in shaping the strategy, vision, and mission of
the firm.
Managers
Managers play a substantial role in determining the strategy of the organization, and a
significant voice in operational decisions. Managers are also accountable for the
decisions made, and act as a point of contact between shareholders, the board of
directors, and the organization itself.
Owners
Owners (who in publicly traded organizations can include shareholders) are the
individuals who hold significant shares of the firm. Owners are liable for the impacts the
organization has, and have a significant role in strategy. Owners often make substantial
decisions regarding both internal and external stakeholders.
Stakeholders for a Search Engine: This graphic is a good illustration of the stakeholders involved in a search
engine organization. Various groups are impacted by their operations, such as consumers, owners, financiers,
governments, and advertisers. Owners are directly involved in the process, and thus described as internal
stakeholders.
External Stakeholders
Integrating businesses into society results in a wide variety of interactions with a

number of different external stakeholder groups.
LEARNING OBJECTIVES
Identify the various external stakeholders that may be impacted by business operations
KEY TAKEAWAYS
Key Points
 Understanding the impacts (positive or negative) of the organization upon the

broader external environment is more easily accomplished when different groups
of stakeholders are identified.
 Customers, suppliers, and governments are all directly impacted by the
operations carried out in a financial way. As a result, these stakeholder groups
tend to be quite closely in tune with business operations.
 Local and global communities are less directly impacted (financially) by business,
but no less relevant when it comes to stakeholder-based decision -making.
 Businesses can have severely negative impacts on the local and global
environment, and so must carefully consider how operational functioning can
affect the well-being of the individuals in these communities.
Key Terms
 stakeholder theory: A theory of organizational management and business

ethics that addresses morals and values in managing an organization.
Business are complex pieces in the social ecosystem, both impacted by and impacting
a wide variety of groups in the external environment. As a leader or manager at an
organization, understanding both internal and external stakeholder needs is a central
responsibility. Decisions should be made in a way that ensures all stakeholders are
considered.
External Stakeholders
There are quite a few external stakeholders for businesses to keep in mind when
making decisions and carrying out operations. These include but are not limited to
customers, suppliers, creditors, communities, governments, and society at large:
Customers
The primary purpose of providing goods and services is to fill needs. Understanding the
needs of an organization’s core customer base, and optimizing operations to best fill
those needs, is therefore a significant part of managing a business. Interacting with
customers through social media, emails, storefronts, user testing groups, and the
delivery of services and goods is an important aspect of maintaining a strong
community (and a strong sense of what customers want from the organization).
Nowadays, big data plays a significant role in determining what users want. By
understanding trends, habits, and trajectories in user data, organizations can anticipate
the needs of users and refine their value proposition.
Suppliers
Suppliers and other strategic alliances are interdependent, where the success of one
will impact the success of another. As a result, suppliers are closely related to
organizations as key external stakeholders. Timely payments, shipments,
communication, and operational processes are key to maintaining a strong relationship
with this stakeholder group.
Local community
A business can be a great benefit to a community, providing tax money, local access to
unique goods and services, jobs, and community development programs. However, a
business can also be a drain on a community by increasing traffic, creating pollution,
hurting small businesses, and altering real estate prices. As a result, businesses must
look at the needs of the community, and ensure that negative repercussions are
minimized while community engagement is maximized.
Government
Governments tax businesses, and therefore have a firm stake in their success.
Governments can in fact be considered primary stakeholders, considering the profit
motive involved. Governments also provide regulatory oversight, ensuring that
accounting procedures, ethical practices, and legal concerns are being handled
responsibly by business representatives.
Broader Society
As a result of the digital and global economy, a business can have a significant impact
on society at large. Companies such as Airbnb and Uber have transformed entire
industries, creating dynamically different economies with a wider variety of participants
than ever. Walmart has substantially impacted the viability of small businesses in many
regions. The food that is sold at fast food chains has huge impacts on global health.
Manufacturing facilities in developing nations are transforming entire ecosystems.
Social networks are collecting vast amounts of data. All of these concepts aren’t
intrinsically good or bad, but managing them to ensure outcomes are positive for society
as a whole is a critical responsibility.
Other
While other stakeholder groups could be discussed at length, these are a few of the key
pillars in stakeholder theory.
Stakeholders: This chart underlines some of the main internal and external stakeholders leaders will consider
when looking at the implications of business operations.
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Business Stakeholders Responsbilities

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Business Stakeholders

Differentiate between internal and external stakeholders.

 stakeholders: People or organizations with a legitimate interest in a given

Organizational management is largely influenced by the opinions and perspectives of

Integrating businesses into society results in a wide variety of interactions with a

 Understanding the impacts (positive or negative) of the organization upon the

 stakeholder theory: A theory of organizational management and business

LICENSES AND ATTRIBUTIONS

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