How stakeholders influence business activity and business decisions
All stakeholder groups have an impact on a business, but some will have more impact than others, giving them more power and influence on the activities of the business. Common areas that stakeholders may influence in a business include decision-making, aims and objectives, operational issues, sales, costs and profits.
See Also
What are the roles and responsibilities of key stakeholders?Who Are Stakeholders and Why Do They Matter? - Non Profit News | Nonprofit QuarterlyImprove Drastically Your Strategic Planning and Implementation through Stakeholder InvolvementThe Importance of Stakeholders: Identifying & Prioritizing Stakeholder Engagement| Stakeholder | Impact on business activity |
| Shareholders and owners | Owners have the most impact, as they make decisions about the activities of the business and provide funding to enable it to start up and grow. Shareholders influence the aims and objectives of the business based on their financial, non-financial and social requirements. |
| Managers | Managers make some recommendations and decisions that influence the business’ activity. They make key business and operational decisions on a daily basis and they try to achieve aims and objectives set by shareholders and owners. Managers making the right decisions are likely to reduce business costs and increase profits. |
| Employees | Employees play a large role in whether a business meets its aims and objectives. Employees can affect the business directly, eg by refusing to work or not working as well as they should. Hard-working employees would increase sales, however employees could also ask for wage increases, which would increase costs. |
| Customers | Customers buy products and services and give feedback to businesses on how to improve them. Customers influence the sales and profits of a business. |
| Suppliers | Suppliers can have a significant impact on a business if there are any changes in the quality of the goods they supply or the reliability of their deliveries. Suppliers can affect a business costs, this may make a business re-evaluate their aims and objectives. |
| Local community | If a business affects a large number of local residents negatively, they may protest or object through the local council. They can also support businesses by buying products and services. The local community could also force a business to focus more on social and environmental causes. |
| Government | Governments can pass new laws, change tax levels or amend levels of government spending in ways that affect the business, eg by providing increased grants or funding. This may increase costs for a business, or allow them to achieve greater profits. |
| Stakeholder | Shareholders and owners |
|---|---|
| Impact on business activity | Owners have the most impact, as they make decisions about the activities of the business and provide funding to enable it to start up and grow. Shareholders influence the aims and objectives of the business based on their financial, non-financial and social requirements. |
| Stakeholder | Managers |
|---|---|
| Impact on business activity | Managers make some recommendations and decisions that influence the business’ activity. They make key business and operational decisions on a daily basis and they try to achieve aims and objectives set by shareholders and owners. Managers making the right decisions are likely to reduce business costs and increase profits. |
| Stakeholder | Employees |
|---|---|
| Impact on business activity | Employees play a large role in whether a business meets its aims and objectives. Employees can affect the business directly, eg by refusing to work or not working as well as they should. Hard-working employees would increase sales, however employees could also ask for wage increases, which would increase costs. |
| Stakeholder | Customers |
|---|---|
| Impact on business activity | Customers buy products and services and give feedback to businesses on how to improve them. Customers influence the sales and profits of a business. |
| Stakeholder | Suppliers |
|---|---|
| Impact on business activity | Suppliers can have a significant impact on a business if there are any changes in the quality of the goods they supply or the reliability of their deliveries. Suppliers can affect a business costs, this may make a business re-evaluate their aims and objectives. |
| Stakeholder | Local community |
|---|---|
| Impact on business activity | If a business affects a large number of local residents negatively, they may protest or object through the local council. They can also support businesses by buying products and services. The local community could also force a business to focus more on social and environmental causes. |
| Stakeholder | Government |
|---|---|
| Impact on business activity | Governments can pass new laws, change tax levels or amend levels of government spending in ways that affect the business, eg by providing increased grants or funding. This may increase costs for a business, or allow them to achieve greater profits. |
