Reading Questions: Stakeholders

Definition

As noted, each organizational model has a different stakeholder focus. But what is a stakeholder?

A stakeholder is simply any group that has a 'stake' in how the business is doing, because it is affected by the activities of the business. The standard list of a stakeholders is: 1) shareholders/creditors, 2) employees, 3) customers, 4) suppliers, 5) natural environment, 6) community, 7) competitors, 8) and (foreign and domestic) governments.

Primary & Secondary Stakeholders

That list is divided along an important line. The first four stakeholders are considered 'primary stakeholders,' so-called because they have direct economic ties to the business. What this means is that while the primary stakeholders are affected by the business, their activities affect the business in return. So the relationship is two-way.

The second group of stakeholders (the last four) are the 'secondary stakeholders,' so-called because their economic connection to the business is less direct, or else does not exist at all. Therefore, while they are affected by the business, they activities do not usually dramatically impact the business. Thus, the way that the business treats them is not ordinarily tied to the success of the business. Of course, it might be - for instance, when a community boycotts a company, or when a government prevents a merger. But this kind of thing is not an everyday occurrence. 

Traditional Business Ethics Issues by Stakeholder

Employees

• Motivating Employees
• Management issues
• Culture issues
• Discrimination in hiring/promoting/firing
• Unfair treatment
• Harassment
• Safety
• Unionization
• Lay-offs

Customers

• Deceptive or manipulative advertising
• Irresponsible with customer data
• Quality issues - Intentionally making bad products
• Quality issues - Carelessly making bad products
• Poor customer service
• Safety

Suppliers

• Ignoring use of sweatshops
• Deceiving suppliers
• Taking advantage of suppliers (buying power)

Shareholders

• Shareholder activism
• Listening to investor concerns

Government

• Regulations
• Tax rates/Tax Shelters
• Monopolies
• Lobbying
• Bribery
• Government Contracts
• Free Trade Agreements

Environment

• Exploiting natural resources
• Illegal dumping
• Creating greenhouse gases

Society

• Gentrification
• Exploiting natural resources from other countries
• Community philanthropy
• A business that is responsible for most or all economic activity in a society