Stakeholder Influence Essay

1167 Words 5 Pages
stakeholders - interests and power

Common and conflicting interests of stakeholders

The different stakeholder groups have different interests some in common with other stakeholders and some in conflict.

Examples of common interests:

* Shareholders and employees have a common interest in the success of the organisation. * High profits which not only lead to high dividends but also job security. * Suppliers have an interest in the growth and prosperity of the firm.

Examples of conflicting interests

* Wage rises might be at the expense of dividend. * Managers have an interest in organisational growth but this might be at the expense of short term profits. * Growth of the organisation might be at
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They have the ability to influence the objectives and directions of the organisation.

But the individual shareholder in a large public company has very little influence.
In theory they can exert influence through voting at the annual shareholders meeting but unless individuals group together their votes will have little impact.

In any case they are likely to be outvoted by the big institutional investors (e.g. pension funds) who own large blocks of shares.

However, shareholders can exert influence through threatening to “vote with their feet” by selling shares. As a result, managers and directors must at least keep shareholders satisfied.

Determinants of stakeholder power

For stakeholders to have power and influence the desire to exert influence must be coupled with the means to exert leverage on the company.
How much power the stakeholder can exert will reflect the extent to which:

* The stakeholder can disrupt the organisations plans. * The stakeholder causes uncertainty in the plans. * The organisation needs and relies on the stakeholder.

Levers operated by internal stakeholders

Internal stakeholders have their own interests which they might pursue - e.g. managers might seek organisational growth over profits, employees seek high wages and favourable working conditions.
Managers make decisions and therefore have extensive power.

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