Stakeholder - do you know your stakeholders?

Decisions you make as an entrepreneur do not only affect you, your company or your staff members. Business processes usually involve all groups of people that are directly or indirectly involved with your company. These interest groups are called stakeholders. Stakeholders can significantly affect the success of your company. You should therefore carefully consider the goals and interests of your stakeholders.

What is a stakeholder?

Imagine that you are planning an investment. You want to bring a new product line to the market and use external capital for this purpose - for example a bank loan or a promotional loan. In future, not only you, your staff members and the shareholders of your company, but also the banks and promotional institutions involved will have an interest in the development of your project. Banks expect interest on the capital provided and timely repayment of their loans. Support in the form of public funds may also be linked to specific conditions.

If you involve suppliers in the production of your products, they will also have an interest in the development of your business processes. The success or failure of your product line will have a direct impact on the turnover of your suppliers. You will also need to deal with your suppliers’ business processes.

It is furthermore important to keep an eye on the interests and demands of customers. They will have specific ideas regarding the price/performance ratio of your products, expect appropriate service and possibly goodwill. Do not underestimate the power of the customer!

If you introduce new products to the market, you will quickly attract the attention of competitors. These will primarily expect you to behave fairly in economic terms. They might offer you strategic collaboration. Either way, your actions in the market will have an effect on the actions of your competitors.

Other stakeholders may fall into the state and society category. You should also respond to the demands of these stakeholders. State institutions expect you to conduct your business within the law and to pay taxes and social services. As an entrepreneur, you are furthermore expected to bear Corporate Social Responsibility (CSR). This is reflected in the demands made by associations, lobbies, political parties, citizen initiatives, the press and the general public. Where and under which conditions are your products produced? Do you produce sustainably or are your business processes a burden for humans and the environment? You will benefit from preparing suitable answers to these questions.

The focus of the stakeholder approach is on how you can identify stakeholders, while seriously and appropriately taking into account their goals and interests.

Definition

Stakeholders are all the internal and external groups of people who are directly or indirectly affected by the activities of a company and therefore make demands and have expectations, and exert an influence on the company. These are sometimes also referred to as interest or lobby groups.

Internal and external stakeholders of a company

Stakeholders can be divided into internal and external stakeholders. Internal stakeholders are employed by your company or have shares in it. Generally, three internal stakeholder groups with different goals and motivations are identified: owners/shareholders, managers and staff members.

Examples of internal stakeholders

Stakeholder

Interests

Owners/shareholders

- Income/profit

- Increase capital invested

- Independence/freedom to make decisions

- Power, influence, prestige

Management

- Good income

- Independence/freedom to make decisions

- Status, acknowledgment, prestige

Employees

- Job

- Fair salary

- Social security

- Meaningful activity

- Further education

- Interpersonal contacts

- Status, acknowledgment, prestige

 

External stakeholders are stakeholders that do not belong to the company. External stakeholders include: External capital providers, suppliers, customers, competitors as well as the state and society.

Examples of external stakeholders

Stakeholder

Interests

External capital providers

- Safe capital investment

- Good interest rates

- Capital growth

Suppliers

- Stable business relationship

- Good conditions

- Reliability/payment term adherence

Customers

- Good price/performance ratio

- Service

- Goodwill

Competitors

- Fair competition

- Possible readiness to cooperate

State and society

- Legislator

- Authorities

- Associations and lobbies

- Political parties

- Citizens’ initiatives

- Press

- General public

- Taxes

- Jobs

- Social services

- Corporate Social Responsibility (CSR)

- Donations

Why you should take your stakeholders seriously

The stakeholder approach not only focuses on satisfying shareholders, but aims to identify all groups involved in the success of the company. The task of management is therefore to mediate between the individual stakeholders in order to ensure the success of the company.

Stakeholders are identified by means of stakeholder analysis, which is a special form of environmental analysis. Strategies, measures and action recommendations for focused handling of stakeholders are developed and implemented within the framework of stakeholder management.

The reasons for this intensive interaction with the stakeholders of your company is obvious. Only those who know their stakeholders can ensure

  • that obstacles and resistance are detected in due time and that
  • the parties affected by change processes are integrated in time.

Stakeholder analysis is part of the SWOT Analysis, which compares the internal strengths and weaknesses of the company in the face of external, market-based opportunities and risks in order to identify strategies for the business plan.

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