Relationships with stakeholders- Internal factors

Relationships with stakeholders- Internal factors

1. Business objectives

   • The main objectives that a business focuses on: Growth, Profit, Ethical/Social goals
   • A business committed to ethical and social objectives will highly priorities the objectives of as many stakeholders as possible.
     • An example is the Co-operative. This is because they give their customers and employees a say in how the business is managed. The co-op use a range of fair trade products and funds projects in many communities.
   • However a business that is focused on maximising its profits or achieving fast growth will have a different relationship with its stakeholders.
     • They will seek to maximise costs which will allow them to more likely reach maximum profit. This could mean that they do not meet the objectives of all the stakeholder groups.
       • This could include paying minimal wages, ignoring the needsof the local community and charging prices that some customers find to expensive.
     • It could mean that the business also limit the willingness to engage in communication and consultation with the stakeholder groups.
       • Any communication that does occur could be uncomfortable as the stakeholder groups feel as if their objectives are being ignored or not even met.

2. Management and leadership styles

   • Managers/leaders who have management styles that are based on greater democracy or involvement with the stakeholder groups will more than likely have more concern about their well being..
     • This can create better long term relationships with employees because there is a belief in two-way communication.
       • This means that the stakeholders benefit from the efficient communication and consultation as well as the option to play a part in the decision making process.
       • An example of this type of leadership is Satya Nadella who is a CEO at Microsoft (2014). He was a good listener and always welcomed everyone's input and ideas. He also had excellent communication skills.
   • Managers/ leaders that take the autocratic approach are less likely to focus on the objectives and needs of its stakeholder groups.
     • They will have little or no opportunities to help shape any decisions
       • This will lead to the stakeholder groups believing that their objectives are not even considered in discussions.

3. The size and ownership of the business.

   • For smaller businesses such a sole traders it is simpler for them to communicate and involve their stakeholders with the business. This is because they may have many relationships with its stakeholders and the owners may know them personally.
     • They won't have the influence fro other owners meaning that good relationships can be formed between the managers and stakeholder groups.
   • Large public limited companies will have different relationships with their stakeholders, this is because there are more legal structure put in place that influences them.
     • One example is that boards of directors maybe under a lot of pressure from powerful stakeholders to achieve short term profit.
       • Another example is that a company may press suppliers to reduce prices by threatening to move competitors. This would mean that there suppliers would be under paid for the stoke that they produced.