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cie AS levels Business Studies notes

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Flamed-Ghoust:
UNIT 1 - Business and its environment

Chapter 5 - Stakeholders in a Business

* The shareholder concept of business is that the firm has a duty to put the needs of shareholders first.
* A stakeholder is anyone who has an interest in the success of a business. This includes shareholders, customers, suppliers, local community and employees.
* Shareholders are likely to favour policies that reduce costs and therefore contribute to higher profits. Paying employees above the minimum wage will certainly increase costs in the
short-term and lead to greater cash outflows, thus making the liquidity position weaker. However, if employees are motivated by higher rates of pay, they may become more productive and show greater loyalty to the business. Thus, it is possible that there will be a reduction in the long-term costs of the business, which would benefit shareholders through boosting profit.
* An internal stakeholder is from within the business.
* Suppliers and employees may benefit from higher company profits, their primary concerns will be related to payment for supplies and wages. Shareholders have the greatest direct gain from high profits, as the profits of a business really belong to the shareholders.
* Corporate social responsibility is the view that businesses should take their responsibility to wider society seriously rather than focus solely on the shareholder/owner.
* Financial support for a charity is putting something back into society and thus links to social responsibility. Businesses benefit from this type of behavior as it helps improve their image and provides positive publicity.

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