Commercial studies: notes class 10(icse)

Topic 1

Stakeholder in commercial organization

STAKEHOLDERS: stakeholder means all those groups which have a stake in a business firm.

DISTINCTION BETWEEN STAKEHOLDER AND SHAREHOLDER

Stakeholders is much wider term than shareholders. In a joint stock company persons who owns the
share of the company are known as shareholders. They contributes the company’s share capital and
assume the risk of loss. In addition to shareholders, customers, creditors, employees, government and
others also have a stake in a company. These are all known as stakeholders. Thus, shareholder and the
one out of several stakeholders.

DISTINCTION BETWEEN STAKEHOLDER AND SHAREHOLDER

stakeholders customers

Stakeholders like shareholders and employees Customers do not have a financial stake in a
have a financial stake in a business firm. business firm.

Stakeholders supply financial capital or human Customers do not supply any capital to the
capital. organization.

Stakeholders do not buy goods and services from Customer buy or services from the business
the business organization. organization.

Stakeholders take risk of the organization. Customers do not take risk of the organization.
DISTINCTION BETWEEN SHAREHOLDERS AND CUSTOMERS
SHAREHOLDERS
Shareholders are stakeholders as they have a
financial stake in a company.
Shareholders invest money in the company by
buying its shares.
Shareholders receive dividend from the
company.
DISTINCTION BETWEEN SHAREHOLDERS AND CREDITORS
Shareholders
They are internal stakeholders.
They invest in the capital of the company.
They assume greater risk of loss of capital.
They are the members of the company, having
voting rights.
CUSTOMERS
Customers are not stakeholders as they do not
have a financial stake in a company.
Customers do not invest money in the company.
Customers do not receive dividend from the
company.
Creditors
They are external stakeholders.
They only give a loan to the company.
They assume lesser risk of loss of loan.
They are not members of the company, they do
not having rights.
INTERNAL AND EXTERNAL STAKEHOLDERS

1. Internal stakeholders : stakeholders who are involved with in the organization are known as internal
stakeholders.
2. External stakeholders: stakeholders who are contributing to the business enterprise from outside
the organization are known as the external stakeholders.

DISTINCTION BETWEEN EXTERNAL AND INTERNAL STAKEHOLDERS

INTERNAL STAKEHOLDERS EXTERNAL STAKEHOLDERS

They operates from inside organization. They operate from inside the organisation.

They actively participate in the management and They do not participate actively in the
working of the organization. management and working of the organization.

They consist of employers ( owners and They consist of suppliers, customers,

managers ) and employees. competitors, government and general public.

EXPECTATION O OF STAKEHOLDERS

1. Safety of capital contributed by them.

2. a fair and regular and return( in the form of dividend or interest ) on their capital.
3. Return of loan in time in case of creditors.
4. Equal participation in policy decision.

EXPECTATION OF EMPLOYEES

1. Security of jobs and continuity

2. A fair remuneration in the form of wages and salaries.
3. Safe and comfortable working environment.
4. Protection of trade union rights.
5. Quick and fair redressal of grievances.
EPECTATION OF SUPPLIERS

1. Fair prices for the supplies.

2. Regular orders for supply.
3. Healthy and co-operative inter-business relationship.
4. Reasonable terms of delivery and payments.

EPECTATIONS OF ASSOCIATES OR COMPETITORS

1. Fair trade practices regarding price, quality, and services.

2. Respect for intellectual property rights.
3. An atmosphere of healthy competition and ethical behavior.

EPECTATIONS OF GOVERNMENT

1. To fallow the laws and regulations of the country

2. To corrupting public servants
3. To pay all taxes regularly and in time
4. To avoid monopoly and concentration of economic power.

EXPECTATION OF GENERAL PUBLIC

1. To protect the environment from all types of pollution

2. To donate funds for charitable and public welfare activities
3. To improves standard of living of people by promoting educational, medical and cultural
institutions
4. To preserve social and cultural values.

STAKEHOLDERS ANALYSIS: stakeholders analysis is process of the identifying the various stakeholders
groups who have a interest (stake) in the decisions and activities of the commercial organization

Steps involved in the stakeholders analysis:

1. Identifying the stakeholders: It is necessary to identify the internal and external stakeholders of
a commercial organization.
2. Mapping stakeholders relationship: a map is prepared to depict the diverse groups of
stakeholders. This map known as the stakeholders relationship map, illustrates the various types
of these groups with which a commercial organization interacts.
3. Understanding ‘stakeholders’ coalition: various groups of stakeholders may combine to provide
support to the enterprise but they may also combine to block the working of the enterprise
when their interests are not protected by the owners and managers.
4. Assessing stakeholders interest: the interest of every stakeholders groups have different.
Managers must assess the different interest of various shareholders.
5. Judging stakeholders power: different stakeholders groups have different type of power
shareholders (owners) have legal power to vote on major decisions of the company.
6. Deciding priorities of stakeholders: