STAKEHOLDERS AND THEIR INTERESTS

Examples of a company's stakeholders[edit source]

Stakeholders: Stakeholder's concerns:
[2]

Government

taxation, VAT, legislation, employment, truthful reporting, diversity, legalities, externalities.

Employees

rates of pay, job security, compensation, respect, truthful communication.

Customers

value, quality, customer care, ethical products.

Suppliers

providers of products and services used in the end product for the customer, equitable business opportunities.

Creditors

credit score, new contracts, liquidity.

Community

jobs, involvement, environmental protection, shares, truthful communication.

Trade Unions quality, worker protection, jobs.

Owner(s)

profitability, longevity, market share, market standing, succession planning, raising capital, growth, social goals.

Investors

return on investment, income.

http://en.wikipedia.org/wiki/Stakeholder_(corporate)

Stakeholders are those who may be affected by or have an effect on an effort. They may also include people who have a strong interest in the effort for academic, philosophical, or political reasons, even though they and their families, friends, and associates are not directly affected by it. One way to characterize stakeholders is by their relationship to the effort in question. Primary stakeholders are the people or groups that stand to be directly affected, either positively or negatively, by an effort or the actions of an agency, institution, or organization. In some cases, there are primary stakeholders on both sides of the equation: a regulation that benefits one group may have a negative effect on another. A rent control policy, for example, benefits tenants, but may hurt landlords. Secondary stakeholders are people or groups that are indirectly affected, either positively or negatively, by an effort or the actions of an agency, institution, or organization. A program to reduce domestic violence, for instance, could have a positive effect on emergency room personnel by reducing the number of cases they see. It might require more training for police to help them handle domestic violence calls in a different way. Both of these groups would be secondary stakeholders. Key stakeholders, who might belong to either or neither of the first two groups, are those who can have a positive or negative effect on an effort, or who are important within or to an organization, agency, or institution engaged in an effort. The director of an organization might be an obvious key stakeholder, but so might the line staff those who work directly with participants who carry out the work of the effort. If they dont believe in what theyre doing or dont do it well, it might as well not have begun. Other examples of key stakeholders might be funders, elected or appointed government officials, heads of businesses, or clergy and other community figures who wield a significant amount of influence. While an interest in an effort or organization could be just that intellectually, academically, philosophically, or politically motivated attention stakeholders are generally said to have an interest in an effort or organization based on whether they can affect or be affected by it. The more they stand to benefit or lose by it, the stronger their interest is likely to be. The more heavily involved they are in the effort or organization, the stronger their interest as well. Stakeholders interests can be many and varied. A few of the more common: Economics. An employment training program might improve economic prospects for low-income people, for example. Zoning regulations may also have economic consequences for various groups. Social change. An effort to improve racial harmony could alter the social climate for members of both the racial or ethnic minority and the majority. Work. Involving workers in decision-making can enhance work life and make people more satisfied with their jobs. Time. Flexible work hours, relief programs for caregivers, parental leave, and other efforts that provide people with time for leisure or taking care of the business of life can relieve stress and increase productivity. Environment. Protection of open space, conservation of resources, attention to climate change, and other environmental efforts can add to everyday life. These can also be seen as harmful to business and private ownership. Physical health. Free or sliding-scale medical facilities and other similar programs provide a clear benefit for low-income people and can improve community health. Safety and security. Neighborhood watch or patrol programs, better policing in high-crime neighborhoods, work safety initiatives all of these and many other efforts can improve safety for specific populations or for the community as a whole. Mental health. Community mental health centers and adult day care can be extremely important not only to people with mental health issues, but also to their families and to the community as a whole.

As well discuss in more depth further on, both the nature and the intensity of stakeholder interests are important to understand.

Why identify and analyze stakeholders and their interests?

The most important reason for identifying and understanding stakeholders is that it allows you to recruit them as part of the effort. The Community Tool Box believes that, in most cases, a participatory effort that involves representation of as many stakeholders as possible has a number of important advantages: 1. It puts more ideas on the table than would be the case if the development and implementation of the effort were confined to a single organization or to a small group of like-minded people. 2. It includes varied perspectives from all sectors and elements of the community affected , thus giving a clearer picture of the community context and potential pitfalls and assets. 3. It gains buy-in and support for the effort from all stakeholders by making them an integral part of its development, planning, implementation, and evaluation. It becomes their effort, and theyll do their best to make it work. 4. Its fair to everyone. All stakeholders can have a say in the development of an effort that may seriously affect them. 5. It saves you from being blindsided by concerns you didnt know about. If everyone has a seat at the table, concerns can be aired and resolved before they become stumbling blocks. Even if they cant be resolved, they wont come as surprises that derail the effort just when you thought everything was going well. 6. It strengthens your position if theres opposition. Having all stakeholders on board makes a huge difference in terms of political and moral clout. 7. It creates bridging social capital for the community. Social capital is the web of acquaintances, friendships, family ties, favors, obligations, and other social currency that can be used to cement relationships and strengthen community. Bridging social capital, which creates connections among diverse groups that might not otherwise interact, is perhaps the most valuable kind. It makes possible a community without barriers of class or economics, where people from all walks of life can know and value one another. A participatory process, often including everyone from welfare recipients to bank officers and physicians, can help to create just this sort of situation. 8. It increases the credibility of your organization. Involving and attending to the concerns of all stakeholders establishes your organization as fair, ethical, and transparent, and makes it more likely that others will work with you in other circumstances. 9. It increases the chances for the success of your effort. For all of the above reasons, identifying stakeholders and responding to their concerns makes it far more likely that your effort will have both the community support it needs and the appropriate focus to be effective.

Who are potential stakeholders?

As we discussed, there are primary and secondary stakeholders, as well as key stakeholders who may or may not fall into one of the other two categories. Lets examine possible stakeholders using that framework.

Primary stakeholders
1. Beneficiaries or targets of the effort. Beneficiaries are those who stand to gain something services, skills, money, goods, social connection, etc. as a direct result of the effort. Targets are those who may or may not stand to gain personally, or whose actions represent a benefit to a particular (usually disadvantaged) population or to the community as a whole. Some examples are:

A particular population a racial or ethnic group, a socio-economic group, residents of a housing project, etc. Residents of a particular geographic area a neighborhood, a town, a rural area. People experiencing or at risk for a particular problem or condition homelessness, lack of basic skills, unemployment, diabetes. People involved or participants in a particular organization or institution students at a school, youth involved in the justice system, welfare recipients. People whose behavior the effort aims to change delinquent youth, smokers, people who engage in unsafe sex, people who dont exercise. Policy makers and agencies that are the targets of advocacy efforts.

Secondary Stakeholders
2. Those directly involved with or responsible for beneficiaries or targets of the effort. These might include individuals and organizations that live with, are close to, or care for the people in question, and those that offer services directly to them. Among these you might find: Parents, spouses, siblings, children, other family members, significant others, friends. Schools and their employees teachers, counselors, aides, etc. Doctors and other medical professionals, particularly primary care providers. Social workers and psychotherapists. Health and human service organizations and their line staff youth workers, welfare case workers, etc. Community volunteers in various capacities, from drivers to volunteer instructors in training programs to those who staff food pantries and soup kitchens. 3. Those whose jobs or lives might be affected by the process or results of the effort. Some of these individuals and groups overlap with those in the previous category. Police and other law or regulation enforcement agencies. New approaches to violence prevention, dealing with drug abuse or domestic violence, or other similar changes may require training and the practice of new skills on the part of members of these agencies. Emergency room personnel, teachers, and others who are legally bound to report possible child abuse and neglect or other similar situations. Landlords. Landlords legal rights and responsibilities may be altered by laws brought about by campaigns to stop discrimination in housing or to strengthen tenants rights. Contractors and developers. Open-space laws, zoning regulations, and other requirements, as well as incentives, may affect how, where, and what contractors and developers choose to build. Employers. A workplace safety initiative or strengthened workplace safety regulations, health insurance requirements, and other mandates may affect employers costs. Those that hire and make a commitment to workers from at-risk populations may also have to institute worker assistance programs (personal and drug/alcohol counseling, for example, as well as basic skills and other training). Ordinary community members whose lives, jobs, or routines might be affected by an effort or policy change, such as the location of a homeless shelter in the neighborhood or changes in zoning regulations.

Key stakeholders
4. Government officials and policy makers. These are the people who can devise, pass, and enforce laws and regulations that may either fulfill the goals of your effort or directly cancel them out. Legislators. Federal and state or provincial representatives, senators, members of parliament, etc. who introduce and pass laws and generally control public budgets at the federal and state or provincial levels. Governors, mayors, city/town councilors, selectmen, etc. The executives that carry out laws, administer budgets, and generally run the show can contribute greatly to the success or failure of an effort. Local board members. Boards of health, planning, zoning, etc., through their power to issue permits and regulations, can be crucial allies and dangerous opponents. State/federal agencies. Government agencies often devise and issue regulations and reporting requirements, and can sometimes make or break an effort by how they choose to regulate and how vigorously they enforce their regulations. Policy makers. These people or groups often have no official power they may be advisers to those with real power but their opinions and ideas are often followed closely. If theyre on your side, thats a big plus. 5. Those who can influence others. The media. People in positions that convey influence. Clergy members, doctors, CEOs, and college presidents are all examples of people in this group. Community leaders people that others listen to. These might be people who are respected because of their position of leadership in a particular population, or may be longtime or lifelong residents who have earned the communitys trust over years of integrity and community service. 6. Those with an interest in the outcome of an effort. Some individuals and groups may not be affected by or involved in an effort, but may nonetheless care enough about it that they are willing to work to influence its outcome. Many of them may have a following or a natural constituency business people, for instance and may therefore have a fair amount of clout. Business. The business community usually will recognize its interest in any effort that will provide it with more and better workers, or make it easier and more likely to make a profit. By the same token, it is likely to oppose efforts that it sees as costing it money or imposing regulations on it. Advocates. Advocates may be active on either or both sides of the issue youre concerned with. Community activists. Organizations and individuals who have a philosophical or political interest in the issue or population that an effort involves may organize to support the effort or to defeat it. People with academic or research interests related to a targeted issue or population. Their work may have convinced them of the need for an intervention or initiative, or they may simply be sympathetic to the goals of the effort and understand them better than most. Funders. Funders and potential funders are obvious key stakeholders, in that, in many cases, without their support, the effort wont be possible. Community at large. When widespread community support is needed, the community as a whole may be the key stakeholder.

http://ctb.ku.edu/en/tablecontents/chapter7_section8_main.aspx

Lets start with a definition of stakeholders, which are: Groups / individuals that are affected by and/or have an interest in the operations and objectives of the business Most businesses have a variety of stakeholder groups which can be broadly categorised as follows:

Stakeholder groups vary both in terms of their interest in the business activities and also their power to influence business decisions. Here is a useful summary:

Stakeholder Shareholders

Main Interests Profit growth, Share price growth, dividends

Power and influence Election of directors

Banks & other Lenders Directors and managers Employees

Interest and principal to be repaid, maintain credit rating Salary ,share options, job satisfaction, status Salaries & wages, job security, job satisfaction & motivation

Can enforce loan covenants Can withdraw banking facilities Make decisions, have detailed information Staff turnover, industrial action, service quality Pricing, quality, product availability

Suppliers

Long term contracts, prompt payment, growth of purchasing

Customers

Reliable quality, value for money,

Revenue / repeat business

product availability, customer service Community Environment, local jobs, local impact Government Operate legally, tax receipts, jobs

Word of mouth recommendation

Indirect via local planning and opinion leaders Regulation, subsidies, taxation, planning

Stakeholder power is an important factor to consider whenever you are asked to write about the relationship between a business and its stakeholders. In the context of strategy, what is important is thepower and influence that a stakeholder has over the business objectives. For stakeholders to have power and influence, their desire to exert influence must be combined with their ability to exert influence on the business. The power a stakeholder can exert will reflect the extent to which:

The stakeholder can disrupt the business plans The stakeholder causes uncertainty in the plans The business needs and relies on the stakeholder

The reality is that stakeholders do not have equality in terms of their power and influence. For example:

Senior managers have more influence than environmental activists A venture capitalist with 40% of the companys share capital will have a greater influence that a small shareholder Banks have a considerable impact on firms facing cash flow problems but can be ignored by a cash rich firm A customer that provides 50% of a business revenues exerts significantly more influence than several smaller customer accounts Businesses that operate from many locations across the country will be less relevant to the local community than a business which is the dominant employer in a town or village Governments exercise relatively little influence on many well-established and competitive business-to-business markets. However their power is much stronger over businesses in markets which are regulated (e.g. water, gas & electricity) or where the public sector has a direct stake (e.g. retail banking) Employees have traditionally sought to increase their power as stakeholders by grouping together in trade unions and exercising that power through industrial action. However, in the last two decades the level of union membership has declined significantly as has the total time lost to industrial action

Importance And Advantages Of Ratio Analysis

Ratio analysis is an important tool for analyzing the company's financial performance. The following are the important advantages of the accounting ratios. 1. Analyzing Financial Statements Ratio analysis is an important technique of financial statement analysis. Accounting ratios are useful for understanding the financial position of the company. Different users such as investors, management. bankers and creditors use the ratio to analyze the financial situation of the company for their decision making purpose. 2. Judging Efficiency Accounting ratios are important for judging the company's efficiency in terms of its operations and management. They help judge how well the company has been able to utilize its assets and earn profits. 3. Locating Weakness Accounting ratios can also be used in locating weakness of the company's operations even though its overall performance may be quite good. Management can then pay attention to the weakness and take remedial measures to overcome them. 4. Formulating Plans Although accounting ratios are used to analyze the company's past financial performance, they can also be used to establish future trends of its financial performance. As a result, they help formulate the company's future plans. 5. Comparing Performance It is essential for a company to know how well it is performing over the years and as compared to the other firms of the similar nature. Besides, it is also important to know how well its different divisions are performing among themselves in different years. Ratio analysisfacilitates such comparison.

Advantages: Simplifies financial statements : R a t i o A n a l y s i s s i m p l i f i e s t h e comprehension of financial statements. Ratios tell the story of changesin financial condition of the business. Facilitates inter firm comparison: Ratio analysis provides data for i n t e r c o m p a n y c o m p a r i s o n . R a t i o h i g h l i g h t s t h e a s s o c i a t i o n w i t h successf

ul and unsuccessful firms. They also reveal strong and weak companies, overvalued and undervalued companys. Makes intra firm comparison possible: Ratio analysis also makes possible comparison of the performance of different division of thecompany. The ratio helpful in deciding about their efficiency. Helps in planning: Ratio Analysis helps in planning and forecastingo v e r p e r i o d o f t i m e a c o m p a n y d e v e l o p s c e r t a i n n o r m s t h a t m a y i ndicates future success/ failure. If relationship changes in firms dataover different time periods. The ratio may provide clues on trends andfuture problems. 9

A Study on Financial Performance based on Ratios At HDFC Bank Liquidity position: With the help of ratio analysis conclusions can bed r a w n r e g a r d i n g l i q u i d i t y p o s i t i o n o f t h e c o m p a n y . T h e l i q u i d i t y position of a company could be satisfactory if it is able to meet itscurrent obligations when they become due. Long term solvency: Ratio analysis equally useful for assessing thel o n g t e r m f i n a n c i a l v i a b i l i t y o f a f i r m . T h e l o n g - t e r m s o l v e n c y i s measured by the leverage / capital structure and profitability ratios which focus on earning power and operating effieciency