How Do Stakeholders Influence Business Activities?

The influence of stakeholders has increased how companies operate as community citizenship and social responsibility are more and more integrated into business management. Customers, employees, communities and business partners are among key stakeholder groups that carry weight in company decisions and activities. Understanding the positive and negative effects of stakeholders on company operations is especially important for small businesses.

Government and Society

Legal compliance and risk-management efforts are two ways business stakeholders affect your business. Municipal, county, state and federal entities are different types of stakeholders in a business than customers, employees and suppliers, because they can shut you down.

In terms of working with society in general, corporate social responsibility helps companies balance social and business responsibilities with profits. CSR has been for many years, at the very least in the form of PR efforts, such as working with local charities. More and more companies are choosing to play a more active role in environmental preservation and social responsibility. They do this by looking for ways to “go green” and reduce their impact on the environment and then promote this via their social media channels, advertising and other means.

Customer Relationship Management

Satisfying customers and building long-term relationships are key to building a long-term, successful business. For example, if long-term customers are late with their payments because they are struggling, you might eliminate interest charges and late fees and let them work out a payment plan. This will change your cash flow projections, but might help you keep an important customer.

Many organizations use customer relationship management, a data-driven business marketing process whereby companies collect data on customers for more targeted and efficient marketing and sales efforts.

Attracting and Retaining Employees

Businesses must also make employee recruitment and retention a focus of their business operations. Treating employees as valued assets, promoting a nondiscriminatory work environment and actively involving employees in important decisions are examples of how these stakeholder influence a business, according to job and career website Indeed.com. You’ll reduce your profits by increasing workplace safety, wages and benefits, but will keep your workers happy and your business stronger.

Vendors and Suppliers

The people who supply you with the materials and services you need to operate require that you also consider their needs when running your business, recommends the Harvard Business Review. The more heads up you can give suppliers about changes to your business, the more they can plan their budgets and delivery schedules. Smaller partners like a one-person graphic design business or an IT services provider with a handful of employees need to be paid on time.

Investors and Partners

When people lend your money or buy into your business, you must balance your desire to spend your profits to improve your business with your obligation to share these profits with your investors. If your investor gives you all of his or her money upfront, he or she may have less say in your operations and act as a silent partner. If your investor gives you money over time, he or she may make more demands, not only for profit-sharing, but as to how you operate the company.