7115 · 1.5
Business objectives and stakeholder objectives — FAQ
Frequently asked questions for 7115 Business objectives and stakeholder objectives. Direct answers first, then deeper explanation — then practise with marking.
Are shareholders and stakeholders the same thing?
No. This is a common confusion. A shareholder is a type of stakeholder, specifically one who owns shares in the company. The term 'stakeholder' is much broader and includes anyone with an interest in the business, such as employees, customers, and suppliers, whether they own shares or not. All shareholders are stakeholders, but not all stakeholders are shareholders.
Does a business have to treat all stakeholders equally?
No, and it is often impossible to do so. Businesses must prioritise. Stakeholder mapping tools like Mendelow's Matrix help managers decide which groups require the most attention. Key players (high power, high interest) will usually be prioritised over those with little power or interest. The choice of which group to prioritise depends on the specific decision, the business's ethical stance, and its long-term strategy.
Is focusing on profit the best way to run a business?
While profit is a crucial objective, especially for shareholders (the 'shareholder concept'), a sole focus on short-term profit can damage relationships with other key stakeholders. This can harm long-term profitability. Many modern businesses adopt a 'stakeholder concept', which involves balancing the needs of all groups (employees, customers, etc.) to ensure sustainable success and a positive corporate reputation.