Impact Of Stakeholders On Business

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Stakeholders and their impact on business.
This essay is going to look at the value of stakeholders. How they can affect different business' in different ways and the importance of listening to them. Focusing on Primark; Nestle and McDonald’s, and the brand damaging reports about them in the media. Why the companies have a commitment to their stakeholders and the consequences of ignoring them.
One of the most important things to consider when running a business is your company's reputation. This can severely be affected by stakeholders, a stakeholder could be anyone with even a slight interest in what your company does or what it's beliefs are. “A stakeholder is an individual or group, inside or outside the organisation, who has a meaningful stake in its performance” (Naylor, J. 1999) They come in all shapes and sizes, some being pressure groups that have been set up to protect the environment and others to protect the rights of the employees. Some company's choose to follow ethical procedures and some do not, usually with consequences. The decisions your business makes and the path it decides to go down can be seriously affected by the stakeholders. They can in essence close your whole business down, no matter of the size. They can change the general public's behaviour, they can increase costs, ruin the firms reputation and in some cases even change the law.
A lot of company's only look after the stakeholders that they feel are important. This can sometimes be a big mistake. When looking at the shareholders and the owners goals, money is key, whereas the employees and the customers may have a completely different view. These different thoughts about how a company should be run can a lot of the time clash. In the book Business studies (Marcouse, Gillespie, Martin, Surridge, Wall. 1999 pg489) It states that “The managers should take into account their responsibilities to other groups, not just to the owners, when making decisions.” The managers need to asses their situation thoroughly before starting the business, to ensure that any people who are affected by their company have no reason to complain about their ethics. Worthington and Britton (2006, pg220) talk about corporate social responsibility and how “companies should be held accountable for any of its actions that affect people, their communities and their environment.”
In February 2008 the clothing retail company Primark came under fire by the BBC show Panorama. The show made allegations that the overseas manufacturer was exploiting children in their efforts to produce affordable clothing. Primark took immediate action against the claims, cutting all ties with the accused suppliers and counteracting the BBC’s investigation with one of their own. Although Primark acted as fast as they could, sacking the accused suppliers in India and denying any knowledge of under-age workers to the media, the reports were still brand damaging. Primark like any other business has a commitment to their stakeholders, this exposure by the media put the spotlight on them and they were subjected to bad press for some time. As a household brand they are known to produce affordable fashion, but this counted against them as everyone made a connection with cheap clothing and cheap labour. The company has now set up a link on their website called ‘Ethical Trading’ (www.primark-ethicaltrading.co.uk/, 16/10/12) which shows all their support to workers in other countries, they have also set up videos and reports about the case, claiming that the BBC report was doctored and they are in fact an innocent party. They have also set up ethical trade action plans which they hope will prevent any further attacks from the media and essentially reduce the amount of illegal and under-age workers in the future. Stakeholders are important to Primark, without them they wouldn’t be the successful company that they are today. There would be no interest by customers and like any retail business; it is the
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