Chapter 3 Identifying Stakeholders and Issues
3.1 The Stakeholder Concept and Business
In Canada, business operates in a pluralistic social system where a variety of
groups and institutions use power or influence to represent the interests of
particular groups of citizens.
Business is subject to the influence of other institutions in society and must
respond to the various participants in society.
3.2 Defining and Identifying Stakeholders
A stakeholder is an individual, or group, who can influence and/or is
influenced by the achievement of an organization’s purpose.
All stakeholders have expectations (reasonably priced goods, good quality
Individuals or groups who have invested in the form of equity, or shares.
Depending on the size of the organizations, the number of shareholders will
A shareholder in a large corporation will not have the same importance as in
a smaller corporation.
Directors are elected by shareholders to represent their interests.
The purpose of a board of directors is to determine the corporation’s
strategic direction, monitor and review the corporation’s performance, and
hire and fire top executives.
Small, unincorporated business enterprises do not have directors.
Those who work for the company
Employees are considered among the most obvious, and perhaps the most
Customers or Consumers
Can be members of the public, or other corporations.
Consumers are influencing the ethics of corporations.
Lenders and Creditors
Some lend for long term by purchasing bonds or debentures.
Some advance funds for short periods, as with trade creditors.
Lenders can be individuals or other corporations.
Stakeholders have an influence if the lender is not paid as agreed upon in the
contract, the corporations assets can often be seized. Suppliers
Suppliers are usually other corporations that provide raw materials,
component parts, or finished materials.
Depending on how many sources of this supply you can get, the supplier’s
importance will vary.
Sometimes, a corporation may own its supplier.
Individuals who are not employees of the corporation but provide services
on a fee-for-service basis.
Lawyers, accountants, engineers, and management consultants.
Their influence is in the form of advice they provide.
Dealers, Distributors, and Franchisees
Corporations use distributors to bring their products to customers; therefore
the corporation should see them as an important stakeholder.
Corporations join together to form hundreds of organizations to represent
The impact of these types of organizations varies, but by uniting to speak as
one they are bound to have more influence than by acting individually.
Competitors are those firms that sell the same products.
Competitors need to be watched and monitored closely.
Not only from domestic environment, but from foreign countries as well.
Joint-venture participants are partners cooperating in a particular enterprise
Typically have written agreements.
Such organizations operate on a non-profit basis with volunteers.
They are numerous, but their impact on the corporation varies.
Society at Large
This stakeholder represents the general public; that is, the views of society.
The views of this stakeholder can be difficult to determine, making it difficult
to ascertain the stakeholder’s influence.
Educational institutions educate not only the students, but also the general
Business relies on these institutions to provide it with educated and skilled
Religious leaders occasionally speak out on issues related to business.
Businesspersons are individually influenced by the values and beliefs upheld
by religious groups. Charities
Charitable organizations receive some of their funding from corporations,
and in return the business donors expect careful stewardship of the funding.
The media publicizes information about the corporation and can have a
substantial positive or negative impact