Influnce of Shareholders

Q1) Define and discuss the role and importance of stakeholders in the company, and their ability to influence the performance of the organisation.

Stakeholders of a company are the individuals and groups who are affected by the firms's vision, mission. They are affected by the strategic outcomes and performance achieved. on the other hand, they also have enforceable claims on the firm's perforamance.

Stakeholders can influence a firm's profitability, competitiveness and survival. Firms are dependent on their stakeholders and should establish and manage the relationships with them.

There are three general groups of stakeholders and each can influence the firm's performance.

The capital market stakeholders include shareholders and major suppliers of capital, like banks. They provide provide financial capital to the firm, so that it can invest in the needed resource to run the firm and earn returns. Shareholders expect to have a share of the profit earned, through the distribution of dividends. If shareholders are not getting this, they can sell their shares, this will result in a drop of the market value of the firm. Also, the firm may find it harder to raise capital through the stock market in future. Lenders expects timely loan repayment. If firms has frequent late payments or defaults on loans, lenders can issue higher interest rate loan and even refuse loans to the firm in future. The firm may find it harder to secure financial capital in future.

The product market stakeholders includes primary customers, suppliers, host community. This relationshipd affect the operations and profitability of the company. Customers expect products with good performance characteristics, like high quality, durability. if the products do not meet their expectations, customers can choose not to buy the firms products, meaning no revenue for the firm. The suppliers expect to be treated fairly by the firm, with reasonable pricing and delivery schedule. If firms find...