Understanding Business Outcome 2 2016 17 Stakeholders What

Understanding Business Outcome 2 2016 -17

Stakeholders

What is a Stakeholder? Stakeholders are groups of individuals with an interest in and an influence on an organisation.

School Stakeholders Task 1. Identify the different stakeholders of Knox Academy 2. State whether they are Internal (inside the business) or External (outside the business)

Stakeholders Internal – within the business Janitors Supply Staff Head Teacher and SMT Teachers Catering Staff Admin Staff Pupils Technicians First Aiders Librarian Cleaning Staff School Board Music Tutors Careers Officer External – outwith the business Parents Bus Companies Local Police Fire Brigade Local Business Lollipop People Supplier PTA SQA Universities Now complete the interests column on the Knox Academy worksheet. Describe why they are interested in Knox Academy

Who are Stakeholders? alternative From the clip, note down the interests that different stakeholders have.

Task Complete the worksheet identifying stakeholders and their interests in the following organisations: Baxters NHS Aubigny Sports Centre We will now look at how stakeholders can influence the school. Describe how they influence the performance of Knox Academy.

Owners/Shareholders INTERESTS To receive a share of the profits made To see the business succeed and survive INFLUENCES Decide to buy/sell shares Opportunity to vote at AGM (Ltd/plc) Direct influence on decision-making (ST/PT)

Employees INTERESTS Job Security Improved Salaries INFLUENCES Level of Productivity Can take Industrial Action if unhappy eg strike

Management INTERESTS Improved Salaries and Bonuses Career Opportunities INFLUENCES Quality of decisions made

Banks INTERESTS Ability to pay back loans INFLUENCES Give/refuse Loan Application Setting Interest Rates

Customers INTERESTS Best prices (Value for Money) High quality Range of products Customer service INFLUENCES Whether to buy the product/service Repeat purchasing Word of mouth

Suppliers INTERESTS Ability to pay invoices Continuing custom INFLUENCES Set price of materials Quality of raw materials Set credit terms

Local Community INTERESTS Environment Jobs Effect on other Businesses Infrastructure INFLUENCES Ability to Persuade Businesses to carry out their wishes Positive/Negative Publicity

Pressure Groups INTERESTS Environment Jobs INFLUENCES Lobby Businesses – Positive/Negative Publicity

Local/National Government INTERESTS Attracting Jobs Collection of Taxes Improvement of Economy INFLUENCES New Legislation Levels of Taxation

Competing Aims of Stakeholders Different stakeholders can have competing aims eg: Senior Management may wish to maximise profit whereas customers want low prices. The Managing Director may wish to have an innovative atmosphere whereas employees are looking for job security (innovation might include the introduction of automation leading to job losses)

Extension Tasks GCSE Business: Asda Dividend GCSE Business: Re. Tyre GCSE Business: Powergen Times 100: Shell – Balancing Shareholder Needs

Factors Affecting Businesses

Business Challenges A business challenge is anything that prevents a business from fully achieving its aim(s). Examples of business challenges: Enrico’s fish and chip shop’s aim to maximise profit is challenged by an increase in the cost of fish and potatoes. The Roodland’s Hospital aim to provide the best possible patient care is challenged by there being a shortage of trained staff. Cancer Research UK’s aim to raise more money for charity is challenged by the difficulty of obtaining finance to open new premises.

Business Challenges In pairs list as many factors which you think would affect decisions that businesses might make today or prevent them from successfully achieving their aims. eg the recession. Feedback to the class and categorise your findings into 2 columns, Internal and External Factors.

Looking at Internal Factors first in more detail… Employees Management Finance Equipment Information

Internal Factors – Impact on the Business Employees: Quality of production – poor quality will lead to unhappy customers Skill/ability level – may not be able to do the jobs required Work rate – low productivity means increasing costs Resistance to change – may not want to complete new tasks Management: quality of decision making – may lead to poor choices for the company

Internal Factors Finance Is there capital available for changes to be implemented? Equipment Do they have the required technology to carry out their decisions? Faults/maintenance – this could slow production Information Can they access the information that they need and is it accurate in order to make an effective decision.

SWOT Analysis One measure which helps to monitor an organisation’s environment is a SWOT Analysis. This analyses the internal strengths and weaknesses of an organisation, and external opportunities and threats faced by the organisation. A strategy is then put in place. SWOT stands for strengths, weaknesses, opportunities, and threats.

SWOT Analysis The first part of the analysis – strengths and weaknesses – looks inward at the present achievements and problems of the organisation. Examples of possible strengths and weaknesses in a typical organisation: Strengths Weaknesses new products experienced staff finance available profitable good management declining products aging work force poor premises high absenteeism poor management

SWOT Analysis Strengths (Internal) Weaknesses (Internal) Opportunities (External) Threats (External) Analyse the strengths and weaknesses of Crazy Music Case Study using these headings.

Crazy Music Solutions… Strengths - knowledge of music Weaknesses - lack of business sense, no investment in new technology - cash registers, small premises, selection of classical stock which is not selling well, keeping track of stock levels.

External Factors Political Economic Social Technological Environmental Competition

External Factors PESTEC Political – eg New/changing legislation (eg Equality Act 2010, Minimum Wage Act) Businesses must ensure they abide by new laws that are introduced. This may increase costs. Economic – eg Changes to interest rates, exchange rates; stage of business cycle (eg recession) Changes to rates can mean business may have more to pay for loans/goods Recessions may reduce sales as customers aren’t spending as much money

External Factors PESTEC Social – eg Trends and fashions; changing demographics If your product goes out of fashion then you may lose customers Technological – eg Improving technology (eg Skype, CAD/CAM, e-commerce) This may give your business a competitive advantage

External Factors PESTEC Environmental – eg Impact on the environment (eg recycling), trading responsibly (eg Fair Trade); weather (floods) Environmentally minded customers are more likely to shop with you. Business can be affected by floods and have to close their premises. Competition – eg Innovative ideas from other companies Customers may go to your competitors

External Factors - Videos Legislation Contact Lenses (5 mins 26 seconds) How does the Economy affect business? (4 mins 44 seconds) An ever-changing world (3 mins 34 seconds)

SWOT Analysis Internal and External factors affecting a businesses success or failure can be analysed using a SWOT Diagram. Strengths (Internal) Weaknesses (Internal) Opportunities (External) Threats (External) Analyse the opportunities and threats facing Crazy Music Case Study using these headings.

Crazy Music Solutions… Strengths - knowledge of music Weaknesses - lack of business sense, no investment in new technology - cash registers, small premises, selection of classical stock which is not selling well, keeping track of stock levels. Opportunities - strong advertising using various media, eg newspapers, TV, change suppliers, invest in EPOS, remodernise or move to new premises, business course. Threats - 'Trendy Music', suppliers increasing prices, changing customer tastes.

CASE STUDY Class Challenge: Vue Cinemas are facing an ever increasing pace of change that could affect their profitability. In pairs, discuss the challenges that they may be facing (5 minutes)

CASE STUDY EXAMPLE SOLUTIONS Class Challenge: Vue Cinemas Loss in popularity of cinema - S Cheap cost of DVDs to buy/rent – competition - X Streaming services eg Love. Film - T Sky/Cable TV - T Changing lifestyles - S Trying to please everyone Pirate DVDs Government legislation - P To survive Technological changes Location costs in city centres. GEN 2006 Q 5 e

Summary Task: Political, Economic and Social After reading the information provided, answer Task 1 and Task 2… Task 1 – Interest Rates Task 2 – Legislation How could technological factors affect Hislop’s Coach Tours? L&L Business Level 4 – p 44/45