a. Critically discuss the FOUR stakeholders to a firm, excluding its owners.

Generally, a way of differentiating the different kinds of stakeholders is to

consider groups of people who have classifiable relationships with the firm. There are
two types of stakeholders which are primary stake holder and secondary stakeholders.
Friedman (2006) also states that there is a clear relationship between definitions of what
stakeholders and identification of who are the stakeholders. The main groups of
stakeholders excluding the owners are employees, customers, local communities,
suppliers and distributors, creditors, and also shareholders. Primary stakeholders known
as internal stakeholders are those that engage in economic transactions with the business
such as suppliers, creditors, shareholders and employees. However, secondary
stakeholders or external stakeholders are those who do not engage in direct economic
exchange with the business but they are affected by or can affect its actions. For
examples, customers, communities, activist groups, business support groups, and the
media.
The four stakeholders which will be critically discuss are customers, employees,
suppliers and also communities. While obligations to these stakeholders are sometimes
considered to be motivated by firm self-interest, the ethical perspective asserts the
rightness or wrongness of specific firm actions independently of any social or stakeholder
obligations. Customers are key stakeholders that help establish the firms reputation and
identification. Understanding customer needs and wants and providing customers with
high-quality products are the key to the firms success. A market orientation focuses on
an understanding of customers expressed and latent needs and development of superior
solutions to the needs. For example, Pizza Hut is considered a new menu that satisfied
and driven their customer needs and wants. They will approach selects to elevate the
interests of one stakeholder (the customer) those of others.

Employee participation in corporate governance systems can be found in many

countries and corporations throughout the world. They as one of stakeholder group can
strengthen the corporate governance. Employees have right to consultation that must be
consulted on certain management decisions. They also have right to nominate or vote for
supervisory board members. In many cases employee participation on the board is
mandated. This right creates a check the duties of board members to consider stakeholder
interests and balance system between management and the supervisory board.
Suppliers want a fair price for their products, but the buying firm will try to cut
their costs. Unfortunately for suppliers, the power in the market often rests with the
buyer. The big four supermarkets dominate the UKs farming industry, continually
forcing down the prices they pay to producers, reducing farm incomes. The situation is
often worse when suppliers are based in developing countries, with the original producer
receiving a tiny proportion of the products final sale value. Fair trade goods, such as
Green and Blacks chocolate, try to make the supplier and buyer relationship more
balanced by giving the supplier a fair price.
There is recognition that communities also affect and are affected by firm
operations. Engagement can benefit communities while building legitimacy and learning
for firms. Community stakeholders include neighborhoods, community development
groups, environmental organizations, development organizations, citizen associations and
non-governmental organizations (NGOs). Community stakeholders can helps the firm
better understands the communitys viewpoints and concerns. Projects can be designed to
take community concerns into account; communities also often have valuable local
knowledge, which can lead to better, even innovative, projects. When community
stakeholders feel they have been heard, conflict and controversy are reduced, and the

firms credibility is enhanced. Good community relations can make it easier to attract
workers, as employees want to work for a firm that is respected within the local
community. Good community relations also reduce lawsuits and other obstacles, avoiding
costly project delays. For example, the community was concerned that emissions
exceeding certain thresholds might be detrimental to human health. A citizens committee,
backed by the company, formed to address the situation. The committee met regularly
with the company chemist, had access to the companys laboratory results and consulted
with university scientists.
A stakeholder orientation that aligns the demands and needs of all stakeholders
and also ensuring the long term health and prosperity of the firm.