Stakeholder vs Shareholder Concept - A Level Business

Defining Stakeholders and Shareholders00:00:00

A stakeholder is anyone with an interest in the business, internal (like employees) or external (like suppliers). A shareholder owns a share of the company, seeking dividends or capital appreciation.

Traditional Shareholder Approach00:00:36

In the 70s and 80s, the traditional approach focused solely on maximizing shareholder value through dividends and capital appreciation, with managers serving only shareholders.

Modern Stakeholder Approach and Externalities00:01:07

The modern approach emphasizes that managers must consider all stakeholders. The pursuit of profit can lead to negative externalities, affecting third parties like the community (noise/air pollution), ethics (exploitation of suppliers), or employees (unfair wages, lack of training).

Modern Managerial Responsibility00:02:12

Modern managers consider all stakeholders in their decision-making to achieve mutually beneficial long-term results, moving beyond just keeping shareholders happy.

Corporate Social Responsibility (CSR) Approaches00:02:36

CSR approaches range from doing the bare minimum requirements to prioritizing long-term stakeholders, to making stakeholder satisfaction a corporate objective or even part of the mission statement, potentially ahead of profit. These concepts should be considered alongside Carroll's CSR pyramid.