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Internal and External Stakeholders Essay

Explain the roles of both internal and external stakeholders in the selected business and show how their objectives and expectations have changed over time.

What is a Stakeholder?

A stakeholder is someone who is interested in a company or business, e.g. Tesco; they can either be an internal or external customer to the business. They may also be affected in a situation that happens to the company because they them selves may of given and invested money into the company or may just be interested in it and use it quite often. They can either have direct or indirect control of the business, internal usually being direct while external being indirect control of the business. Key stakeholders are those who draw in resources such as money and supplies to the business; these are the customers, employees, the government, suppliers and the community.

Although stakeholders are people that judge they to be stakeholders e.g. customers who are interested in the business classify themselves as stakeholders, different types of people and relations would have different types of values and considerations. Internal customers may have different considerations than external customers also. For example, a customer who is an external customer is entitled to customer services and good quality goods, while an employee who is and internal customer may have considerations such as their job security and good pay and promotions being available within the company.

Owners and Shareholders Internal

Both owners and shareholders are internal stakeholders to Tesco. As they are important to the company they may be given considerations and values than other people would not be given such as the dividends and profits.

Dividends is a disruption of Tesco’s profits. This is usually decided by the board of directors on how much they should be given or perhaps the law on how much they are entitled to. If an issue were to occur in the company, such as the company failing maybe because the companies they supply to now longer do not wish to purchase from them, the company may give dividends to share holders to ‘keep them happy’ and for them not to do anything that could also effect the company. For example, John Smith, a shareholder or an owner to the company owns 100 shares. Tesco announces that they will be giving people a 10 percent dividend at the end of the third quarter, meaning that John Smith will will be satisfied to know that he will receive an extra 10 shares on top of his others.

Over time, owners and Share Holders demand more and less of what they can receive as stake holders of Tesco. As times are now getting more difficult, the shareholders of the company may receive more dividends to keep them interested in the company while owners may demand more profits given to them and a larger share of the revenue Tesco receive at the end of each year.

Managers – Internal

Managers are also stakeholders in companies as well; these are internal stakeholders that focus on good staff, good pay, the reputation of Tesco and the meeting targets that the company has.

Managers are interested in staff that work for the supermarket in any department or job type they have. Managers would be interested in the work that their employees offer to Tesco so they may monitor and evaluate the work produced by each staff member. If they feel that some members of staff should have better customer service skills, they would talk to customer services and make the necessary arraignments for them to be trained on this. Managers would also hire and fire employees.

Managers are not only in charge on employee management but also on the pay they are given. Managers of companies often look and evaluate the wages that employees are being given by the company. If they feel that it is to low or to high for the employee then they, with other managers etc, have the right to change the wages given. It is important to make sure that all employees are being paid fairly and properly, otherwise some lower paid staff members may question their pay roll being given to them by Tesco.

As well as the other all management of the staff and the pay they are being given, they will also focus and concentrate on the reputation of Tesco. If the company has a bad reputation then customers and other companies may not shop and buy products from them. For instance, if another company offered to buy ten thousand units of baked beans and they were not successfully delivered, this would create a bad reputation for the company. The managers would not only have to make sure that these situations are not to occur but how to handle them if they were to occur. They may offer discounts to improve their reputation to other customers and companies, they may also offer dividends to share holder. People will not want to buy shares and feel they would want to pull out if the reputation of the company was not good.

Managers would also want to make sure that Tesco reaches the targets set for it each year. For example, if a meeting were held and the conclusion of it was to open three new shops in London; the manager would have to make sure that the target is going and on the ‘right track’ to be met. If the aim was targeted to finish in three years, then the manger may examine and survey that a new shop would open in London every year for the next year.

Managers may be given more responsibility of the supermarkets they run because of the ‘redundancies’ now days. As companies were and maybe still are facing the heat of the recession, they may want to cut staff employment because they cannot afford them or due to the fact that they do not want their take-ins to be slashed. They therefore may give managers more to do because other managers have been laid off. This may mean that they have to manage and evaluate more staff, team leaders, evaluate more peoples wages and assess them to the Tesco Headquarters. They may have less help insuring that the reputation of Tesco is kept in tact. They also may have to attend more meetings and evaluate more targets that the supermarket has to complete.

Employees – Internal

Employees are internal to Tesco. They are mostly interested in the features such as their job security, good pay, the environment they work in, their pension and perks (holidays) and promotions available.

Job security to employees is very important, is is basically their assurance that they have and can keep their currant job. With the days we live in today when people are struggling to get jobs, people who do or already have jobs want to know that they can keep their job and not live in the fear that they could be made redundant. Employees with a high level of job security can be guaranteed by the company they work for that they will not be made redundant. Companies that cannot and do not offer a high level of job security may find it difficult to interest people in working for them; however, this may not bother people when struggling to get jobs, they would take any job offered to them but their loyalty to the company and the work given to the company may be low.

So job security not only looks at how likely the employee can stay with their job but how hard they will work for the company. Job security is often affected by the economic expansion or recession. Generally, the more the company needs an employee, they may have certain skills for the company that are hard to come by, the higher the job security for the employee would be. Some employees can increase their job security by negotiating contracts with their bosses of Tesco; this may be the supermarkets manager.

Payment and the wages that the employees receive are also as important as the job security they receive, and also the holidays they receive. Firstly, Tesco must decide how they will pay the employee, either paying them by the hour they work or by a salary. A worker who is paid a salary for their payment have different sets of rights and conditions than those who are payed by the hour. This would regard breaks, time off and the amount of time worked for the amount of pay they receive. Salary workers are considered to be exempt, meaning that the hourly laws and wages do not apply to them. If a worker who worked at a supermarket was given an hourly wage of eight pounds an hour, every hour they worked they would receive eight pounds. So if they worked for five hours on a Saturday, they would receive forty pounds.

As the worker is on an hourly wage, of they missed a day off work because they were sick, they would not be paid because they did not complete any hours on that day to be paid for. On the other hand, if a salaried worker was paid eight hundred pounds every month by the company and he missed a few days off work because he was sick, since he is on a salary the amount of time missed would not be taken off his wages. However, the company may ask the employee to work overtime to repay the time missed. The company may give boundaries to the salary paid employee of when they can have holidays, christmas and easter holidays, and when their breaks are during the day; two hour lunch breaks and half an hour morning breaks for example. An hourly paid employee would take time out of their own working hours to have breaks, so the company would not pay them for their breaks and time off.

The environment workers work in can alter the amount of effort, time and over all loyalty they give to the company. Research has shown that money is not just one aspect of the employee motivation and over all loyalty to the company. Emotional and physical comfort in the workplace play large roles in the work employees do for the company. Now days, it is seen as the environment given to the workers will alter and change the employees productivity. Some companies are creating work places that motivate the workers to increase and maximise the work able to be given. The google offices for example have been entirely refurbished to keep the workers happy and motivated through out the day.

Employees who work for a company and are given poor environments to work in will not be happy and over all affect the work they produce. This could mean the difference between the amount of money the company makes at the end of the year. Since Tesco is a huge and powerful company that has supermarkets all over the world, it would be unlikely that the employees work in a bad working environment. Workers such as people who work at the check outs share the same environment with the customers also.

“A 2001 study published in “Fortune” magazine found that companies included in “100 Best Places to Work For” had 50 percent less employee turnover than their competitors. According to Levering, lower turnover and the ability of these environments to attract high-quality employees has a direct and positive influence on the companies’ productivity.”

Read more: Importance of the Work Environment on Employee Production | eHow.com http://www.ehow.com/info_8196762_importance-work-environment-employee-production.html#ixzz1i7DNevaD

In general, a pension is an arrangement to provide people with an income when they are no longer receiving wages and payment from employment. Saving for retirement is a priority to all employees that have salaries. The number of options for retirement saving makes the process complicated, but employee pensions and saving plans that the company offers are among the most useful things they can offer their employees. If a company decides that to cut outgoing costs and they cut down the pension the employees receive, workers could become very angry by this. Employees may start to strike and leave the company if they are not given a satisfactory pension plan, they may start to lack in the amount of work put in to the company, meaning future consequences for every one.

When employees start work for Tesco, they want to be able to and to know in the future that they can increase their pay without finding a different job with a different company; so employees want promotions available to the companies they work for. Some companies offer a promotion policy, this simply signifies to their employees that the understand and reward excellent performance. This not only gives the companies employees something to work for, but motivates them in performing in their currant job to be promoted to a higher position. This would offer the employees more authority and more a higher payment to their salary. They may also receive a higher pension fund depending on the companies policies. As Tesco have many departments in their supermarkets, there may be many roles and opportunities for promotion.

As their bosses of Tesco are put under more and more pressure to increase and to keep their take-ins in tact, employees and workers may loose their jobs and have to keep up to certain measurements to maintain their job security at a high level. Their pay may be slashed and the environment quality may be budgeted too. Their pensions and perks may also decrease with the chances of promotion slimming as well.

Customers – External

Customers are external stakeholders to the company. They keep the company Tesco going buy buying products from them. However, Tesco have to give the customers features back in return to keep them shopping with the company and to make the customers loyal. In order to keep customers loyal and stakeholders to the company, they must give the customers; satisfactory customer services, quality products, connivance and good prices.

When customers shop with large companies such as Tesco they demand good customer service in return. Customer service is vital when attracting more customers into the supermarkets doors. Customer service can prove to be a vital role in how a customer thinks and feels about the company. The staff who work at customer services try and meet the needs and satisfactions for the customers as best as possible. This could be with helping customers who have difficulties carrying their shopping to showing people where specific items are in the store.

Customer services also deal with factors such as giving their customers the best discounts and out beating their other competitors with the prices they offer. They also manage, along with the help of manager, the reputation of the company. In order to keep their reputation in tact they have to keep their customers happy whatever it takes to fight their other competitors. It is well known through supermarkets that a customer wont really appreciate good service but will remember bad service and spread this among their friends, creating a bad reputation about the company, whatever the situation.

Customers want good quality products when they purchase things from Tesco. It is then the companies turn to provide this to the customers. For example, customers will be dissatisfied of they find they have bought broken and damaged goods. Since customers keep Tesco’s going, it is important that they don’t buy any broken goods or it could ruin the reputation of the company. Customers will also not shop with the company if they find that they are continuously buying broken and manhandled goods. In these hard times it is important for customers to want to get the most out of the things they pay for being that the products they buy are quality goods.

These days where people are becoming more and more busier, people will pay the extra cost to buy items quickly and conveniently, so companies such as Tesco understand that these convenient shops they place can be potential ‘gold mines’. Customers also ask for the convenience of Tesco as a company. The key to successfully opening a convenience store is the location from which it is places. This could be a Tesco Express on a motorway of on a corner of a street in London around offices and houses.

It is important for companies to determine their location well. There would simply be too much competition if Tesco were to open a small Tesco Express next to a Sainsbury’s supermarket or even a shopping center. The bigger the store the more the store will have to offer to the customer, and the customers know this. Tesco understand that if there are no nearby shops available and workers only have a limited amount of time for their lunch break, they will pay the extra to shop at a Tesco Express.

Customers who shop with large chains of supermarkets such as Tesco, also expect good prices for the products they buy. As time moves on people are finding that they want to get the best for the least amount of money. Companies are now competing against each other to show to their customers or potential customers that they offer the best prices available. As customers are external stakeholders to the company, they will leave Tesco if they see that another supermarket can offer the same goods but at cheaper prices.

Over the past few years customers must ‘squeeze every penny they have’, especially of they are short on cash. So companies must continually show and prove to the customers that they have the best prices, services and quality products; they may do this by advertising on television. radio and newspapers.

Suppliers – External

Suppliers are external stakeholders to a company, in this case, Tesco. They often prompt payment of products, can give Tesco what they ask for product wise, for example large or regular orders, this can create good contracts. They can create good relationships and have the same values that Tesco have.

Suppliers are crucial to Tesco as they provide all of the products to them so they can be sold in their supermarkets. As the suppliers understand that Tesco rely on them to keep providing them with the products, they expect fast and and prompt payment. As Tesco over the years have grown substantially, making them the biggest and most powerful supermarket chain in the world, if one supplier were to only supply Tesco alone, they would not need to provide for anyone else. However, Tesco know not to put to many eggs into one basket so they do have other suppliers on standby and use different suppliers for different products.

Suppliers can give regular and large orders to Tesco. These can start around 500 to around 500,000 for one order alone; for example 100,000 units of Heinz Beaked Beans; they can give and create good contracts for all companies they work for. The bigger and better the contracts are the better the relationship will be for them both.

If Tesco have a good and firm relationship with their suppliers then the suppliers will most likely give them offers and discounts. They will also provide better service to them than their other companies, such as early deliveries. The suppliers may provide discounts and offers to the companies. If Tesco wanted to buy 200,000 units of milk from a supplier, they may say they could have an extra 100,000 if they made their offer 250,000 units. The suppliers have the same values as Tesco do, to make money and grow.

Government – External

The government are external stakeholders for Tesco. Their main role is to collect taxes, to make sure that the company is acting legally and that the company is providing jobs. As times are getting worse, higher taxes and people unable to get jobs the government are evaluating businesses performances, to make sure that they are acting in their rights (legally) and providing jobs to people, as Tesco are the biggest supermarket chain in the world.

As times are getting more difficult for people to find jobs, Tesco may evaluate the performance of large companies such as Tesco and to make sure that they are providing jobs to the local community. The government sometimes try to help companies and people who are unemployed by placing rules.

Local Communities – External

Local communities are external stakeholders. They want local jobs and convenience. They also care about litter pollution, conservation and want better infrastructure. Local communities that surround the supermarkets are those who keep them going. However, they don’t keep control of what the supermarkets do, for instance, being eco friendly and letting customers litter everywhere without members of staff being hired to clear it up. Local communities may be unhappy with these things so this may lead to the company receiving complaints and gaining a bad reputation. Therefore, the company must change and do what the public want them to do, changing times means that changes must be made otherwise the company may fail.

Local communities want local jobs available to them. During these difficult times this may become difficult as a lot of jobs are hard to come by these days. This means that people must try harder and be able to give the skills to the required job, this could include experience or management degrees.

Litter pollution can cause the local community aggravation especially when its left and not cleaned up by the company that its caused by. Tesco may not have much rubbish but there suppliers that deliver the goods in cardboard boxes may cause rubbish. This rubbish should be cleared up by the company or the customers (external stakeholders) will start complaining and create a bad reputation for the company. Fast food restaurants such as McDonalds now hire people to clean up the rubbish that is thrown on the floor every hour. This increases their reputation for looking after the area they live in and caring what their customers think of the company. Acts like this increases companies reputation to the local community.

Local communities also care about the conservation of the area they live in. As more and more supermarkets are being built for the increasing population, local communities care about more and more green house gases spreading into the atmosphere. This means that supermarkets can be blamed for this as they use up a lot of energy; more lorries on the road and more electricity being used. To improve the companies reputation with the areas conservation, companies such as Tesco now promote recycling and other ‘get green’ schemes.

This can improve the local community with conservation practices for their community and shows to them that Tesco do care about the Earth and the environment. Local communities may work and use the company more if it means there actions are improving the conservation area and the world. Even those people who are uninterested in the conservation of the area can still get a good feeling from the company to know they are doing something good for the environment.

To also help the environment and the local communities feelings about Tesco, the supermarkets are now built with better infrastructure. This may be from making the store completely eco friendly to making the store look a lot better. As time moves on ugly and unattractive buildings are being pulled down ready for newer better looking buildings. This is because people care what the buildings look like as well as what they are doing for the environment. To improve the looks of their supermarkets, Tesco may build their new supermarkets so they ‘blend in’ with their surrounding more. In London -Westminster-, offices and new modern apartments are being built with a modern ‘glass look’.

Old 60s offices has mainly concrete in them, now new buildings are covered in glass. Tesco’s newer supermarkets in city’s such as London will be covered in glass also instead of the old ‘concrete look’. A Tesco supermarket that os being opened up in the country may have wooden paneling on the outside to also blend on to its surroundings. Tesco have recently opened the worlds first completely zero-carbon supermarket. It is made from timber, uses sun pipe lighting and collects rain water to flush toilets and run the supermarkets car wash; the companies ultimate goal is to be a completely zero carbon company by 2050. The store also has…

Sustainably sourced timber frame

Roof lights and sun pipes that allow natural daylight into the sales floor and staff areas Energy-efficient heating and air conditioning systems Rainwater collection to flush the toilets and run the carwash Combined Heat and Power (CHP) plant to generate electricity using renewable fuel No harmful refrigerants in the refrigerators, heating, ventilation and air conditioning systems The first LED-lit car park in the UK

Solar-powered streetlights

Energy-efficient equipment, such as low-energy bakery ovens

Tesco also talk about how they are supporting their local community in Ramsey, the area which the zero-carbon store has been built.

‘Local manufacturers and suppliers of materials were used in its construction, from supplying the timber cladding to the flooring, aggregate and windows. Many of the construction and store staff are from the surrounding area. In fact, 80 per cent of store staff are from within three miles of the site! We have also built a community centre as part of the development.’


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