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CG and Other Stakeholders

The document discusses stakeholders and how to classify and prioritize them. It defines stakeholders as anyone affected by or having interest in a company's activities. Stakeholders can be internal like employees or external like customers. They are classified based on impact/dependence, directness of impact, and level of activity. The document provides guidance from OECD principles on considering stakeholder interests within corporate governance, such as respecting legal rights and providing information for participation.

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Frandy Karundeng
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75 views13 pages

CG and Other Stakeholders

The document discusses stakeholders and how to classify and prioritize them. It defines stakeholders as anyone affected by or having interest in a company's activities. Stakeholders can be internal like employees or external like customers. They are classified based on impact/dependence, directness of impact, and level of activity. The document provides guidance from OECD principles on considering stakeholder interests within corporate governance, such as respecting legal rights and providing information for participation.

Uploaded by

Frandy Karundeng
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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CG

and other
STAKEHOLDERS

By: Frandy Karundeng, SE., MSA


although there is a debate between whether
shareholders or other stakeholders
should take priority,

the two should run side by side


and be considered alongside
every decision made.
STAKEHOLDERS
Generally a company can consider a stakeholder as a person or group who
has an interest in or can be affected by an organization’s activities.

However, not all stakeholders have the


same level of interest and impact on an categorize and
organization or can be affected by the prioritize stakeholders
company’s activities.
Classifiying Stakeholders

internal external
stakeholders stakeholders
cover groups such cover groups such as
as employees, management customers, competitors
and trade unions. and suppliers.
Classifiying Stakeholders

most less
affected/dependent affected/dependent
Those who are likely to be Those who are likely to be less affected
more affected by the organization are are the government and the wider
shareholders, employees, manage- community.
ment, customers and suppliers.
Classifiying Stakeholders

primary secondary
Who have a direct impact on such as the community and
the organization and without management have a less direct
whom it would be difficult to impact on the organization and
operate. the company could survive
Would be the government, without them to a certain extent.
shareholders and customers.
Classifiying Stakeholders

active passive
such as management, employees, such as shareholders, local
regulators, suppliers and pressure communities, the government and
groups. customers.
Guidance of Stakeholders Interests
there is also more formal guidance to help a business
consider how corporate governance principles should
be interpreted in light of stakeholder interests.

OECD PRINCIPLES
they first need to consider stakeholder rights
established by law.
under the corporate governance framework
businesses need to co-operate with their
stakeholders in a way that enables them to ‘create
jobs, wealth and sustain financially sound
enterprises’.
Therefore, knowing who your stakeholders are and
how the law protects them are key to ensuring that
business activities comply with corporate
governance guidelines
OECD The rights of stakeholders protected by law need to be
respected within the corporate governance framework.

Principles With any stakeholder interest protected by the law,


stakeholders need to have the opportunity to obtain
effective redress for violation of their rights.

Performance-enhancing mechanisms for stakeholder


participation need to be included in the corporate
governance framework.

Relevant information needs to be provided to stakeholders


who participate in the corporate governance process.
INTERNAL
Stakeholders
EXTERNAL
Stakeholders
CASE STUDY
A company manufactures clothes in a number of towns and cities in the United Kingdom. These are
then distributed to a network of retail outlets throughout the country. The company is owned by two
other companies that take an active interest in the profitability of the clothing manufacturing and
retailing sides of the business.

Other UK clothing businesses now source their products from overseas as manufacturing costs in the
UK are extremely high and reduce margins on the sale of the final product. The board of the business is
currently considering closing the manufacturing side of the business and sourcing their garments from
countries like China and India where manufacturing costs are half of those in the UK. However, there is
some concern over the conditions for workers in these countries and the age of labour used.

Discussion:
Identify the stakeholder groups who will be affected and interested in the decision to relocate the
manufacturing side of the business, and the impact of the decision on the group.
Discuss the actions the board can take in respect of each stakeholder group.
thank you

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