Identify and Describe the Different Stakeholders in a Company

Question

1. Identify and describe the different stakeholders in a company.

In a company there are various stakeholders group exist. It is comprise of shareholders, directors, senior executive management, employees, customers, suppliers, the general public and also the government. Shareholders are the main stakeholders in a company because they basically owner of the company. Shareholders also can be consisting of majority shareholders, minority shareholders and institutional shareholders. Majority shareholders holds the majority of equity share in the company thus able to influence the directions and decisions of the company, as they control the composition of board director through voting to appoint or remove the directors. As for the minority shareholders their influence in the voting and company decision often inadequate during general meeting for the company proposal or resolutions. However with the amendment to the Company Act in 2007, there are some statutory provisions in Sections 181 and 181A to E to safeguard the interests of minority shareholders. As for Institutional shareholders, they comprise of organization that collect funds from their client or other depositors and invest these funds in listed companies example like Employment Provident Fund ( EPF ) and Permodalan Nasional Berhad ( PNB ). They also call as a Fund Manager. Their presence in the listed companies can help enhance the profile and trading status of the investee company. Due to the shareholding in the company, they also may need to nominate directors to represent their stake in the company. Fund manager are accountable to their clients and depositors, who expect profit from their investment. Shareholders are more interested in their dividends and capital growth of their shares so that will get higher profit.

Directors and senior executives also were parts of the main stakeholders in the company. They may also be main shareholders of the company. They are the management team of company that operate collectively through board of director and have power in decision making process with involve business operation in the company such as on finance, paying dividends and making major investment. Board of director may consist of Executive directors, non executive director and independent directors. The functions and responsibility all of this directors are specially different whereas a role of an executive director is on the management of company, as for Non Executive directors they work without any specific portfolios and for independent directors they work as an independent of the management. They are employees to the company with paid salary and other benefit. They will be interested in their job security, prospects and pay.

Other stakeholders in the company may consist of employee that was working with the company. To ensure company success in the business, they must have a good and dedicate employee that working continuously hard to make sure company getting profit. As a fact the employees are really dependent on their corporate employers to provide them with job security, which translates to regular source of income. In this respect, the employees are considered to have a stake in the company as it provides them jobs, which translate to regular source of income.

Creditors and debenture holders also become indirect stakeholders in a company, as it is their expectation to be paid what they are owed. If the deal with the company regularly, or over a long time, they will expect the company to do business with them accordance with the contractual agreements. Normally bank and financial organizations will lend money to the company to do their business.

As parts of business environment suppliers also play a crucial role in supply stocks and inventories to company. This to ensure the company operates their business smoothly without interference. As a result of that suppliers also become stakeholders in the company since their interest or stake in the company lies in their expectations to be paid timely and fairly for the amount of goods been supplied. They really expect the continuity of the business been carried by supplying better services and goods. Therefore it is unfair for company to undercut its suppliers in the name of maximizing profit.

Customers are also stakeholders in the company. They expect good quality product of goods and services to be given to them in return for fair and satisfactory price. Goods sold must be not hazard to customers health and able to be used. It is important since the customer loyalty and their expectation is required to be met. This will ensure company reputation is been protected thus will make more profit since people trust have been created to the company product. In the current business environment people or consumer