Business and society: social performance knowledge graph

Business and Society: Social Performance

Primary stakeholders refer to a group or people that engage in economic transactions, with a business firm as it carries out its daily business activities of providing the society with goods or services. These primary stakeholders engage in a unique relationship with the firm, or a two-way exchange. These people comprise the customers, employees, suppliers, creditors, stockholders, and retailers (Lowenstein & Rabinowitz, 2013). Every group of primary stakeholders has an essential role to the firm, directly. Without these people, the firm would not perform well because its primary work would not be accomplished (Lowenstein & Rabinowitz, 2013).

The stockholders mainly relate with the firm through investments. They invest in the firm, and in return, they receive their potential dividends and gains. Creditors borrow money from the firm and later on collect the payment of interest and principal. On the other hand, employees devotedly offer their skills and knowledge to the firm in exchange for salaries, benefits, and an opportunity for professional and self-development. Suppliers who in return, the firm pays them do the provision of raw materials, energy, services, and other inputs. In the group, there are the wholesalers who mainly engage in market transactions with the firm. They deal in distributing the goods and services to sales outlets. Lastly, the company will need the customer who will buy their products or services (Weber & Lawrence, 2011).

Secondary stakeholders are groups, or people who do not engage in direct transactions with a company but are affected by, or can affect the firm's action. These stakeholders help the firm in a different way. The secondary stakeholders include the community, the media, nongovernmental organizations, business support groups, and the public. The natural environment enters this group through a representation by a group of people interested in environmental issues. The government qualifies as a secondary stakeholder because it does not engage in buying or selling with businesses. However, money flows from a business firm to the government in the form of taxes and fees. Money can also flow from the government to the business firm in the form of incentives or subsidies.

Influence exists wherever there is power. Stakeholders have proved vital people in the running of a business, and their contribution enhances prosperity of the firm. In the early 21st century, the stakeholder's influence on business firms was on the rise. This is due to the integration of citizenship and social responsibility into business management (Kokemuller, 2013). On the other hand, stakeholders have some powers in the business firm. This means that they can use their resources to make an event happen or serve a desired outcome. There are four types of stakeholder's powers. They include voting power, economic power, political power, and legal power.

Every stakeholder has a voting power. This implies every stakeholder has a legal right to cast a vote. However, this voting power is measurable. Stakeholders with high numbers of stock in the firm pose the highest power and those with fewer stocks pose the same power as their stocks. The amount of power is proportional to the stocks a stakeholder has in the business firm. Stakeholders have a legitimate right to vote on major decisions in the firm as mergers, and acquisitions, compositions of the board of directors, and many other issues that may arise before an annual meeting (Weber & Lawrence, 2011).

Customers, suppliers, and retailers are a group of stakeholders who poses the economic power. In case the company does not keep its end on a contractual agreement, the suppliers may withhold supplies, or ignore to fill order forms. Customers may also refuse to buy goods and services from the firm if the business firm acts in an irresponsible manner. Customers can boycott goods if they are too expensive, low standard goods, or if the goods are unsafe. On the other hand, employees may respond to unethical behavior from the management or inadequate work conditions by refusing to work. However, employees who do not belong to working unions have no economic power because they do not have security for their jobs.

The government exercises political power through legislation, regulations, or lawsuits. Government bodies act directly, but stakeholders use their political power indirectly. This happens when they urge the government to implement new laws, or enact regulations. The citizens may vote for candidates they fell have supported their views associated with the government laws and regulations that may affect a business. Stakeholders may also exercise political power indirectly, for example, during protests by environmentalist on a government move.

Lastly, the stakeholders have legal power. Legal power means they can sue the business firm if they feel they unfairly treated by the business firm. This happens when they sue a corporation for damages due to harm caused by the firm on the stakeholder. An example is a lawsuit by customers for damages caused by consuming, or using unsafe goods or services, brought by employees damage caused by injury at work, or brought by environmentalists for damages on the environment either by water polluting, air pollution, or by harm to habitats and species of animals and plants (Weber & Lawrence, 2011).

In order to start a coalition with the stakeholders, the CEO needs to hold a first meeting with them. The meeting should have some characteristics, which include optimism, have energy, and signal a good start. The high energy will get the people exited hence signaling a good start. The contents of the first meeting and the agenda are highly significant. This agenda will determine the result of the coalition. The issue around which the coalition came together is necessary in this meeting. The CEO should initiate an actual statement on the same. Then the structure of the coalition prompts a discussion on how it will run, and it has reachable goals stated (Wolff & Rabinowitz, 2013).

The CEO should also create a common goal among the stakeholders to work towards a common vision, and agree with the coalitions directions. An action plan is of essence or at least a preliminary plan that will lead the way to the formulation of a procedure to form an action plan. This is the first meeting, so things to do before the next meeting needs a review. People should leave the meeting feeling they have accomplished something. After meeting, the CEO schedules the next meeting. This will enhance the development of regular meetings.

The plan entails a lot. The first meeting paved way for the coalition to lay out its agenda. The CEO should make sure communication among the coalition is wide open. This will make the coalition members feel they are part of the coalition. The CEO should participate, network and keep promises with the coalition. The goals set for the coalition should be reachable. Another important thing in planning the coalition is acknowledging diversity among members. Not everyone will agree with the coalition's decisions, so the CEO should consider everyone's opinion. Simply, diversity should be a source of discussion.