Identifying External Stakeholders

I. What did you learn from this activity?

Answer:
External stakeholders are groups outside the business or people
who do not work inside the business but are affected in some
way by the decisions of the business. External stakeholders can
include:
a) Customers
b) Shareholders
c) Creditors
d) Federal, state, and local governments
e) The local community
f) Society
g) Suppliers

Identifying external stakeholders in business is a crucial activity

that can provide valuable insights and benefits for an
organization. Here's what can be learned from this activity:

1. Understanding of Stakeholder Landscape:

Identifying external stakeholders helps a business gain a
comprehensive understanding of the various individuals, groups,
or entities that have an interest in or are affected by the
company's operations. This knowledge allows a business to map
out its stakeholder landscape.

2. Prioritization:
Not all stakeholders are equal in terms of influence or
importance to the business. Through this activity, a business can
prioritize its stakeholders, focusing more on those who have a
significant impact on its success or are critical to its operations.
3. Enhanced Communication:
Knowing who your external stakeholders are enables better
communication strategies. Businesses can tailor their messages,
channels, and engagement approaches to cater to the specific
needs and interests of different stakeholder groups.

4. Risk Management:
Identifying external stakeholders helps a business assess
potential risks and opportunities. By understanding the concerns
and interests of stakeholders, a company can proactively address
issues and mitigate risks that could harm its reputation or bottom
line.

5. Regulatory Compliance:
In many industries, regulatory requirements mandate
engagement with specific external stakeholders, such as
government agencies or consumer advocacy groups. Identifying
these stakeholders ensures compliance with relevant laws and
regulations.

6. Strategic Decision-Making:
The insights gained from identifying external stakeholders can
inform strategic decision-making. Businesses can align their
strategies with stakeholder expectations and values, which can
enhance their competitiveness and sustainability.

7. Partnerships and Alliances:

Recognizing external stakeholders may open up opportunities
for partnerships, collaborations, or alliances. Building positive
relationships with stakeholders can lead to mutually beneficial
arrangements that drive business growth.

8. Reputation Management:
External stakeholders can significantly impact a company's
reputation. Identifying these stakeholders allows a business to
manage its reputation effectively by addressing concerns and
building trust
 9. Sustainability and Social Responsibility:
Stakeholder identification is crucial for businesses that prioritize
sustainability and social responsibility. It helps in understanding
the concerns of environmentally conscious stakeholders and
aligning business practices with sustainable goals.

10. Customer-Centric Approach:

Customers are a key external stakeholder group. By identifying
their needs and preferences, a business can adopt a more
customer-centric approach, leading to improved products,
services, and customer satisfaction.

In summary, identifying external stakeholders in business is a vital

activity that fosters a deeper understanding of an organization's
operating environment. It enables businesses to make informed
decisions, manage risks, enhance communication, and build positive
relationships, ultimately contributing to their long-term success and
sustainability.

II. Did this change the way you view business in general?
Answer:
III. How can the health of a single business can have an impact on
the larger community and economy?
Answer:
Generally, A group of people in the same area or with shared
interests is called community and the system of making, buying,
and selling things in a place is called economy.

The health of a single business can affect the larger community

and economy in these simple ways:
1. Jobs:
A healthy business creates jobs for local people. If it's not
doing well, people might lose their jobs.

2. Money and Taxes:

Successful businesses make money for their employees and
pay taxes. These taxes help pay for things like schools and
roads.

3. Supplies and Other Businesses:

Businesses rely on each other. If one business struggles, it
can hurt others in the same network.

4. Local Support:
Healthy businesses often support local projects and charities,
making the community better.

5. Confidence and Spending:

When businesses do well, people feel confident and spend
more money, which helps the economy.

6. Property Values:
If businesses are doing well, it can increase property values in
the area.
7. Overall Growth:
Healthy businesses help a region grow economically,
attracting new companies and talent.
8. Better Life:
A strong business community can improve the quality of life
with more job opportunities, diverse shopping, and cultural
activities.

9. Government Services:
Taxes from businesses fund important government services
like healthcare and schools.

10. Global Competitiveness:

A strong local business scene makes a region more
competitive globally, attracting investment and trade.

In summary, the health of a single business can have a far-

reaching impact on the larger community and economy. It affects
employment, income, taxes, supply chains, and various aspects
of community life. Therefore, both businesses and communities
often have a vested interest in supporting and nurturing a healthy
business environment
 Quick Review
I. What is a business?
Answer:
Any profit making independent legal activity that provides
goods or services to the customer is called business
Or
The exchange of goods, services or money for mutual benefit or
profit is called business

II. What are the primary differences between a for-profit and a non-
profit business?
Answer: For profit business provides goods or services to
consumers for the purpose of making a profit and Nonprofit
business provides goods or services in order to generate income
that furthers its mission

III. What factors of production sustain businesses?

Answer:
Generally, we know that Resources are the inputs used to
produce the outputs (goods and/or services). Resources are also
called factors of production. We can include this as factors of
production :
a)Natural Resources
b) Labor
c)Capital
d) Entrepreneurship
e)Environment
f) Expenses
Businesses rely on several key factors of production to sustain their
operations. These factors include:
1. Natural Resources:
Any natural resource, land, plants, livestock, wind, sun, water,
etc.

 Land: This refers to the natural resources, locations, and

physical space needed for a business. It encompasses
everything from the physical land a business occupies to
the raw materials it uses in production.

2. Labor:
Any human service—physical or intellectual. Also referred to
as human capital. The workforce is a critical factor. Skilled and
unskilled labor is essential for the production process, customer
service, and various other aspects of business operations.

3. Capital:
Anything that’s manufactured in order to be used in the
production of goods and services. Capital refers to the financial
resources needed to start and maintain a business. This includes
money for purchasing equipment, machinery, buildings, and raw
materials, as well as for paying wages, covering operational
expenses, and funding expansion.

4. Entrepreneurship:
The ability to recognize a profit opportunity, organize the other
factors of production, and accept risk. The entrepreneurial factor
involves the creativity, innovation, and risk-taking abilities of
individuals who organize and manage a business. Entrepreneurs
are responsible for making key decisions, taking calculated
risks, and driving the business forward.
5. Technology: In the modern business landscape, technology
plays a crucial role. It includes not only the hardware and
software used in operations but also knowledge and expertise in
leveraging technology to enhance productivity, streamline
processes, and reach customers.

6. Environment:

7. Knowledge and Human Capital:

This factor relates to the skills, knowledge, and expertise of the
workforce. In today's knowledge-based economy, a well-
educated and skilled workforce is essential for innovation and
competitiveness.

8. Infrastructure:
Adequate infrastructure, including transportation networks,
communication systems, and utilities like water and electricity,
is crucial for business operations. Reliable infrastructure helps
ensure the smooth flow of goods and services.

9. Legal and Regulatory Environment:

Businesses must operate within a legal framework that defines
their rights and responsibilities. Government regulations and
policies can significantly impact business sustainability.

10. Access to Markets:

Access to markets, both domestic and international, is vital for
businesses to sell their products or services. Proximity to
customers and effective distribution channels are factors to
consider.

11. Social and Cultural Factors:

Understanding and adapting to the social and cultural aspects of
the target market can influence a business's success. This
includes factors like consumer preferences, cultural norms, and
social trends.
These factors are interrelated, and their significance can vary
depending on the nature of the business, its industry, and its specific
goals. Successful businesses effectively manage and optimize these
factors to ensure sustainability and growth.
IV. How do resources flow between businesses and households?
Answer:
V. What are the major business functions and what does each do?
Answer:
Major business functions are the fundamental activities and
operations that organizations undertake to achieve their goals,
produce goods and services, and operate efficiently. These
functions can vary somewhat depending on the size, industry,
and complexity of the organization, but they generally include
the following:
a) Management
b) Operations
c) Marketing/Sales
d) Finance
e) Research and Development

1. Management:
The primary role of managers in business is to supervise other
people’s performance. It functions about Planning, organizing,
controlling, and leading.

 Planning: Setting long-term and short-term goals for the

business, as well as short term strategies needed to execute
against those goals.
 Organizing: Organizing the operations of a business in the
most efficient way, enabling the business to us its
resources effectively.
 Controlling: When people or processes stray from the
path, managers are often the first ones to notice and take
corrective action.
 Leading: The manager may lead work teams or groups
through a new process of the development of a new
product. The manager may also be seen as a leader of the
organization when it interacts with the community,
customers, and suppliers.
2. Operations:
Operations are generally transforms resources into products
which means inputs (factors of production) are converted to
outputs (goods and services). It is the heart of a business,
pumping out goods and services in a quantity and of a quality
that meets the needs of customers. The operations manager is
responsible for overseeing the day-to-day business operations,
which can include ordering raw materials or scheduling workers
to produce tangible goods.

3. Marketing/Sales:
Marketing identifies customers’ needs and designs products and
services that meet those needs. In a simple way, it works to
identify and satisfy customer needs.

The marketing function includes:

 Promoting goods and services

 Determining how the goods and services will be delivered
 Developing a pricing strategy to capture market share
while remaining competitive
 Building and overseeing businesses’ Internet presence

4. Finance:
Finance involves planning for, obtaining, and managing a
company’s funds. Finance managers plan for both short- and
long-term financial capital needs and analyze the impact that
borrowing will have on the financial well-being of a business.
The finance department answer questions about how funds
should be raised, the long-term cost of borrowing funds, and the
implications of financing decisions for the long-term health of
the business. Accounting is a crucial part of the Finance
functional area. Accountants provide managers with information
needed to make decisions about the allocation of company
resources.
 5. Research and Development:
Research and Development is the lifeblood of manufacturing
businesses. It Provides knowledge and ideas that help a
company keep up and ahead of the competition. R&D is staffed
with scientists, thought-leaders, subject-matter experts, and
industry analysts striving to provide the organization with
knowledge and ideas to keep up and ahead of the competition.
R&D is led by the Chief Technology Officer (CTO) who
manages a Development VP or similar title depending on what
technology products are being produced.

VI. Define a business stakeholder?

Answer:
A stakeholder is an individual or a group that has a legitimate
interest in a company, organization, or business. Such as
managers, employees, and owners who are internal stakeholders
whom are working directly within the business and Customers
Shareholders, Creditors, Federal, state, and local governments,
The local community, Society, Suppliers are the External
stakeholders whom are working outside the business or people
who do not work inside the business but are affected in some
way by the decisions of the business.

VII. What external forces impact businesses?

Answer: