The Importance of Stakeholders

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Stakeholders are the individuals who are affected by or can influence a company or product throughout its life. These individuals can be customers, clients, suppliers, investors and employees. Without the ongoing participation of stakeholders, it is hard for a company to survive, as companies and stakeholders are mutually interdependent. Thus, stakeholders and their engagement are important in helping a company express its values, carry out its mission, develop strategies, implement processes and improve relationships on a continuous basis.

Long-Term Relationships

  • In addition to being important for normative reasons, stakeholders are also essential for instrumental, performance-based reasons. When a company has a long-term relationship with its stakeholders, it runs more efficiently and can have a better chance of producing profits. The retention of long-term relationships and stakeholder trust can help a company develop a loyal customer base, experience less employee turnover, increase productivity and reap the benefits of word-of-mouth marketing. However, once a company establishes a long-term relationship with its stakeholders, it must maintain a high level of trust with its stakeholders.

Feedback and Product Development

  • Stakeholders can have advisory and participatory roles in a company. By committing the appropriate resources, stakeholders show their willingness to contribute their energy in processes that they feel they have influence over, thus affecting a business's plans. Because they generally act according to their own interests if given the opportunity, stakeholders can provide feedback during the entire product development process, which can positively influence the product's and/or the company's success. In turn, a company can earn continued and new stakeholder loyalty.

A Sense of Community

  • A sense of community among stakeholders can positively shape the organizational development within a company and increase consumer sales. As a company establishes itself more, its community grows to include both internal stakeholders found in the company and external stakeholders the company can reach by means of information and service. A business can establish a sense of community among its stakeholders with loyalty programs, memberships, promotions and using virtual services, such as social networks.

Considerations

  • Sometime, stakeholders provide negative feedback that may be hard for some companies to hear. However, these opportunities serve as a way for a company to learn more about the perceived problems of stakeholders, so that it can take constructive action. Acting upon stakeholder criticism can actually give a company a competitive edge, and help the company determine the stakeholders who hold the most value for it. By practicing transparency and listening to and acting upon negative stakeholder feedback, a company can take preventative measures to avoid future problems and to increase stability.

References

  • Photo Credit Photos.com/Photos.com/Getty Images
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