Stakeholder influence and power

Stakeholders can change what a business does, not just react to it. Shareholders invest more or sell their shares, employees work productively or take industrial action, customers buy or boycott, and suppliers supply or withhold supply. Pressure groups campaign and lobby, while government regulates, taxes and decides planning applications. This pressure can encourage a business to improve quality, customer service, ethical behaviour or environmental impact.

What gives a stakeholder power

Having a strong opinion is not the same as having power, the ability to make a business change its decision. A single shopper refusing to buy from a supermarket is unlikely to alter its prices, but a large investor threatening to sell shares can. Power comes from:

Analysing stakeholder impact

To judge impact, first identify the stakeholders, then explain how each is affected, then decide who has most power. Imagine a café chain plans to swap single-use plastic cups for paper ones. Customers may dislike the new cups, the plastic cup supplier loses a contract, staff have to explain the change at the counter, and the environmental pressure group that campaigned for the switch gains a win. Power does not always sit with the loudest group: the pressure group has public sympathy, but a major customer such as a university that buys thousands of drinks a week can have more influence, because losing its contract would cost the café chain far more. A business thinks this through before deciding because stakeholders can support a plan or resist it, changing costs, reputation and whether the change succeeds.