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How can stakeholders help a business to have a competitive advantage?

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Introduction

How can stakeholders help a business to have a competitive advantage? Stakeholders are all those individuals and groups which have a 'stake' in the company. Included in this category are groups such as; employees, creditors, customers, shareholders and local communities. These are all affected by the actions of the business in some way. Competitive advantage is a distinctive feature that makes a business successful. It may result from innovation, reputation or the relationship with customers and suppliers. There has been a growing trend for businesses to be more closely involved with their stakeholders. The growing awareness that reputation is an important contributor to competitiveness has enhanced this trend. ...read more.

Middle

Customer care and consideration is important; if it is overlooked, the company can be given a non-caring image causing the reputation and interest in the company to decrease. Creditors are people who are owed money by the company. They have to be taken into consideration because it is important to maintain their goodwill. If this falls, the company's reputation does as well. Suppliers are stakeholders too. They can add to the reputation by being reliable and flexible, showing that they can manage a sudden demand that needs satisfying. There are fewer complaints towards the company because they are producing more efficient, cheaper, better quality products. Businesses will gain lots of loyal customers that will keep returning because they know the service is good and they are widely known because of the reputation is has built up. ...read more.

Conclusion

The parents of the children will return the favour by using the business and giving the company confirmation that the relationship between company and stakeholders is good. There is a drawback however - Pressure groups can be formed. If, for instance, a dispute arose over environmental issues, these pressure groups can be made up from customers and members of the local community. If they do not agree with what the company may be doing, they will set out to ruin its reputation. Reputation can take a long time to build but is invaluable once it has been achieved. However it is very easy to dent, so the company would have to be extremely careful when making decisions about relocating or expanding to avoid confliction. Once a reputation has been damaged, it is hard to rebuild. ...read more.

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