{"id":2774,"date":"2023-02-19T16:10:47","date_gmt":"2023-02-19T16:10:47","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/chapter\/learn-it-1-3-4-who-is-involved-in-a-business\/"},"modified":"2025-05-19T14:10:13","modified_gmt":"2025-05-19T14:10:13","slug":"learn-it-1-3-4-who-is-involved-in-a-business","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/chapter\/learn-it-1-3-4-who-is-involved-in-a-business\/","title":{"raw":"Learn It 1.3.4: Who Is Involved in a Business?","rendered":"Learn It 1.3.4: Who Is Involved in a Business?"},"content":{"raw":"
Interested Parties<\/h2>\r\n
An interested party is an individual or group that has a legitimate interest in a company, organization, or business. You may see these people and groups referred to as stakeholders<\/strong> in business writing and other media.\u00a0The Stanford Research Institute defines stakeholders as \u201cthose groups without whose support the organization would cease to exist.\"[footnote]Freeman, R. Edward, and DI Reed. \u201cStockholders and Stakeholders: A New Perspective on Corporate Governance.\u201d ResearchGate, April 1983. https:\/\/www.researchgate.net\/publication\/238325277_Stockholders_and_Stakeholders_A_New_Perspective_on_Corporate_Governance[\/footnote] Interested parties can affect or be affected by the actions (or inactions) of a business, and they can exist both within and outside of a business.<\/p>\r\n\r\n
interested parties (or stakeholders)<\/h3>\r\n
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Internal interested parties<\/strong>\u00a0are groups or people who work directly within the business.<\/li>\r\n\t
External interested parties<\/strong> are groups outside a business or people who don't work inside the business but are affected in some way by the decisions and actions of the business.<\/li>\r\n<\/ul>\r\n<\/section>\r\n\r\n[caption id=\"attachment_8424\" align=\"alignright\" width=\"1024\"] Figure 1. Internal and External Interested Parties[\/caption]\r\n\r\n
Internal interested parties include managers, employees, and owners. Managers and employees want to earn high wages and keep their jobs, so they have a vested,<\/span> or personal, interest in the financial health and success of the business. For example, owners want to maximize the profit the business makes as compensation for the risks they take in owning or running a business.<\/p>\r\n
Examples of external interested parties are customers, suppliers, distributors, creditors, the local community, society, and the government.<\/p>\r\n
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Customers<\/strong> want the business to produce quality products at reasonable prices.<\/li>\r\n\t
Shareholders <\/strong>have an interest in business operations, since they are counting on\u00a0the business to remain profitable and provide a return on their investment in the business.\u00a0<\/strong><\/li>\r\n\t
Creditors <\/strong>that supply financial capital, raw materials, and services to the business\u00a0want to be paid on time and in full. <\/strong><\/li>\r\n\t
Federal, state, and local governments\u00a0<\/strong>need businesses to thrive in order to\u00a0pay taxes that support government services, such as education, police, and fire protection.<\/li>\r\n\t
The local community<\/strong> has a stake in the business, because\u00a0it provides jobs,\u00a0which\u00a0generate economic activity within the\u00a0community.<\/li>\r\n\t
Society<\/strong>\u00a0as a whole (as well as the local community) is concerned about the impact that business operations have on the environment in terms of\u00a0noise, air, and water pollution. Society also has an interest in the business with regard to the safety of the goods and services produced by\u00a0the business.\u00a0<\/strong><\/li>\r\n\t
Suppliers<\/strong> need\u00a0the business to continue to buy their products in order to maintain their own profitability and long-term financial health.<\/li>\r\n\t
Distributors\u00a0<\/strong>need the business to continue operating so that they products to distribute and operate profitably.<\/li>\r\n<\/ul>\r\n\r\n[caption id=\"attachment_1306\" align=\"alignright\" width=\"180\"] Figure 2. Huy Fong Foods addressed stakeholder complaints.[\/caption]\r\n\r\n
Often, the priorities of internal and external stakeholders may conflict. For example, Huy Fong Foods, the maker of the popular red sriracha hot sauce with the rooster on the bottle, had to address complaints by residents and business owners that its factory in Irwindale, CA was emitting fumes from chiles that caused breathing problems.[footnote]https:\/\/time.com\/12539\/sriracha-factory-california-pictures\/[\/footnote] Businesses need to work to resolve these competing issues if they want to continue to thrive.<\/p>\r\n[ohm2_question height=\"800\" hide_question_numbers=1]3011-3012[\/ohm2_question]<\/section>","rendered":"
![\"Internal](\"https:\/\/content-cdn.one.lumenlearning.com\/wp-content\/uploads\/sites\/15\/2023\/02\/05144804\/L1.3.4-2-1024x468.png\")
Figure 1. Internal and External Interested Parties[\/caption]\r\n\r\n![\"bottles](\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5830\/2022\/08\/14182510\/14059710450_be061bf402_q.jpg\")
Figure 2. Huy Fong Foods addressed stakeholder complaints.[\/caption]\r\n\r\n