A primary stakeholder is an individual or group that is significantly affected by the actions of a business or organization, and has an interest in its success and operations. Primary stakeholders are typically owners, employees, customers, and suppliers.
- Owners: The owners are the people or entities who have ownership in the business or organization, and are typically the ones who have the most to gain or lose from the business's decisions and performance.
- Employees: Employees are essential to a business's success, and their performance and success are highly dependent on how the company is managed and how well it performs.
- Customers: Customers are a key component of any business, as they are the ones who purchase the goods and services offered by the company. As such, they have a major stake in the company's success.
- Suppliers: Suppliers provide the resources that a business needs to operate, and their performance can have a significant impact on the business's success.
Primary stakeholders are an integral part of any business or organization, as their interests and performance can have a major influence on the success of the business. As such, it is important to recognize their role and engage with them in a meaningful way.
Example of Primary stakeholder
A primary stakeholder in a retail store might be the store's owners, employees, customers, and suppliers. The owners have an interest in the store's success and operations, as it directly affects their financial well-being. Employees rely on the store for their livelihood, and need it to be profitable for them to continue to be employed. Customers are the lifeblood of the store, so their satisfaction is essential for it to remain successful. Finally, suppliers provide the store with the resources it needs to operate, so they are also a primary stakeholder. All of these primary stakeholders have an interest in the store's success and operations, and need to be taken into account when making decisions.
Types of Primary stakeholder
Primary stakeholders can be divided into four distinct categories: owners, employees, customers, and suppliers.
- Owners: Owners are those who have ownership in the business or organization, and are typically the ones who have the most to gain or lose from the business's decisions and performance.
- Employees: Employees are the people who work for the business and are essential to its success.
- Customers: Customers are the people who purchase the goods and services offered by the business.
- Suppliers: Suppliers provide the resources that a business needs to operate.
Steps of Primary stakeholder
Primary stakeholder analysis consists of four steps: identifying primary stakeholders, understanding their interests and goals, identifying their power and influence, and engaging with them.
- Identifying Primary Stakeholders: The first step is to identify the primary stakeholders, that is, the individuals or groups that have a significant interest in the business's success or operations.
- Understanding Stakeholder Interests and Goals: Once primary stakeholders have been identified, it is important to understand their interests and goals. This can be done by conducting research or interviews to get a better understanding of their motivations and objectives.
- Identifying Power and Influence: It is also important to understand the power and influence of the primary stakeholders. This can be done by assessing their resources, influence in the market, and other factors that can affect the business's operations.
- Engaging With Stakeholders: The final step is to engage with the stakeholders in a meaningful way. This can include developing relationships, providing information, and involving stakeholders in decision-making processes.
Advantages of Primary stakeholder
Primary stakeholders can provide numerous benefits to a business or organization. These benefits include:
- Increased Efficiency: By engaging with primary stakeholders, a business can gain insights into how they can improve their operations, leading to greater efficiency.
- Improved Performance: By understanding the needs and wants of stakeholders, a business can make changes to better meet those needs, resulting in improved performance.
- Enhanced Reputation: Engaging with stakeholders can also help to build a positive reputation, as stakeholders are more likely to give positive reviews if they feel like their input is valued.
- Increased Engagement: By engaging with primary stakeholders, businesses can increase engagement with their customers, suppliers, and other stakeholders, resulting in a stronger relationship and better performance.
Limitations of Primary stakeholder
The primary stakeholder model has some limitations, such as the potential for conflicts of interest between stakeholders, as well as the potential for stakeholders to have competing interests. Additionally, the primary stakeholder model does not always take into account the interests of those who are not directly involved in the business or organization, such as the wider community or environment. Finally, the primary stakeholder model can be limiting in that it does not always capture the complexity of a business or organization and its various stakeholders.
Other approaches related to primary stakeholders include the following:
- Stakeholder mapping: Stakeholder mapping is a process of identifying the stakeholders in a business or organization and understanding their needs, interests, and influence.
- Stakeholder engagement: Stakeholder engagement is the process of actively engaging with stakeholders to understand their needs and interests, as well as to ensure their satisfaction with the business or organization.
- Stakeholder analysis: Stakeholder analysis is a process of evaluating the interests of stakeholders and understanding their influence in order to make better decisions and ensure the success of the business or organization.
Primary stakeholders are essential to the success of any business or organization, and it is important to understand their role and engage with them in a meaningful way. Effective stakeholder management involves recognizing the needs, interests, and influence of stakeholders, and engaging with them to ensure their satisfaction. By engaging in stakeholder mapping, engagement, and analysis, businesses and organizations can better understand and manage the interests of their stakeholders.
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