Question

What do stakeholder power mean?

Answer 1

Stakeholder power means the power of the stakeholders to utilize resources to have the desired outcome or to make an event happen. There are primarily three types of stakeholder power i.e. voting power, economic power and political power. Voting power refers to voting on major decisions of the business such as mergers and acquisitions, liquidation and other extraordinary issues. Stakeholders also chose the directors through whom they want the company to be run and ensure a healthy return on their investment. The customer, suppliers and retailers have economic power on the company. Customers determine the demand of goods or services for the business, suppliers have the power to command prices for their inputs and retailers through selling decisions. Political power is exercised by the government in the form of framing rules and laws for businesses to operate.