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F1 BPP ST(August 2020) [Unlocked by www.freemypdf.com] (1)

 
11 
 
3
Stakeholder goals and objectives 
Managers are not completely free to set objectives: they have different groups of stakeholders to 
consider. The managers act as 
agents
for the stakeholders, whose influence varies from organisation to 
organisation. 
The 
agency relationship
in business therefore refers to the separation between an organisation’s owners 
(the shareholders) as the 'principal', and those managing the organisation on their behalf (the company 
directors) as their 'agents'. 
Those running the company should do so in a way that best serves the interests of shareholders (rather 
than pursuing their own interests). It is important that management interests are aligned with the 
organisation's goals, so that they act in a way that benefits shareholders and other stakeholders. 
The concept of agency is particularly relevant for large organisations, where there is a large separation 
between company ownership and its management.
Stakeholders
are those individuals or groups that, potentially, have an interest in what the organisation 
does. These stakeholders can be within the organisation, connected to the organisation or external to the 
organisation.
There are three broad types of stakeholder in an organisation, as follows. 

Internal
stakeholders (employees, management) 

Connected
stakeholders (shareholders, customers, suppliers, financiers) 

External
stakeholders (the community, government, pressure groups) 
3.1 Internal stakeholders: employees and management 
Because 
employees
 
and
management
 
are so intimately connected with the company, their objectives 
are likely to have a strong influence on how it is run. They are interested in the following issues. 
(a) The 

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