Stakeholders

Habari Mwanafunzi! Let's Talk About Who's Who in Business!

Imagine your favorite local football team, maybe Gor Mahia or AFC Leopards. Who cares if they win or lose? The players do, of course! So does the coach, the fans in the stadium, the person selling sodas and smokies outside, and even the TV station showing the game. All these people have an interest, or a "stake," in the team's success. In the world of business, we call these people Stakeholders. Let's dive in!

So, What Exactly is a Stakeholder?

A stakeholder is any person, group, or organization that has an interest in a business and can either affect or be affected by its operations and performance. They are the "family" of a business - some live in the house, and some are neighbours, but they all matter!

Real-World Example: Think about a local duka (shop) in your neighbourhood. The owner is a stakeholder. You, the customer, are a stakeholder. The person who supplies the bread and milk is a stakeholder. Even the county government that collects a business permit fee is a stakeholder! Everyone is connected.

The Two Big Families: Internal and External Stakeholders

We can group stakeholders into two main categories. Think of it as those who are 'inside' the business versus those who are 'outside' but still very much connected.

      +-----------------------------+
      |       THE BUSINESS          |
      | (e.g., Naivas Supermarket)  |
      +-----------------------------+
              ^               |
              |               |
     INTERNAL |               | EXTERNAL
     (Inside) |               | (Outside)
              |               v
      +----------------+    +----------------+
      | - Owners       |    | - Customers    |
      | - Managers     |    | - Suppliers    |
      | - Employees    |    | - Government   |
      +----------------+    | - Community    |
                            | - Banks (Creditors) |
                            +----------------+

1. Internal Stakeholders (The 'Inside' Team)

• Owners / Shareholders: These are the people who own the business. They provide the money (capital) to get it started. Their main interest is to get a return on their investment, which means making a profit. Many Kenyans are shareholders in companies like Safaricom or KCB Group through the Nairobi Securities Exchange (NSE).
• Managers: These are the people hired to run the business day-to-day. The CEO, branch managers, and department heads. Their interest is in their salary, job security, and performance bonuses. They want the business to succeed so they can succeed too!
• Employees: These are the people who do the work! From the cashier at the till to the worker in a tea factory in Kericho. Their main interests are fair wages, safe working conditions, and job security. Happy employees often lead to a successful business.

2. External Stakeholders (The 'Outside' Network)

• Customers: Perhaps the most important group! Without customers, there is no business. Their interest is in getting good quality products and services at a fair price. If customers are unhappy, they will go to a competitor.
• Suppliers: These are other businesses that provide raw materials or services. For example, a farmer who supplies maize to a posho mill. Their interest is to be paid on time and to have a steady, reliable customer.
• Government: The national and county governments are stakeholders. Their interest is that the business obeys the law (e.g., environmental laws from NEMA), pays taxes to the Kenya Revenue Authority (KRA), and creates employment.
• Community: This is the local society where the business operates. The community's interest is in the business providing jobs, being environmentally responsible (not polluting), and sometimes giving back through Corporate Social Responsibility (CSR) like building a classroom or a borehole.
• Creditors (e.g., Banks): These are people or institutions that have lent money to the business, like Equity Bank or KCB. Their only interest is getting their money back, with interest, on the agreed-upon date.

Image Suggestion: A vibrant, wide-angle shot of a busy open-air market in Kenya, like Gikomba or a Maasai Market. The scene should show vendors (suppliers), customers browsing, and the general community interacting. The style should be colourful and full of life to represent the dynamic relationship between different stakeholders.

The Big Balancing Act: When Stakeholders Disagree

It's not always easy to keep everyone happy. Often, the interests of different stakeholders can clash. A successful business must learn how to balance these different needs.

Scenario: A Conflict of Interest
A flower farm near Naivasha wants to increase its profits for its shareholders. To do this, the managers decide to cut costs by not treating the wastewater before releasing it into the local river.

• Conflict 1: Shareholders (profit) vs. Community (wants clean water for fishing and farming).
• Conflict 2: Shareholders (profit) vs. Government (specifically NEMA, which has laws against pollution).

A good business would find a better way to make a profit without harming the community or breaking the law.

Let's Do Some Maths! Calculating Shareholder Value

One way a business keeps its owners (shareholders) happy is by sharing profits with them. This payment is called a dividend. Let's see how it's calculated.

// Let's imagine a local company, "Kenya Coffee Exporters Ltd."

// Step 1: Find out the total profit available to share.
Total Profit for the Year: KES 1,000,000

// Step 2: Find out how many shares the company is divided into.
Total Number of Shares: 200,000 shares

// Step 3: Calculate the dividend for ONE share.
// Formula: Dividend per Share = Total Profit / Total Number of Shares

Calculation:
Dividend per Share = 1,000,000 / 200,000
Dividend per Share = KES 5

// This means for every single share you own, you get 5 Shillings!

// So, if you are a shareholder who owns 1,000 shares:
Your Total Payout = Dividend per Share * Your Number of Shares
Your Total Payout = 5 * 1,000 = KES 5,000

Your Turn to Think!

You now understand the complex family that makes up a business. Every decision a company makes affects many people in different ways. A truly great business isn't just about making money; it's about creating value for ALL its stakeholders.

Challenge: Can you list at least five different types of stakeholders for your own school? Who are they, and what is their main interest?

Keep up the great work, you're building a strong foundation for understanding the world of business!