What Are the Functions of a Stakeholder?
Stakeholders invest money into newly formed companies or companies that want to expand. Stakeholders are not typically idle investors that watch their investment from afar. Stakeholders have functions in companies that influence operations and management. If a stakeholder is not happy with a company, he can take his investment away.
Project Monitor
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Stakeholders monitor the progress of business projects to ensure that their investments are not wasted. For example, a business might obtain the resources of a stakeholder to build another location in another part of the city. The stakeholder's function is to check up on the status of the new location and pressure the business to make progress. Business managers know that if they do not complete the project on time or as promised, they could lose their funding.
Experience Source
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Stakeholders typically throw their weight behind businesses in which they have experience. The financial wealth of a stakeholder usually derives from her success in a previous, similar business, so the stakeholder functions as a source of knowledge and expertise. Businesses often look to their stakeholders as mentors and guiding hands. For instance, if a business wants to expand into a new marketplace, it can ask a stakeholder for strategies and tips. The stakeholder can suggest a certain approach to expansion and warn of the pitfalls the business might face.
Resource Provider
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One of the primary functions of a stakeholder is to provide resources to a business when it needs them most. Stakeholders are not a fountain of money and capital, but they typically do offer a certain monetary commitment to businesses asking for their support. For instance, a company that plans to expand might secure a $5 million potential commitment from a stakeholder. The stakeholder might only give the business $2 million at first and promise the rest as reasonably needed.
Conflict Resolution
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When conflicts arise in a business, stakeholders might need to step in and resolve the issue before it escalates. For example, if a chief executive office of a business is accused of a crime because of unethical business practices, the business must decide whether the CEO should step down from her position. If managers cannot come to an agreement, a stakeholder must use his voting power and leverage to make a decision. Business conflicts are not always this dramatic, but stakeholders must prepare to function as mediators in all large business disagreements.
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Writer Bio
Aaron Marquis is a University of Texas graduate with experience writing commercials and press releases for national advertising agencies as well as comedy television treatments/stories for FOX Studios and HBO. Marquis has been writing for over six years.