Stakeholders in Commercial Organisations Notes for ICSE Class 10 Commercial Studies Chapter 1

You can check the prescribed scope in the official CISCE Commercial Studies syllabus for Examination Year 2027.

A stakeholder is an individual or group that has an interest in a commercial organisation or is affected by its activities and decisions.

Different stakeholders are connected with a business in different ways. A shareholder may invest capital, an employee may provide labour and skills, a supplier may provide materials, and the government may regulate the activities of the organisation.

Because their relationship with the business differs, their expectations from the organisation also differ.

For ICSE Class 10 Commercial Studies, stakeholders are classified into two major groups:

1. Internal Stakeholders
People who are within the organisation and have a direct relationship with its ownership, management or employment.

2. External Stakeholders
Individuals or groups outside the organisation who have dealings with the business or are affected by its activities.

Owners and managers have invested money, effort and responsibility in the organisation. They therefore expect the business to remain financially sound and grow over time.

1. Safety of capital: Owners expect the money invested in the business to remain reasonably secure.
2. Regular and satisfactory return: They expect the organisation to earn sufficient profit and provide an appropriate return on investment.
3. Growth of the business: Owners and managers expect the enterprise to expand, improve its position and increase its long-term value.
4. Capital appreciation: Investors expect the value of their investment to increase as the organisation develops.
5. Accurate information: Management and owners require reliable and up-to-date information about the organisation’s performance and financial position.
6. Participation in important decisions: Owners expect an appropriate role in major policy and strategic decisions.
7. Good public image: They expect the organisation to maintain a strong reputation and goodwill.

Employees contribute their time, knowledge, skills and effort to the organisation. Important expectations of employees include:

1. Job security: Employees expect continuity and reasonable stability of employment.
2. Fair remuneration: They expect suitable wages or salaries for the work they perform.
3. Safe and comfortable working conditions: The workplace should protect health and safety and provide proper facilities.
4. Welfare facilities: Employees may expect facilities connected with health, social security, recreation and general welfare.
5. Training and career development: Workers expect opportunities to improve skills and progress in their careers.
6. Fair grievance redressal: Complaints and workplace problems should be addressed promptly and fairly.
7. Participation and recognition: Employees value opportunities to contribute ideas and receive recognition, rewards or incentives for good performance.
8. Retirement and social-security benefits: Employees expect applicable benefits that provide financial security beyond active service.

Creditors provide loans, credit or other financial support to a business. They expect:

1. Fair return on lending: Creditors expect the agreed rate of interest or return on money lent.
2. Regular payment of interest: Interest should be paid according to agreed terms.
3. Timely repayment: Loan instalments and principal should be repaid on their due dates.
4. Correct financial information: The business should provide truthful and current information about its financial condition when required.
5. Proper utilisation of borrowed funds: Money borrowed should be used responsibly for the purpose for which finance was provided.
6. Healthy business relationship: Creditors expect transparent communication and responsible financial conduct.

Suppliers provide materials, products or services required for business operations. Their major expectations include:

1. Fair prices: Suppliers expect a reasonable price for the goods or services supplied.
2. Regular and timely payment: Amounts due should be paid according to agreed credit terms.
3. Regular orders: A stable business relationship provides continuity and helps suppliers plan their operations.
4. Reasonable terms: Delivery schedules, order conditions and payment terms should be fair and practical.
5. Transparency: Important information relating to orders, payments and commercial dealings should be communicated clearly.
6. Healthy long-term relationship: Suppliers expect honest and cooperative dealings rather than unfair pressure or misleading practices.

The government provides the legal and economic framework within which businesses function. In return, it expects commercial organisations to act lawfully and contribute to national development.

1. Regular payment of taxes and duties: Businesses should calculate and pay applicable taxes honestly and on time.
2. Compliance with laws: Commercial organisations should follow applicable business, labour, consumer and environmental requirements.
3. Fair trade practices: Businesses should avoid unfair practices such as hoarding, black marketing and deliberate creation of artificial scarcity.
4. Proper use of national resources: Scarce resources should be used efficiently and responsibly.
5. Contribution to employment and economic development: Business activity should support productive employment and economic growth.
6. Support during national or social need: Responsible businesses may assist society and government during emergencies and calamities.

Businesses use resources provided by society and their activities affect the wider community. Society therefore expects organisations to act responsibly.

1. Fair prices and regular supply: Essential goods and services should be available at fair prices without artificial shortages.
2. Protection of the environment: Businesses should minimise pollution and use environmentally responsible practices.
3. Socially desirable products: Organisations should avoid activities and products that seriously harm public welfare.
4. Employment opportunities: Businesses are expected to contribute to employment and improvement in living standards.
5. Support for weaker sections: Commercial organisations can contribute to inclusive economic and social development.
6. Community development: Businesses may support education, health, infrastructure and other socially useful activities.
7. Responsible use of resources: Natural and economic resources should be used efficiently rather than wasted.
8. Ethical conduct: Society expects businesses to avoid illegal and anti-social practices.

Model Answer:

1. Suppliers: They expect regular and timely payment according to agreed terms.
2. Employees: They expect a safe and comfortable working environment.
3. Government: It expects businesses to comply with legal requirements and pay applicable taxes and statutory dues on time.

1. Writing employee expectations when the question asks for employer expectations.
2. Classifying suppliers or creditors as internal stakeholders.
3. Using a very broad business-management definition instead of the syllabus classification.
4. Assuming all internal stakeholders have voting rights.
5. Writing duties of a stakeholder when the question asks what that stakeholder expects from the organisation.
6. Mixing the expectations of creditors with those of suppliers.
7. Writing only headings such as “job security” in a long-answer question without explaining the point.