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Explain how Capital Market Stakeholders and Product Market Stakeholders influence
organizational strategic management.

Product Market Stakeholders:

Types and Their Interests
Updated on April 15, 2022 · by Ahmad Nasrudin

[Link]

Product market stakeholders refer to parties who influence or are affected by the
company’s offer. They consist of customers, suppliers, local communities, and
government. Their satisfaction contributes to the company’s success.

Why are product market stakeholders important?

Dissatisfied product market stakeholders can stop providing them with the
resources needed for production or bring money to the company. Suppliers offer
valuable input to the company. Their input affects the quality of the product and
the company’s cost structure. To be willing to supply, they demand timely
payment at the right price.

Supplier dissatisfaction results in the input supply stop. Also, other risks must too
be faced by the company. They may be unreliable in supplying inputs. They
deliver inputs such as raw materials that are not timely or not according to
specifications. All of this can have an impact on product cost and quality.
Therefore, companies must strike a balance between supplier satisfaction and
reliable input requirements.

Customers bring money to the company. They buy products and cash flows to
the company. With this money, companies can pay suppliers, pay employees,
pay back debt, distribute dividends to shareholders, and become capital in the
future (retained earnings).

Customer dissatisfaction can have an impact on a lower income. They flow

money to competitors when they are not satisfied with the company’s products,
making the company uncompetitive.

Customers demand reliable products to satisfy their needs. They want a quality
product (differentiation) at the lowest possible price. However, price and quality
demands are a dilemma because companies often find it challenging to fulfill
simultaneously. Therefore, companies can focus on one of them: cost
differentiation or leadership. Differentiation allows customers to pay premium
prices. Whereas, cost leadership will enable companies to offer slightly lower
prices through a lower than average structure in the industry.

The community provides labor for the company. They demanded that companies
prioritize healthy labor practices and pay adequate wages. They also want the
company not to cause negative externalities such as pollution.

The government provides public services such as infrastructure, transportation,

and education. All of it contributes to the company through lower logistics costs
and quality human resources. That indirectly affects the cost and quality of the
company’s products.

On the other hand, the government is also interested in business. The

government is trying to encourage increased business activity. That way, they
create more labor. Besides, the government also wants companies to pay taxes
and comply with applicable laws and regulations. Examples of such rules are
product health standards, labor practices, minimum wages, and antitrust.
 Capital Market Stakeholders:
Types, Influence to Business
Updated on April 15, 2022 · by Ahmad Nasrudin

Capital-market stakeholders refer to groups that provide capital companies. They

affect the availability and cost of company capital. Examples are
shareholders, venture capitalists, banks, and debt investors.

Classification of capital-market stakeholders

Capital market stakeholders consist of:

1. Shareholders can be either venture capitalists, individuals, companies, or stock

investors. They can buy common company shares or preferred company shares.
2. Creditors, such as banks and bond investors. They gave the company debt and,
as a consequence, needed the company to repay it. Debt can be in the form of
loans, bonds, and commercial paper.

How do capital-market stakeholders affect the

company?
Companies often need external capital to meet funding needs for business
expansion. New plant construction, acquisition, and purchase of machinery
require more money than is generated from the company’s internal cash. They
do this, for example, by issuing new shares or debt securities. They can also
seek loans from banks.
Capital-market stakeholders provide capital to the company. Shareholders give
the company equity capital. Meanwhile, creditors offer debt capital.

Taking external capital has consequences for capital costs, consisting of the cost
of equity and the cost of debt. By contributing these capital, investors want the
company to be able to increase its wealth. That way, they hope to get a higher
return than the level of risk they receive with the investment.

Impact of unsatisfied creditors

Disgruntled lenders can impose tighter agreements on subsequent loans. They
can charge higher interest, considering the high risk of default. Higher interest
means more expensive funds. Companies must spend more money to pay back
new loans.

Even when unable to satisfy them, the company must file for bankruptcy.
Creditors can threaten to choose options to push the company into bankruptcy.
The threat itself may be enough to convince companies to pay to prevent
closure. If the company is placed in liquidation, the liquidator will realize all
available assets, and this will be shared among all creditors.

And, when shareholders are not satisfied

When a company does not provide an adequate return, shareholders can sell
their shares. For a public company, a sell-off can cause a company’s stock price
to fall.

Often, companies want to issue new shares to raise funds. Plummeting stock
prices make it difficult for companies to raise funds on target.

Some shareholders with significant ownership can also influence the company’s
strategic decisions. They can force the board of directors to improve company
performance and other short-term measures such as efficiency by suppressing
the salaries of employees and executives. It often goes against the wishes of
managers and other shareholders who focus on building competitiveness and
returns in the long run.
 Businesses are made up of lots of different people, teams and invested parties, each
with their own direct and indirect interest and impact on the overall success of the
organisation.

This complex ecosystem of stakeholders is made up of individuals, groups or other

organisations that are directly involved with, or indirectly affected by a business, and
their influence is inextricably linked to its success, failure and how it operates.

The influence that a stakeholder has on a business will largely depend on whether they
are internal stakeholders or external stakeholders and how closely linked they are to the
business and its operations, but business leaders must be able to engage positively
with company stakeholders at all levels as they are crucial to its overall success.

Business owners must therefore successfully balance and manage relationships

between internal and external stakeholders to ensure the long-term success of their
business. By defining, reviewing and nurturing these key relationships, business leaders
create long-term value for their key customers, suppliers, employees and community
stakeholders which in turn leads to a strong business model to build upon.

CAPITAL MARKETS are at the heart of a free-market system. They bring together issuers,
which need capital to pay for operations and services, and investors looking for profitable
investment opportunities. Most individuals and organizations have a direct or indirect stake in
the capital markets, which include stock exchanges, bond markets and money markets.

Issuers
1. Issuers issue securities to raise money. They include small businesses, global
corporations and governments. Businesses may issue stocks, which represent shares
and ownership interests in companies, or bonds, which are loans that require issuers
to pay regular interest payments to investors. Governments also issue bonds to raise
money for operations, social services and infrastructure, such as schools, roads and
bridges.

Investors
1. Investors may buy securities directly or indirectly through mutual funds. The
investment community includes individuals, pension funds, venture capitalists and
governments. Stocks are usually suitable for aggressive investors, who can tolerate
some market volatility in return for long-term capital appreciation, while bonds are
generally suitable for conservative investors, who want capital preservation and
modest regular income.

Exchanges
1. Market exchanges process orders from investors and match buyers with sellers.
Stocks trade on stock exchanges, such as the New York Stock Exchange, while bonds
trade on the bond markets, which are over-the-counter electronic markets operated by
financial institutions around the world.

Regulators
1. Regulators provide structure to the capital markets. They specify rules and guidelines
for issuing securities and providing timely financial disclosures. The U.S. Securities
and Exchange Commission is the primary enforcement agency for monitoring U.S.
capital markets.

Analysts
1. Research analysts serve as impartial reviewers of securities. They analyze published
financial statements, review industry data and talk to senior company management to
assess the financial health and future prospects of publicly traded companies.
Analysts often make recommendations on which securities investors should buy, sell
or hold.

Intermediaries
1. Intermediaries facilitate the actions of investors and issuers. For example, investment
banks, accountants and lawyers help issuers file the necessary forms and market their
securities, while brokerages facilitate securities trading.

Media
1. The media includes the business sections of newspapers, television news programs,
24-hour cable news channels and the Internet. The media provide reports on
companies and capital-market trends. Some also offer opinion on how individual
stocks and overall markets are likely to perform in the future.

Others
1. Other stakeholders include industry trade groups, which lobby policy makers for
regulatory changes; universities, which train future market participants; and suppliers
of products and services to capital-market participants, such as computer vendors and
accounting firms.

[Link]

Capital Market Stakeholder Examples

 Small Business

 Advertising & Marketing

 Marketing

ByChirantan Basu
Newsletters

Defining Stakeholders:
Based on their relationship with the organization, they are classified into three different types: 1)
capital market stakeholders, 2) organizational stakeholders, and 3) product market stakeholders.

Product-market stakeholders include parties with whom the firm shares its industry,
including suppliers and customers.
 DEFINITION

strategic management
By

 Linda Tucci, Industry Editor -- CIO/IT Strategy

 Mekhala Roy
[Link]