AHMADU BELLO UNIVERSITY

DISTANCE LEARNING CENTRE

DEPARTMENT OF BUSINESS ADMINISTRATION

COURSE TITLE: Business Policy & Strategy

CODE: BUAD 836

INDIVIDUAL ASSIGNMENT

BY

Ishiyaku Adamu Njidda

Reg. No.: P20DLBA80996; E-mail: ianjidda@[Link]
Phone No.: 08035296154

QUESTION(S):

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

E-TUTOR: Dr. SALISU UMAR

DECEMBER 2022.
1.0. Introduction.
In business terms, stakeholders can be perceived as those who may have an impact on an
organization and on whom the progress of the organization may have an impact on.
There are three categories of stakeholders: Capital Market Stakeholders, Product Market
Stakeholders, and Organizational Stakeholders (Hitt, Ireland, Hoskisson, pg 20. 2013). Capital
market stakeholders hugely have a great influence in the success of the company. They consist of
major suppliers such as banks, shareholders, venture capitalists, and debt investors who heavily
invested money into the company. Their money is used to provide the capital needed to start and
run the company. Next is the product market stakeholders who impact the success of the
company as they consist of the customers who spend their money buying the product sold by
company. In addition, there are suppliers who provide essentials such as equipment used to run
the business. Product market stakeholders are refers to the parties who influence or are affected
by the company’s offer. They primarily consist of customers, suppliers, local communities, and
government. Their satisfaction contributes to the company’s success. Finally yet importantly is
the organizational stakeholders, that is, the employees, whether they are managers or non-
managers, they play the most important part in the success of a company. The employees run the
day-to-day operations of the company by providing a service that keep customers happy enough
to return in the future.
The concept of organizational Strategic management is based around an organization's clear
understanding of its mission; its vision for where it wants to be in the future; and the values that
will guide its actions. The process requires a commitment to strategic planning, a subsection of
business management that involves an organization's ability to set both short- and long-term
goals as well as satisfying its relevant stakeholders. Strategic planning also includes the planning
of strategic decisions, activities and resource allocation needed to achieve those goals the
company has set for itself. Having a defined process for managing strategies will help the
organization make logical decisions and develop new goals quickly in order to keep pace with
evolving technology, market and business conditions. Strategic management can, thus, help an
organization gain competitive advantage, improve market share and plan for its future.

1.1. Organizational strategic management

Organizational Strategic management is the ongoing planning, monitoring, analysis and

assessment of all necessities an organization needs to meet its goals and objectives. Changes in
business environments will require organizations to constantly assess their strategies for success.
The strategic management process helps organizations take stock of their present situation, chalk
out strategies, deploy them and analyze the effectiveness of the implemented management
strategies. Strategic management strategies consist of five basic strategies and can differ in
implementation depending on the surrounding environment. Strategic management applies both
to on premise and mobile platforms. The concept of organizational Strategic management is
generally thought to have financial and nonfinancial benefits. A strategic management process
helps an organization and its leadership to think about and plan for its future existence, fulfilling
a chief responsibility of a board of directors. Strategic management sets a direction for the
organization and its employees. Unlike once-and-done strategic plans, effective strategic
management continuously plans, monitors and tests an organization's activities, resulting in
greater operational efficiency, market share and profitability.

1.2. Capital Market Stakeholders influences

Capital market stakeholders refer to groups that provide capital to companies. They affect the
availability and cost of company capital. Examples are shareholders, venture capitalists, banks,
and debt investors.
Capital market stakeholders consist of Shareholders and creditors. Shareholders can be either
venture capitalists, individuals, companies, or stock investors. They can buy common company
shares or preferred company shares. Creditors are banks, bond investors, etc. They gave the
company debt and, consequently, needed the company to repay it. Debt can be in the form of
loans, bonds, and commercial paper. 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 this 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.

Creditors can sometimes be unsatisfied and their Impact could be detrimental to business.
Disgruntled lenders can impose tighter agreements on subsequent loans. They can charge higher
interest, considering the high risk of default. Higher interest means more funds that are
expensive. 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.
In addition, where shareholders are not satisfied, the company could result in a more serious
problem. 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 end.

1.3. Product Market Stakeholders influences

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.
In other words, a dissatisfied product market stakeholder can stop providing the resources needed
for production or bringing 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 may results input
supply challenge. In addition, the company would face other risks too. 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 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.

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.

1.4. Conclusion
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 organizations 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 all
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.
References

 Ahmad Nasrudin (2022), Product Market Stakeholders: Types and Their Interests:
retrieved from [Link] on 03/12/2022 at 14:00
WAT.

 Chirantan Basu (2022, April 15). Capital Market Stakeholder. Retrieved from
[Link] on
03/12/2022 at 14:00 WAT

 Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2013). Strategic management: concepts
and cases, competitiveness & globalization. (10th Ed.). Mason, OH: Southwestern
Cengage Learning.

 Linda Tucci (2021), Strategic management: Industry Editor -- CIO/IT Strategy

Mekhala Roy retrieved from [Link]
management on 02/12/2022 at 11:00WAT