Environment as business stakeholder

Word count: 2000

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Environment includes different internal and external factors that can impact any business; natural environment is affected by the business operations however it is not considered an important stakeholder in the businesses (Freeman, 1984). This essay explains why environment is an important stakeholder for businesses and if it is ignored what consequences can result.   Starting with brief literature review, it discuses different cases that highlight importance of environment as a business stakeholder.  All businesses operating anywhere in the world are linked to many other variables and entities. These entities are complex and are not constant, hence managing them is important for organizations. Mangers consider level of control these entities have before managing them, and they have classified different stakeholders accordingly like there is an internal environment within an organization, then there is an operating environment and finally there is an external environment, which is also knows as macro environment.  Internal factors include all factors that are under an organizations control, and hence straightforward decisions for them are made. However these entities are important for the business and it includes employees, shareholders and board of directors etc. Operating environment includes those entities with which business regularly interact here level of control is comparatively less. It includes entities like competitors, suppliers, banks, government and pressure groups etc. The macro environment includes economy, laws, government polices etc, and here control is minimal. All of these are stakeholders for any business. Importance to them is given based on risk attached to them. On the other hand environment in which business operates should also be included as it has major implications but it has not received any attention as a stakeholder for many reasons and some of them are mentioned below, (Environment and stakeholder).


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