How do stakeholder priorities change over a business's life cycle?

Stakeholder priorities change over a business's life cycle due to varying business needs, risks, and opportunities at different stages.

In the start-up phase, stakeholders, particularly investors and employees, are primarily concerned with the viability of the business concept and its potential for growth. Investors are looking for a return on their investment and are willing to take on more risk for the potential of high returns. Employees, on the other hand, may be attracted by the excitement of a new venture and the opportunity to shape the company's direction. They may be willing to accept lower salaries in exchange for equity or the promise of future rewards.

As the business moves into the growth phase, stakeholder priorities shift. Investors now want to see evidence of sustainable growth and profitability, while employees may be more concerned with job security and career progression. Customers become a more significant stakeholder group as their feedback can drive product development and market expansion. Suppliers also become more important as the business needs to secure reliable sources of materials or services to support its growth.

In the maturity phase, the business is likely to be generating steady profits and may be a significant employer. Stakeholders such as employees, customers, and the local community may prioritise job security, product quality, and corporate social responsibility. Investors may be more interested in dividends and the preservation of their investment. At this stage, the business may also attract the attention of regulators and need to pay more attention to compliance with laws and regulations.

Finally, in the decline phase, stakeholder priorities will depend on the reasons for the decline and the business's strategy for dealing with it. If the business is winding down, employees will be concerned about redundancy, while investors will want to recover as much of their investment as possible. If the business is trying to reinvent itself, stakeholders may be looking for evidence of a credible recovery plan.

In summary, stakeholder priorities are not static but evolve with the business. Understanding these changing priorities is crucial for business managers as they seek to balance the often conflicting interests of different stakeholder groups.