Stakeholders in the Real Estate Industry

Sujan Afi S

How would you feel is your parents gift you a house or a flat in your birthday? You will be delighted! You will click some photos and instantly share them in your WhatsApp group, your Instagram, Facebook… everywhere.

You will call up the people and invite them for a party to celebrate your birthday in your new house. You will thank your parents in front of everyone and start the celebration.

However, did you ever think about the entire situation of which the end product is the beautiful house? Well, in this article we will go through almost each and every person who deserves your special thanks for they too have a contribution; you know, money can’t buy everything, a hearty regard is all you can give in an attempt to make those little things your own. 

So, at first there was the open land which was sold to somebody or some organisation. That organisation will then start construction. Then comes the various stakeholders who are crucial in the Real Estate market.

Let us now understand who these stakeholders are. The stakeholders may be an individual, a group, a company, etc. who have certain interest (mostly financial) in any organisation. They form a vital part in the development of any organisation.  

If considered from the market point of view, it is desirable that priority is given to the stakeholders, that is, the organisation should try to satisfy the needs and the demands of the stakeholders, apart from taking major steps to recognise the worth of all the legitimate stakeholders of the market. The organisation should understand its duty and obligations towards the stakeholders and should definitely try to treat them fairly. 

According to Freeman and Reed, a stakeholder is “an individual or group who can affect the achievement of an organisation’s objectives or who is affected by the achievement of an organisation’s objectives” (1983, p.91). Again, Clarkson considers stakeholders to be “persons or groups that have, or claim, ownership, rights, or interests in a corporation and its activities, past, present, or future” (1995:  106). 

Clarkson has categorized stakeholders into two major groups:

Primary Stakeholders

These are the people without who the development of the organisation/company can’t take place. In a way, they form the core of the company. The primary stakeholders include the employees of the organisation, the shareholders, the suppliers, the customers, the government and other authorities who levy tax, etc. The company is highly dependent on the primary stakeholders and vice versa. These stakeholders have the power to influence the major decisions, choices, etc. of the organisation. 

Customers and Employees

The customers and the employees of the company are most important as the good relationship with the former is vital for the progress of the firm.  An organization’s prosperity is largely at the hands of its their representatives; furthermore, how clients and workers relate to one another influence the client eagerness to pay, his/her satisfaction, and help in further development of the organization.

Investors (Shareholders and Debtholders)

The investors can be of two types – shareholders and debtholders. The shareholders can be an individual or a group that initially buys some shares of the organisation (that is investment for him/them) so that he/they can earn some amount of profit or return on that invested amount of money. The debtholders are person(s) who have a financial obligation towards the organisation. They may share a bond. In case the organisation is bankrupt, the debtholders get their issue solved at first. 

Developers and builders

They participate in the business of growing real estate by raising structures and different designs alongside the sub-division of grounds into plots. A developer can likewise be only a project proprietor.

Suppliers

They provide essential goods/things that are needed for the construction of the buildings, houses, etc. The vendors and the workers can also be included in this category. They too work for the organisation. Imagine if you have everything at your hand but you don’t know how to put all of them together. The workers are the people who put the right thing in the right order. They are the steps on which the employees and the employers climb to reach the destination.

Government

The government takes tax or levy from the organisation as well as the employees of the organisation. Thus, the GDP becomes the profit of the government.

Secondary Stakeholders

According to Clarkson, the secondary stakeholders are the ones who influence and get influenced by the organisation, nevertheless, they are not a must for the survival of the organisation/company. They include the media, other competitive groups, supporting groups, trade unions, and the like. Though they don’t influence the organisation in a very direct way, they can shake the organisation if they want. For instance, the media can build or spoil the image of the company. The supportive group might include the family members of the employees. They can support the employees emotionally; and we know that mental health plays a vital role in everything that we do. 

In the End

We hope that you have got a clear picture of everything that came together to make an infrastructure your home. These people are an integral part of the Real Estate. They play their own role in the stage so that you enjoy the whole drama. Thus, in this blog we have gone through the major stakeholders (primary and secondary) and their definite role in the Real Estate market.

Still, if you have any doubt, you can feel free to drop a mail at info@roodland.com, and we promise to reply back at the earliest and with a promising solution to your query. You can visit our official website for innumerable articles related to Real Estates.

There are articles related to contingency contracts, the mistakes you should not commit when you buy a property, bump clauses, RERA, etc. You will definitely find them enriching and enjoying.


References:

  • Clarkson, M. 1995.  ‘A stakeholder framework for analysing and evaluating corporate social performance’, Academy of Management Review, 20(1): 92-117
  • Freeman, R.E. & Reed, D.L. 1983. ‘Stockholders and stakeholders: A new perspective on corporate governance’, California Management Review, 25(3): 93-94
  • Hult, T., Mena, J., Ferrell, O.C.  & Ferrell, L.  2011. ‘Stakeholder marketing: A definition and conceptual framework’, Academy of Marketing Science Review, 1: 44-65
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